INBOUND 2016 Christopher Penn: "Building the Data-Driven Customer Journey"

Good morning, everyone. I love the first session. Right after the keynote. Everyone's awake and has had at least one coffee. Makes me very happy for the folks who are coming in. We have plenty of seats up front and it smells like people mostly bathed recently. So awesome. Today we're going to be talking about building a data driven customer journey. As announced, my name is Christopher Penn. The most important thing you'll probably want to know about this talk is there will be zero politics in it. So let's start with the good old days of marketing. Back in the old days, we like the old days, you pick up the phone, you start dialing. Everyone who's seen Wolf of Wall street remembers Leonardo DiCaprio's famous line, Pick up the phone. And that's how you do your marketing. And it worked really, really well because we had a really nicely confined ecosystem, right? You had three TV channels, you had your local paper, you had your local radio station, no problem. You had to decide where to spend your money, maybe those little placemats at the local diner. But that was it. It was simple, it was easy, it wasn't always cheap, but you could at least do it and get your brain around it. The problem is the. The world has changed quite a bit. This is a concept called content shock by my friend Mark Schaefer, who says that we marketers are the problem. We are creating more content than any human being can possibly consume. And he thinks we're at that point now where we're creating more content. I would say we're actually past it this year alone. And this was taken, this snapshot was taken about a month ago. Someone born in 1996, 1997 would have seen like 3 million news stories per year. That was the news. Thanks to the Internet, thanks to mobile, thanks to the mass content economy, we are on target to hit 70, almost 73 million news stories this year. That's a lot of content. If you are in, if you've ever worked in public relations, if you've ever worked in content marketing, if you've ever tried to pitch a story. The problem is even if you get a hit, you are one hit in 73 million. The chances of anyone noticing are pretty small. And here's the even worse news. It's going to get much, much worse. How many people, just a show of hands, have either follow minor league baseball or fantasy football. Okay? Decent number of the room. You are not reading anything human generated anymore. All minor league baseball, all fantasy football reports about how your team did are now generated by artificial intelligence, by machines. It's great coverage. You get the story you want. But think now about how fast that content curve is going to go up. Because humans, us aren't needed anymore. There's a service out on the web that advertises a thousand mediocre blog posts for only $250. You as a marketer can go out and buy a thousand meh quality machine generated blog posts for $250. How many of you spend more than that on your coffee budget like we certainly do, right? So you can have infinite amounts of content. This is the Internet minute. This is from Excelicom and Domo. 69,000 hours of Netflix watch every 60 seconds. 972,000 swipes on Tinder. No indication whether it's left or right. 347,000 tweets more. So if you're at Inbound, this is what's happening. This is where our people, our customers are investing their time. And this is going up and up and up in your pocket or in your hand. A number of you in your hand are holding not only a slot machine, but the biggest distraction to our marketing. So we as marketers want to put stuff out there. Are you better than Orange is the New Black? Are you better than Luke Cage? If the answer is no, all consumer has to do is change apps and do something else. There's a million and a half apps in each app store as of last summer. There's a million and a half other choices besides our marketing from an analytics perspective. Dark Social. How many people ask you to raise your hands and keep them up? How many people use WhatsApp? Okay, WeChat, keep your hands up. Line, Tango, Facebook Messenger, Snapchat. Look around briefly, take a look around. This is the entire room. All the apps that I've just mentioned are called Dark Social. There are no analytics. There will eventually be because these companies have to make money and they have to prove that they're making money. But for right now, there's no analytics. We don't know. You don't know if your blog post or your service or your product has been recommended to a friend on Facebook Messenger. You can't see it when someone clicks on a link that's shared in Facebook Messenger. It'll just show up as actually Facebook will just. But like WhatsApp will just show up as direct traffic. You'll get nothing. So our ability to understand the content that we put out there in the masses continues to decline. We cannot win volume. We cannot just throw stuff out there. Try to measure it as best we can. And hope that it resonates. So what's the impact of this? What's going to happen to us, the marketers? This is from the CMO survey done twice a year by Duke University and the AMA. In the next 12 months, CMOs believe that there's going to be more intense rivalry for customers, more competitor price cutting, more competitor innovation, emergence of new competitors, domestic and global. These are the priorities. This is what has your CMO and your CEO's hair on fire. Particularly numbers one and two. All this content marketing means that we are now trying not only to catch business and dollars and revenue, we are struggling to capture even basic people's attention. If I can get your attention for more than 3 seconds. Second impact, what are CMOs going to spend on across the board? Just trying to do the marketing. Very little being invested in research, very little being invested in training, very little being invested in sales. So on the one hand, your cmo, or if you are the cmo, your CEO is saying, hey, I need you to do more with less. And on the other hand saying, here's the less. The stuff that's really important, like training, like learning, like selling, like analytics. So we have to become more efficient in our marketing. What's going to get outsourced across the board? Not a whole lot. If you work at an agency, if you work at a marketing company, this is not great news for us. About the only sector that's showing significant growth is consumer services. If you work in energy, if you work in manufacturing and mining. I'm sorry, and what are CMOs going to spend their money on in the next 12 months? On this side, where's the gap in the organization? This side, what are they going to spend money for? They're going to spend money on digital marketing capabilities, which is why we're all here, thank goodness. But everything else kind of will take a back seat to that. The impact of all of this environment, this content everywhere, these channels everywhere, these lack of analytics is that we have very unfocused marketing. We are literally leaving money on the table. And the impact of that is that we burn out our staff, we burn out ourselves. I think the CMO has something like a 16 to 18 month shelf life. That's actually about, by the way, the same amount of shelf life you get out of an intern or a junior level person. That's how fast the industry is changing. So how do we fix this? There was three, now there's five. We need to become data driven and we'll talk about that. Understand the customer journey, understand what our marketing technology stack should be that powers the customer journey. How we will assign dollar amount goals to our marketing so we understand the value of each step in the journey and then map the journey. That's what we're going to do today. What does it mean to be data driven? To be data driven means you make decisions with data first. Not intellect, not intuition, not experience, not instinct, not your gut. Use data to make decisions. Which direction do you go when you travel from Reno to San Diego? Anyone just shout out an answer or two. From Reno to San Diego. Some people said northwest, south, south, southwest, show of hand, Southwest. Okay, you're all wrong. Here's why. Reno's further west. You're actually going southeast when you go to San Diego. So your intuition, you think, well, Nevada's here, California's here. Going this way, your intuition misled you. This is an example that I saw from Tamsen Webster who does an excellent talk on intuition based thinking. If you run your company by intuition, this is probably what a trip from Boston to San Diego will look like. This is fun. This is a great road trip. It's 11,000 miles. It's like $800 in gasoline. It'll take you 11 weeks to get there. But if you have to get from point A to point B, use the data. Use data to guide your decisions to most efficiently get from point A to point B. Note, by the way, just because it's data driven doesn't mean that we still are not in charge of our goals. Right? You still have to check to put the destination into your gps. Your GPS does not automatically start driving you. Thank goodness. So what does it mean to be a data driven company? How do you change your marketing organization to be data driven? It's a five step journey which can take years depending on your organizational culture. In the beginning, your company is data resistant. We know there's this thing called data, but we're gonna do things the way we've always done it. Have you ever heard that in your company in a meeting, we're gonna do things, We've always done it. We know our customers best. After a few quarters of declining results, people become data awareness. We become data curious. What is this stuff? We hear about it, we read it have what's called airline magazine syndrome, where your CEO reads about something on the airplane, says that's the new strategic imperative. It happens, but you become data aware. You start to understand the data. Once you've got the data, you're like, what do I do with this stuff? What does it mean? You become Analytical, you become a data guided organization. You start to use this stuff. Analytics or analysis comes from the Greek word aniline which means to unlock, to loosen up, to free up what's in the data? What does it tell us? What happened? The fourth step is to become data savvy. How do you use data in production? You have to develop insights. Okay, so we have data, we know what happened. Why, why do these things happen? That's what insights are about. Why did something happen? And then finally, once you've gone down this journey in your organization to become data driven, you become a data first company. You use data strategically. You know this is the case when you get a meeting invite saying, Bob, you have the coffee, Jill, you have the donuts, Tom, you bring the data, right? Data is seen as essential to a meeting as the donuts think about where you are in your organization, how far along this journey you are, how far are you personally on this journey? Because at each stage in this journey there are resources, plenty From Google, from IBM, from HubSpot, lots to read and learn. So figure out where you are and that will help you advance up this ladder. Most important, understand how data works. Statistics and algorithms and machine learning and artificial intelligence are all the buzzwords of the day. Learn how they work, learn what they mean, learn how predictions can go wrong, learn how your analytics can mislead you and have you spend money in places you shouldn't be. You will need to take probably a dust off a stats for Dummies book from the local library, but it's worth your time to do so. Second, we need to understand what the customer journey is. In the old day, we had the funnel. Funnels were awesome. Funnels were awesome because they were simple. We understand you put something in the top, something comes out in the bottom. They're still useful at things like frat parties, for beer, up top, person at bottom. But the problem is that's not how people buy unless it literally is a transactional purchase in the moment. If you ever taken your 3 year old or a little kid to a grocery store and there's candy on the end wrap, they say, I want that. Okay, that's a transactional, very simple, easy funnel, toddler candy purchase. Everything beyond that is path based. How many of you have been in a shopping mall or retail store in the last 30 days? Okay, nice to see you all still get out. How many of you have seen someone in the store on their phone comparison shopping? For those of you who use marketing automation software like HubSpot software, is that person an Audience member, a prospect, a lead, Are they an opportunity? Are they a close one deal? What are they? Because the way people buy, they could be multiple things at that journey at the same time. They could be, if you're the store owner, they could be your prospect, but they could be Amazon's opportunity. People can occupy multiple points in the journey at the same time. We as marketers like, no, no, just stay on the prescribed path that we have set up in our marketing automation software. It works so well and our customers say no. So we have to accept that funnels are for marketers, they're for our convenience at the expense of our customers. Try and force them down a path. Journeys are for customers at the expense of us, the marketers. Now that's not to say that funnels have no place. There is still a logic and a sound reason to have an operational funnel in your marketing organization. Because everybody can't do everything all the time. Someone has to be in charge of email, somebody has to be in charge of Twitter, somebody has to be in charge of analytics. That's okay, but we can't expect and ask our customers to do that. What does a journey look like? This is One example from McKinsey showcasing people becoming aware of you with a trigger, considering actively evaluating you and a whole bunch of other people making a purchase and then that post purchase experience, which can either trigger new considerations or loyalty. Again, remember, people can occupy and move around on this. If someone has a bad post purchase experience, they may be a trigger for somebody else. These are the stages of the customer journey and there's two of them. There's the buyer's journey, which is a lot of what we are concerned about. If you are in marketing, if you are using marketing automation software, you are focused on the buyer's journey. How do people go from high to buy? However, the second half of the journey is just as important, the owner's journey. What kind of experience do you provide your customers that make them either evaluate you again for a new purchase or become an evangelist, become your unpaid marketing department. So that's the difference between a funnel and a journey. A journey is nonlinear. A journey occupies a bunch of different places at different times and we have to be there for the customers where they want to be. The third solution to dealing with this marketing madness is to understand our marketing technology stack. There was an event earlier this year called MarTech, that is the marketing technology conference. And 41 different companies submitted their marketing technology stacks. We see companies like HubSpot are in here, but when I saw this I said, what the hell are you doing? I don't understand any of this in terms of what the strategy is. Why is your CRM over here? Why is your intelligence over here? What's all this over here? Why isn't. If you're a HubSpot customer, shouldn't HubSpot be in there too? Companies are just throwing stuff up on slides, hoping it makes sense. Here's another one. This one baffled me. I don't know what they're doing either. It's like, okay, there's spokes and hubs and arrows going every direction. What are these companies doing wrong? What they're doing wrong is they're putting the tools first. Now, don't get me wrong, all of these tools satisfact similar web HubSpot. They all have their place and they are all appropriate tools. They're like utensils in your kitchen drawer, right? You got a spatula, you got a knife, you got a spoon. But there's no context here. This is saying, throw all the utensils at the problem and see what happens. Tools are not first. What comes first is the customer journey. What are we trying to do at each stage in this journey and then what tools fit into it? So when you embark on your own audit of your marketing technology stack, this is how to do it properly. Why are we doing X, Y or Z? Why are we moving to inbound marketing? Why are we doing mobile marketing? Why are we running syndication ads? What's the point? What's the goal? Second question. Who should be in charge of things? Who owns stuff? How many of you have a marketing governance counselor, a marketing governance unit in your company? It's like no hands up at all. That should be a warning sign to every single person in the room. If there's no one saying who's in charge and what are we supposed to be doing? Then you're just going to throw tools at the problem and spend a lot of money for no reason. Why? Who? What should we be doing? What's the process? What does our buyer's journey look like? What does our owner's journey look like? Only then do you talk about the technology. How do we achieve those things when we achieve them and measure it? This is how to properly configure your marketing technology stack to support customer journeys, to support effective targeted marketing. If you have nothing else, at least there's Google. If you have no money, if you're an independent consultant, at the very least Google provides some of the technology like analytics and optimize and stuff. Obviously we're at inbound. So I would assume a fair number of you, if not most of you, also use HubSpot. The two tools together, Google's ecosystem and HubSpot, give you the ability to manage most, if not all of the buyer's journey and a fair amount of the owner's journey. Fourth step, how do you value your goals? Out of curiosity, how many people here use Google Analytics? Raise your hands, leave your hands in the air. How many of you have goals set up in your Google Analytics install? Okay, about a third of the hands went down. Okay, how many of you have a dollar amount assigned to those goals? And there go all the hands. Without a dollar amount, you can't assess the value of any individual channel of the things that you're doing. You're just creating activity and activity is better than non activity. But you don't know the value can't prove roi. So let's talk about how to value your goals. And this works. B2B, B2C. Even distributor manufacturer situations. Because at the end of the day, people still have to take actions digitally in order for us to work with them. So let's start with the first two numbers that every CMO loves. Customer lifetime value and customer acquisition cost. Do you know your customer's lifetime value? How many people have done the computation at your business for customer lifetime value? Okay, if I'm back here next year at Inbound, I hope every single person has their hand in this room. This is the number that will get you promoted. So every hand should be up next year. How many of you know what your customer acquisition cost is? Okay, more hands. So you focus more on what it costs than what the value it is it brings. When you subtract those two, you get your net customer value. That's the start of reverse engineering your goal values. So let's say my value, a lifetime value customer is $100,000. That's their total value and it cost me $10,000 to acquire that. My net customer value is $90,000. Next, my net customer value times my sales closing rate. How many people know what your organization's sales closing rate is? Whether you're retail, B2B anything. Okay, this is more homework for you. What's your closing rate? How efficient are you at taking deals of any kind? Right? A mortgage, a property, a college education and figuring out how, what percentage close you can get your net deal value. That way, if you are using the HubSpot CRM product, that's going to help, that's going to help you use get more information about the value of those deals. So if I have a $90,000 net customer value and my salespeople close one out of four deals, my net deal value is $22,500. So we have a deal. What's our deal closing rate? We as marketers are responsible really for two generating demand generating leads. They're not the same thing, by the way, but we're responsible for generating demand and generating leads. So if we can figure out what the value of a sales qualified lead is based on our deal value, we can start to get to what a sales qualified lead's value is. And again, if you're using HubSpot software, this is the point where it's going to make the jump from the regular application to CRM, but you can start to assign a value to that. So again, if I have a net deal value of 22,500 and I can convert 75% of my sales qualified leads, my value of a sales qualified lead is $16,875. What's my qualification rate for marketing qualified leads? Sales qualified lead times qualification rate. How many marketing qualified leads that filled out the form, that downloaded the ebook, that did all the things that we wanted to picked up the phone, said, I'd like to send you an rfp, I'd like to send you an rfi. I'd like to hire somebody, can I have a demo? So if I have a sales qualified lead value of 16,875 and one out of four leads are qualified, that's the qualified value of. That's the value of a market and qualified lead. Remember from Glengarry Glen Ross, when Jack Lemmon's character says the leads are weak, this is what he's talking about. Alec Baldwin will be here on Friday. Famously then said, the leads are weak, you're weak. Finally, what's your prospect qualification rate? The people who are on your email list, the people who have kind of raised their hands, but not really. What's that rate that gives you your prospect value? Oops. So 4,219 times a 1% qualification rate. So if you have 100,000 contacts in your HubSpot CRM and only a thousand of them are actually marketing qualified leads, the rest are college students and future employees and stuff. Put that in there. This number, the $42 per prospect value, is what would go into your Google Analytics as the goal value for a new prospect. So every time someone signs up for your newsletter, you would have say, that was worth $42. Every time somebody registers for a webinar $42 every time someone gives you their card at a tradeshore conference. $42. Please don't actually send them email. It's really rude. But that's the value. You can do this for every line of business you have. And you can do this from different marketing activities. So maybe prospect your email list is different than your webinar list. Maybe your promo list or your coupon list is different. They behave differently. So you can repeat this whole process top to bottom for the different lines of your business. You must do this. Your web analytics depend upon it and your ability to prove value with HubSpot software depends upon it as well. Do these calculations. So we know that you need to become a data driven organization to understand what the customer journey is, to understand the marketing technology stack you must have in place and how to value your goals. We can now map the customer journey itself. Again, just a show of hands, how many people use Google Analytics? Okay, so most of this is going to apply to you. If you don't use Google Analytics, you use Adobe Analytics. That's fine because most of the stuff will still apply and you can get a free Google Analytics account to do some of the benchmarking stuff. But everyone can try this. This is a tool called the Customer Path to online purchase from Google. If you go to thinkwithgoogle.com you can put in things like your industry, your company size in the United States. Change those around and what will happen is that this set of bubbles will move around. What you're looking at is the way people interact with channels from awareness to nurturing to I'm ready to buy something, I'm ready to do something that qualifies as a transaction. So for a B2B company, that's probably a marketing qualified lead. For an E commerce company, that's a checked out cart. For a retail company, that could be something as simple as driving directions to the store. But from awareness all the way to conversion, Google takes its data from the fact that all of you installed Google Analytics on your website. Google thanks you. To aggregate by industry how people buy. So in this example here, display, click. Advertising is on the far left for the arts and entertainment industry. For the large arts and entertainment industry. That's how people become aware most often. Then they deepen the relationship with social media. Generic paid search, organic search, referral, email, branded paid search and then direct. That's how people become aware of and then eventually make the purchase. In the arts and entertainment industry. Try it out for your own industry. Now the categories in the industries are really broad because again, Google can't give away your individual data, but there's still plenty in here for you to try out. So behind the scenes here you can see this is business, generic business. So paid search, organic search, referral display. When you see two bubbles stacked up on top of each other, again like we were talking about earlier in the pathway, the customer is doing those two things at the same time. Which also means that social email and branded paid search in this example have to be synchronous. They have to have the same messaging, they have to tell the same story, and they have to do so and where the customer is. So this is how you first develop the generic template for your business, for mapping out your customer journey. This is the generic and a lot of you will probably say, well that's great, but business industrial is a big category. I'm a business, but so is an industrial concrete business. And if you're not in industrial concrete, does it apply to you? Well, the good news is that in Google Analytics, if you have set goals and goal values, which is why we spent a lot of time talking about it, Google has a computation called Assisted Conversions. If you go into Google Analytics, on the left hand side there's a gray menu, there's audience acquisition behavior conversion Inside the conversion menu. Click that open and you will see something called multi channel funnels. Click that open and there's a sub menu item called Assisted conversions, which is this screen here. What an assisted conversion is is. It helped, but it wasn't the last thing somebody did. So in this particular example, Direct had the highest number of assisted conversions. Then organic search, then email, social referral. These channels look familiar. They're what's in the Journey tool. On the far right hand side is the ratio of assisted conversions to last touch conversions. The higher that number is, the higher that ratio is, the more likely it is that that channel was towards the awareness side of the customer journey. The closer that number is to zero, the more likely it is that it is. On the far right hand side, it was the closest thing somebody did to a conversion. So when you look at this data, if you were to put it into a visualization tool like Tableau or Watson analytics, you could actually plot out your customer journey yours from your analytics, not the generic tool and then look at how it maps out. In this case, I took the exact same customer journey, those numbers that you saw the ratios and plotted them out on the y axis and on the x axis. No, I'm sorry, the Y axis is on the, this is up and down are the channels. And I made the box size the total amount of revenue assisted in conversions. And since in Last Touch, the bigger the box, the better that channel works. So for this, for my personal website, social networking, social media is working great. It's in the right spot at the beginning of the journey and making a lot of money, money on it comparatively, then email, Email's in the wrong spot if you were to go back to that generic journey. In fact, let's just go back to the generic journey. If you look here, email should kind of be in the middle, not at the front for my particular business, but because the box is large, we're making money on it. So I'm OK with this diverging from the model. On the other hand, organic search has a really small box. It's not generating a lot of revenue. So I'm doing one of two things wrong there. Either I've got it in the wrong place in the customer journey or I suck at SEO. I looked, I kind of suck at SEO on my personal website. And then my PR firm generates very little referral traffic. If I had one. I don't have a PR firm. And that's why. And you can see the results. So if you do the same visualization for yourself, just taking those numbers and ratios and plotting them out like this, you could construct your personal, your company's customer journey mapping. And then you look. If the box is in the right place and it's big, awesome. Keep doing what you're doing in that channel. If the box is in the wrong place, the but it's big. Keep doing what you're doing. If the box is in the wrong place and it's really small, you have to figure out what you're doing wrong in that channel. I did this analysis for a client and they had a social media channel that was really, it was in the right spot in terms of awareness, but the box was so tiny you could barely see it. Why? I said, why is this like this? Well, it turns out they for their business, social media was how someone became aware of the company. But every tweet from them was, hey, buy this, it's on sale now, right? So they're essentially their Twitter channel was basically a series of one night stands, right? Instead of hey, let's get a cup of coffee. So if the box is in the wrong spot or in the right spot and small look at the messaging, what are you doing with the content on that channel? Constructing this journey will take time. You'll have to learn a couple of Tools to do it. But tableau, you can get a free version@Public.Tableau.com you can use Watson analytics from IBM. At WatsonAnalytics.com you can use Excel or Google Sheets. It won't look as pretty, it won't have all the fancy stuff, but it'll get the job done. When you're done, you can put the two side by side and say, how am I doing? Are we in the right spot? Is the bubble in the right size? That's how you build a customer journey. So how do we get to this future? How do you become data driven? Understand the journey, understand the technology, value your goals and map your journey. We talked about all these steps today. Evolve your organization, get into people's heads, particularly your CEOs and your stakeholders in the C suite. That journeys are for the customer. And if you're serving the customer well, you have to move over to that structure. Make intelligent decisions about your technology, value your goals, put dollar signs on them. Even if you're a non profit, even if you're a government, you still have to do things like pay bills, keep lights on and map your journey. You're going to need three kinds of people to make the final leap to becoming a data driven strategic company. The first is you're going to need is developers. This is Microsoft former CEO Steve Ballmer famously sweating profusely and screaming developers at a crowd. But the point is valid. You will need developers because if you think back to the beginning of the talk, we have so much content on so many channels and so many tools. HubSpot software is a terrific software, but it doesn't plug into everything. So you're going to need developers to help bring data in and out of the system. You'll need other tools to kind of manage data in and out. The second kind of person you're going to need are data scientists, real honest scientists who can help you look at the data you've collected. Because those developers will do a great job of pooling all your data and putting it on the kitchen table. And you're like, well, that's awesome. What do I do with it all? How do I make sense of it? Once you get beyond five or six or seven different channels of data sources, you're gonna need someone's help to actually figure out what's in the pile of stuff. And the third type of person you're gonna need are marketing technologists, people who can think in marketing and creative and understanding all the stuff that we as marketers love to do with content. But Also be analytical to be able to think on both sides of the brain. Think in system one and system two. Pick your model. But you're going to need these types of people in your organization so that you can reap the value of what the developers bring in, what the data scientists analyze. The marketing technologists then have to take and do stuff with. If you're an organization that's a little on the smaller side, start in reverse. Get a marketing technologist for some easy wins and some extra revenue and and then work backwards. If you're a bigger organization, you've got buy in from C suite. Start with those developers. You probably already have some. Get some data science and then get your marketing technologists to help you put this together. You will need to refresh your customer journey frequently. Once a quarter. Once a quarter you're going to need to rerun this analysis. But this is the future. This is the future of marketing for us because we're going to face an onslaught of artificial intelligence and machine generated stuff. We have to be focused, we have to use data intelligent. We have to set ourselves up for success so that when the machines come along we are working with them and not against them because they will win if we don't work with them. And that future will be here sooner than you think. Thank you very much.