Wednesday, May 8, 2013

What Marketers Should Learn from Golf's Decline...and how IMC (and data) can help

Customer value is greatly impacted by the amount of information a marketer holds about customers. It turns out that the golf industry hasn't completely embraced this concept. Golfers are bombarded with ads promising drastic game improvement if they only buy the next "big" hit. However, something must be going astray; golf participation is in decline despite these claims that consumers should be better than ever.

GolfDigest did a great job in Tee it Forward of detailing golf’s current struggles. The arms race between golf course designers and manufacturers has been escalating since the nineties. A golf designer builds a harder course and the club manufacturer responds by building a new club which makes the course easier; the cycle continues. Unfortunately, this arms race has left golf in bad shape. Courses are now designed for a small percentage of the population and the game has become too expensive and time consuming for most to play. One thing is missing from the equation, the customer and their different preferences. Some customers prefer to play short courses, some prefer to play old hickory clubs, some love reading online forums about game improvement, some hate Tiger Woods, some don’t. This list could go on and on, but the point is there is heterogeneity between customers and yet brands are treating them pretty much the same. As a result, many customers would now prefer to swing a Wii remote than go play a real round of golf. While I do blame some of this on consumers, I think more falls on the organizations who continually fail to use the emergence of data to derive valuable insights. It only took a couple hundred years for golf club manufacturers to figure out that it might be a good idea to develop a set of clubs focused on the woman golfer, as opposed to sticking a man’s club head on a graphite shaft and calling it a day. 

There are several examples within the sports industry, as well as other verticals, of companies failing to provide customized solutions for a segment of the market. I may be a bit biased, but I believe Integrated Marketing can be golf's savior. You may be thinking “how can IMC help save sports? Isn’t that just about making sure a twitter logo is on my direct mail pieces?” When most think of IMC, they think of integrated campaigns where all communication efforts are coordinated and consumers can easily move across channels. While having the ability to go straight from a company’s Facebook page to their website may be important, I doubt that is going to do much to get someone to fork over $100 to attend a game or play a round. Don Schulz, a professor here at Northwestern, is known as the pioneer of IMC and would probably want me to say "IMC is supposed to be a strategic process to business (not just marketing) where the emphasis is placed on utilizing data to drive a customer focused mindset throughout an entire organization" (cliché alert). Regardless of which term you use (IMC, Marketing 2.0, Database Marketing), the process below provides a great starting point for thinking about the issue at hand and understanding how to provide a more targeted message to consumers.

The failure within the golf industry can be contrasted with the efforts of the San Diego Padres (San Diego CRM.) They were the first to recognize the heterogeneity among their customer base and understand the value that a CRM strategy and IMC approach could provide to customers. They were able to slowly start building out a consumer database and use analytics to customize offerings (ticket packages, fan experiences, contact points) based on the mined buying habits. The result has been consistently high attendance in a time when attendance for other teams is in decline, as well as a unique experience for each fan.

From my analysis of these two articles, these are the three action items I recommend you implement.

1. Quickly Segment your Markets
I recommend cluster analysis (particularly K-means clustering). Cluster analysis is a method by which objects in a data set, in this case customers, are grouped together based on similarities.  There are more sophisticated methods than k-means, like Gaussian mixture models, which address some of the weaknesses of k-means, but the goal should be a quick, yet fairly accurate approach which allows you to move on toward building customized contact points which can be tested and iterated (think Lean Startup or Lean Analytics). 

2. Test, Test, Test
After building initial clusters and customized strategies based on the findings, the next step should be to test your clusters. This can be A/B testing or multivariate testing, but the key is to refine the segmentation (or learn it needs re-done) through actual customer results, as opposed to sitting and running cluster analysis over and over until you have the smallest SSE.

3. Measure and Refine
The obvious goal of segmentation is that a customized approach to marketing would improve consumer response and ultimately consumer satisfaction and sales. The final step of the process is to measure whether these results actually came to fruition.. This analysis can be accomplished through marketing mix modeling, ROMI, web metrics analysis, and any other identified KPIs. 

Don't let your company fall into the same hole that the majority of the golf industry has. Take time to understand how your customers are different. How can your marketing strategy be adapted in real time to meet these different demands? Segmenting, Testing, and Measuring is a good place to start. 

Drew Tolly - MS Candidate in Integrated Marketing at Northwestern University - Specializing in marketing analytics and digital marketing. Follow him on twitter @Drew_Tolly

No comments:

Post a Comment