In an earlier post, I presented the 5 steps in creating a marketing information system, but today I’d like to take a step back to discuss the impact of a marketing information system on sound marketing decision-making; which, of course, is the main role for a marketing information system.
First, let’s start with the definition; a marketing information system is:
A system that analyzes and assesses marketing information, gathered continuously from sources inside and outside an organization. Timely marketing information provides basis for decisions such as product development or improvement, pricing, packaging, distribution, media selection, and promotion.
Meanwhile, Philip Kotler, sort of the father of modern marketing management theory defines it slightly differently as:
people, equipment, and procedures to gather, sort, analyze, evaluate, and distribute needed, timely, and accurate information to marketing decision makers.
In contrast, market research is:
The process of gathering, analyzing and interpreting information about a market, about a product or service to be offered for sale in that market, and about the past, present and potential customers for the product or service; research into the characteristics, spending habits, location and needs of your business’s target market, the industry as a whole, and the particular competitors you face.
If you’d like to learn more about market research, you’ll find some basics here.
The difference between market research and a marketing information system
Now, some combine the two in something called a market decision support system. I prefer to think about the 2 separately because they’re really very different in both character and the skill set necessary.
That said, today I’ll focus mainly on an effective marketing information system:
- Why you need one?
- What to include in one?
- Who should use one?
Why you need a marketing information system?
The days of operating a business on the seat of your pants are long over and long live the new king of business management — analytics. Today’s hyper-competitive environment quickly punishes businesses who don’t make decisions guided by market intelligence with poor market performance and, ultimately, death.
Need an example? Take a look at the epic failure of companies like GoDaddy to capitalize on their huge Super Bowl advertising campaigns year after year. Even a cursory look at their campaign analytics shows an inability to use market information to successfully plan future campaigns.
Whether you implement a real-time marketing information system like the one above (from NASCAR) or whether yours is composed of less timely metrics, a marketing information system is a key component of decisions related to marketing, product, logistics, pricing and other related marketing activities.
Ideally, a marketing information system should contain recent data that guides decision-making presented in a visual format (because humans process images much better than numbers and because visualizations highlight trends), at the appropriate level of analysis (more granular data for line managers, higher level data for C-suite users), and allow users to perform ad hoc analysis. Moreover, an effective marketing information system should include a variety of metrics encompassing major factors impacting market performance (more about this in the next section), be accurate, and timely.
What metrics to include?
There’s no good answer to this question because every business and industry is different. So, the short answer is to include all metrics that impact market performance paying close attention to metrics comprising both the top and middle of the funnel, not just conversion.
That said, too many firms construct their marketing intelligence using metrics that are easy, rather than ones having the greatest impact on market performance. Too often, their efforts mimic this Mutt and Jeff comic strip from 1942 — looking for market intelligence with data that easiest to get, not most insightful:
Make sure you have metrics representing all your KPIs (Key Performance Indicators) and that KPIs match your marketing and organizational goals. Similarly, make sure KPIs represent the entire conversion funnel, including post-purchase evaluations and behaviors such as recommendations, satisfaction, complaints, and loyalty.
Downloading CSVs (Excel files), APIs, and SQL queries help strip selected data from sources such as Google and social networking analytics tools, your website, other external data sources including industry reports, and internal data. Bringing all the metrics together on a Cognos or Cyfe dashboard makes it easy to see interconnections between metrics from different sources.
Who needs a marketing information system?
The short answer — everyone who wants to build a successful business or make their business more successful.
Period.
That said, a marketing information system is expensive, so you need to perform a cost/ benefit analysis to determine how much you should spend to gather market intelligence. In the case of NASCAR’s real-time analytics, the benefit of having accurate, real-time information outweighs the cost of collecting, analyzing, and disseminating this information. A smaller organization might opt for a simpler system that fits their budgetary constraints. Opting for NO marketing information system simply isn’t an option, although it’s a common response from businesses who fail to accurately measure the opportunity costs of bad decisions.
Building market research into your marketing intelligence system
Sometimes a marketing information system needs a little help from market research to fill in gaps. For instance, when a business is working on a new product, market research provides specific information on customer needs, willingness to buy, preferences, and pricing that no marketing information system can provide with accuracy, although it can certainly help by providing historical data related to other products produced by the firm or its competitors.
Read more: 14 Transformational Insights to Bring Simplicity, Clarity, and Alignment to your Marketing Systems