Sonya Crosby, managing director of Auckland-based research company Datamine, can explain much of what her company does with a simple diagram. She draws a generic sales graph on a sheet of paper and circles the bottom end, where the curve pinches down on the axis. "These people are costing you the same amount in marketing dollars as these people [at the top end], but they're spending nothing."
The "new" Pareto principle, she says, shows 90 per cent of sales come from 10 per cent of customers. If you can identify the top-end spenders and target marketing towards them while also cutting the wasted spend, there are gains to be made.
Datamine has made significant gains itself recently. It is one business model that has been able to grow throughout the recession, Crosby says. The firm hired the former mail marketing manager at New Zealand Post, Association of New Zealand Advertisers president and Newspaper Advertising Bureau director in April last year. The company has added eight staff during the year and recently moved to a vacant signal-box at Auckland's old central train station. The refurbished brick-and-glass heritage building is hard to find, but houses some of the most valuable minds in local market research.
The growth springs from the onus on marketing departments to account for every dollar they are given by their board and pressure to show tangible business benefits from marketing activities.
"Businesses are trying to de-risk, and I think there are a few over the last couple of years that have realised they are quite vulnerable and are looking pretty closely at what investment decisions they make," Crosby says.
Rather than asking for a budget increase, marketers are asking for a consistent budget and facing an overall reduction. "Now the boards are getting much more into micro-managing and having a really good look at those investments and saying, 'Why are you spending that much on media? Can you evidence the return you're going to give me?' . . . You're going to have to put up some evidence."
Datamine has patented access to aggregated transactional information from New Zealand's banks - about 20 million transactions a month - and combines it with industry knowledge, in- house research and a "translation" service which spits out technical results in a "commercial language".
"Normally, the way you would plan [a strategy] is to draw on a lot of survey data, which is about what people say they're doing or say they are going to do. Datamine's difference is we work with actual behaviour and lots of transactions that support it.
"But we say, let's look at [attitudinal surveys] last not first, and let's not make our media planning decisions on that. Let's have a look at what your business is actually doing: who are the people that are actually buying from you? What are they buying? When are they buying?"
Crosby says she has the ability to run the numbers on competitors, too, and show the comparative impact of advertising spend on business results for either the client or the client's competitors.
"You can also look wider. In a normal media-planning context, you're looking at just the media channels. We have a look at a whole range of external factors and events and seasonality. Some media planners do go there but not into specific impact on the sales activity."
The company prides itself on being able to extract information which exists within client organisations - effectively tapping resources across the business to help the bottom line.
"You get information that's been collected for the purpose of the finance department or the operations department. It's not actually often collected for marketing or to drive business decisions. Then it's stored in legacy systems and it's not easy to manipulate or make sense of.
"It takes a geek to talk to a geek - when you've got marketers or company directors who are desperately trying to get good information out of their own businesses, you can be talking different languages to each other. The outcome is often hard and frustrating for everybody because that translation of the commercial into technical and back again is quite an art form - you need people who speak both languages."
Crosby is not quick to give any generalised predictions about the future popularity of particular media channels. Because Datamine's results are so business-specific, any industry insights would not be truly representative. But she says the undeniable trend towards digital and online advertising won't dodge the return on investment test, either.
"There are a lot of businesses who, by choice or need, had to pull back from mainstream media and the perceived cost of going into digital and internet looks good, so a lot of money went that way.
"The question is where are the returns to the business? It might be costing you a fraction of what mainstream is, but is it returning only a fraction? What we're interested in is the relationship to real behaviour - linking in with sales activity and visitation and all those key metrics that businesses are measuring.
"It's actually making those two things mesh: asking what are you getting out of this and where are you getting it from? What sorts of relationships should you be looking for online? What are the key triggers that will get them to behave in the way that you want them to, or to find those people that are most attracted to your business?" Independent
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