Power-up your analytics play
In business, gamification is hot right now. Companies talk about taking elements of game design and incorporating them into various – usually dull – activities that they want consumers to complete. Watch an ad and share it to win points. Recruit 10 friends for a word-of-mouth campaign and earn a badge. Take a survey and compete for the top spot on the respondent leaderboard.
But there’s more the games business has to teach companies besides game design skills. Forrester senior analyst Joe Stanhope has written a report arguing that brands and companies need to look at how gaming firms use digital intelligence to quickly understand their customers’ behaviour, to identify pain points, spot commercial opportunities and capitalise on them.
We interviewed Stanhope to find out more.
Research: You say brands need to start thinking like gaming firms in terms of how they integrate analytics into their businesses. What marks out gaming firms as particularly noteworthy in their use of analytics? And where do non-gaming companies currently fall down, either in the implementation or application of analytics?
Joe Stanhope: It would be easy to say that gaming firms’ mastery of analytics derives from their investments in technology, skills, and organisational design. And these factors are certainly important. But the foundational element that marks gaming firms’ use of analytics as noteworthy goes back to their culture. Gaming firms have a culture of measurement and data driven decision making that permeates everything they do.
I believe this cultural distinction comes from two sources; first, gaming firms originated and grew up in the digital world where everything is measurable and data is everywhere, and without the traditional constraints of offline business models; second, analysing game data is their best and only view into the health of their business and the needs of customers, there is no plan B, if they cannot monetise their audiences and develop compelling experiences then they cannot compete.
“Analysing game data is their best and only view into the health of their business and the needs of customers, there is no plan B”
Conversely, non-gaming firms frequently give lip service to data driven approaches but few truly adopt a pervasive culture of measurement and experimentation. And most firms understandably struggle to adapt their traditional business models and legacy investments to prioritise digital. The most typical scenario is that firms make an investment in digital analytics technology – for example nearly 90% of firms have adopted web analytics – but they fail to measure the right things or make the insights from analytics available to the stakeholders who can use that information to support business decisions.
These issues are becoming increasingly apparent as digital marketing becomes more complex as touchpoints emerge, technologies splinter, and consumers become more sophisticated.
In what ways do you see other firms needing to change in order to achieve a little of what the gaming firms do in their use of analytics? You talk about a culture of measurement and experimentation, but what does that mean in practical terms?
JS: No major shift – technical, cultural, strategic, or otherwise – happens overnight. In practical terms this means that analytics professionals need to do everything they can to advocate for a measurement culture, maintain momentum for the analytics programme, and show value. The way they do this is by making analytics actionable. The disconnect between analytics and business outcomes is a common issue, where investments are made in analytics technology and staff, analyses and insights are generated, and yet the business is unable to leverage that information for decision making. So the best way to make an impact is to ensure that the analytics produced have a direct application to the business.
One-size-fits-all report packs aren’t enough. Analytics pros need to understand what data business stakeholders need to support their roles, how they can access that information, and how often they need it. Once business stakeholders are receiving analysis in a relevant manner they can apply those insights to business decisions, and that’s when an analytics program gains the trust of the business and the imperative to continue developing the programme.
This sounds to me like much more of a senior level buy-in is required, not only in signing off on an analytics investments but overseeing the implementation.
JS: I totally agree. Digital intelligence should redefine the analytics strategy, and it isn’t a one-off hire or technology project. It requires consideration and buy-in of the roadmap for implementing digital intelligence, as well how to maintain the environment over the long term. The firms that are the most progressive today are those using the web as a direct channel; ecommerce, multichannel retailers, travel, and media. These firms generate significant amounts of revenue on the web, giving them an incentive to develop analytics programmes that support customer experience and monetisation. They can most easily show the correlation between analytics investments and top line revenue.
The next group of firms who are rapidly embracing digital intelligence are financial services firms. They have the data assets and legacy analytics skills to apply digital intelligence as a method for gaining visibility to a complex, multi-product, multichannel customer experience funnel.
The legacy analytics skills you mention – I think that’s important. Investment in analytics technology has to be matched by investment in analytics skills, right. Are you seeing experts in analytics-savvy companies like the ones mentioned being brought in to work with companies that are currently laggards?
JS: Skills are a major consideration to executing digital intelligence, and a significant source of consternation. Managing analytics talent is a challenge for many companies. Effective analysts need a combination of technical and business skills, which is difficult to locate. And it’s not just about the analysts. Digital intelligence requires a variety of skillsets; savvy firms know that they must develop and hire staff with a number of specialities such as project management and engineering to support analytics.
“Skills are a major consideration to executing digital intelligence, and a significant source of consternation. Managing analytics talent is a challenge for many companies”
Successful firms are gradually becoming more sophisticated and realistic about their hiring practises for analytics staff: understanding the appropriate compensation packages for highly skilled practitioners, being more flexible about geographic location, and offering career advancement opportunities. They are also focused on organising staff properly and bringing in the right mix of experienced and entry-level staff. But given the challenges in hiring and retaining qualified analysts, there is also a strong market for third-party analytics services.
Firms are increasingly turning to vendors, speciality consultancies, agencies, and systems integrators for services to augment and support their analytics efforts. Procuring third-party services can be a great way to maintain momentum when hiring is difficult or impossible, or to bring in speciality skills for short term projects such as implementations that don’t warrant a permanent hire, and it facilitates valuable knowledge transfer as an analytics programme ramps up.
Can you point to any third-party vendors that are particularly strong in this area?
JS: Web analytics vendors such as Adobe, IBM, and Webtrends are in pole position to lead the digital intelligence solution market, given their technical capabilities and market penetration, but that’s not the only choice. A new entrant or entirely new class of technology provider could redefine the category, driving innovation and providing new options to firms. Several categories are in the running; these include data-management platforms for audience intelligence, such as Krux Digital and X Plus One; data-mining and optimisation platforms, such as SAS and Causata; and analytics platforms, such as Splunk and Vertica.
Splunk is an interesting one. Does its $230m IPO adequately convey the size of the market opportunity here for vendors, or is that just a drop in the ocean?
JS: Splunk is certainly a standard bearer for growing interest in analytics and “big data”, both as a technology solution and a strong business model. Splunk provides a solution for analysing machine data of any type. Traditionally these solutions have been an IT play. But they definitely see marketing as a big opportunity and potential area of growth. It’s an opportunity to bring their technology to an entirely new type of buyer.
Many analytics technology companies, Splunk included, are productising specific solutions to address the marketing and digital analytics opportunity. IBM is another example – its acquisition of several marketing technology firms over the last couple of years shows that they are also serious about going beyond IT into marketing. So I think we’ll see more of this in the next few years.