Har­vard Busi­ness Review reports that the “advance of big data shows no signs of slow­ing.” Orga­ni­za­tions can no longer afford to sit on the side­lines, allow­ing larger orga­ni­za­tions with more aggres­sive strate­gies to be at the fore­front. Today, Big Data has come to all, big and small orga­ni­za­tions alike. HBR warns that orga­ni­za­tions that choose to sit this trend out now risk “falling behind as com­peti­tors and chan­nel part­ners gain nearly unas­sail­able advantages.”

In “Big Data and the Cre­ative Destruc­tion of Today’s Busi­ness Mod­els,” A.T. Kear­ney poses two ques­tions to orga­ni­za­tions fac­ing Big Data chal­lenges that we will explore today: 1) How do we get started? 2) What tech invest­ments can enable ana­lyt­ics capabilities?

It is impor­tant for orga­ni­za­tions to think about what strate­gies and tools they have in place in order to move from Big Data, or large quan­ti­ties of infor­ma­tion, to smart data that trans­lates into action­able insights. Orga­ni­za­tions are tak­ing dif­fer­ent courses of action in order to cre­ate smart data. Some of these actions include hir­ing data sci­en­tists skilled in mak­ing “dis­cov­er­ies in the world of big data,” restruc­tur­ing IT and mar­ket­ing depart­ments, and acquir­ing new technology.

The Adobe 2013 Dig­i­tal Mar­ket­ing Opti­miza­tion Sur­vey revealed that orga­ni­za­tions that are mak­ing an invest­ment to incre­men­tally improve their dig­i­tal per­for­mance have a com­pet­i­tive advan­tage. These orga­ni­za­tions are expe­ri­enc­ing small to large uplifts in con­ver­sion rates. Over­all, this can trans­late into mil­lions of dol­lars of extra revenue.

In the first part of this five-part blog series, we dis­cov­ered why ana­lyt­ics is the first key solu­tion to an organization’s audi­ence man­age­ment chal­lenges. Today we will look at what tar­get opti­miza­tion is and how this new tech can help your orga­ni­za­tion turn Big Data into smart, action­able data.

What Is Tar­get Optimization?

Tar­get opti­miza­tion is sim­ply using tech­no­log­i­cal tools to tar­get and test an organization’s dig­i­tal strate­gies. The first step is putting this new tech to good use is for the orga­ni­za­tion to iden­tify a dig­i­tal fea­ture, such as a website’s home­page, that they would like to tar­get and test. Then, using either mul­ti­vari­ate (test­ing at least three features/variables) or A/B test­ing (test­ing only two features/variables), data-driven results will be gath­ered. Those results will be used to opti­mize or improve upon that fea­ture in a never-ending process to cre­ate the ideal fea­ture that will ulti­mately increase the organization’s con­ver­sions and revenue.

Orga­ni­za­tions can use tar­get opti­miza­tion as a solu­tion to improve an array of fea­tures from user expe­ri­ences on web­sites to ban­ner ads to auto­mated per­son­al­iza­tion. For exam­ple, with mul­ti­vari­ate or A/B test­ing, orga­ni­za­tions can see what con­tent is most engag­ing to cer­tain audi­ence seg­ments and then cre­ate new strate­gies to lever­age those find­ings. “Whether sug­gest­ing arti­cles based on a visitor’s pre­vi­ous read­ing pat­terns or pre­sent­ing tempt­ing cross-sell offers based on a shopper’s affin­ity for cer­tain prod­ucts, (tar­get opti­miza­tion) pro­vides a wide range of auto­mated approaches to per­son­al­iz­ing rec­om­men­da­tions on web sites, mobile sites, appli­ca­tions, and email.”

Let’s Look at the Suc­cess of YouSendIt

YouSendIt, a col­lab­o­ra­tion ser­vice with more than 34 mil­lion users in 193 coun­tries, is a clas­sic exam­ple of an orga­ni­za­tion mak­ing the nec­es­sary par­a­digm shifts to con­vert Big Data into smart data. “In the past, YouSendIt … relied on intu­ition and sim­ply com­pared the results before and after mak­ing changes” to their web­site. Does this reflect your orga­ni­za­tional prac­tices today? How heav­ily would you say you rely on intu­ition over data and analytics?

YouSendIt decided that their orga­ni­za­tion was mov­ing and evolv­ing too quickly to con­tinue using intuition-driven analy­sis. They decided it was time to employ the right tech­no­log­i­cal capa­bil­i­ties to accom­plish their work. So YouSendIt “estab­lished best prac­tices for A/B test­ing” and then waited until they “achieved sta­tis­ti­cally sig­nif­i­cant results” to make changes. Orga­ni­za­tional lead­ers reported being “caught off-guard by the unpre­dictable paths users take beyond the pri­mary designed flow, which under­scores the need for objec­tive and rig­or­ous test­ing.” Accord­ing to lead­ers, this process lead to new insights about users’ web­site behav­ior and shifted the orga­ni­za­tion “from intu­itive deci­sion mak­ing to a data-driven process result­ing in real returns.” Some of their out­comes included 1) increased con­ver­sion by 6 per­cent on their home­page and 2) adjusted copy, design, and mar­ket­ing cam­paigns across chan­nels that resulted in increases of up to 21 per­cent for con­ver­sion and 10 per­cent for life­time value (LTV).

Why You Should Bud­get for Tar­get Optimization

There is ample proof that tar­get opti­miza­tion leads to higher web­site con­ver­sion rates, which leads to bet­ter bot­tom lines. There’s also a direct cor­re­la­tion between the amount of money bud­geted for opti­miza­tion and that organization’s web­site con­ver­sion rate. There’s no way around this fact: “Only 16% of those who allo­cate up to 25% of their mar­ket­ing bud­get for opti­miza­tion enjoy aver­age web­site con­ver­sion rates of 5% and above, com­pared to 39% of those who allo­cate more than a quar­ter of mar­ket­ing bud­get to this area.” To sum it up, the mar­ket­ing opti­miza­tion sur­vey found that the more money orga­ni­za­tions spend on tar­get opti­miza­tion, the more con­ver­sions they will expe­ri­ence. Com­pare those num­bers with the aver­age con­ver­sion rates being below 1 per­cent for 59 per­cent of orga­ni­za­tions who have cho­sen not to “invest in test­ing or don’t have a strate­gic, struc­tured process in place.”

Invest­ing in a new tech­nol­ogy pack­age that includes test­ing, tar­get­ing, and opti­miz­ing is a win-win sit­u­a­tion for orga­ni­za­tions with a proven track record of success.