In a previous post, I cited the findings of the survey entitled “Digital Roadblock: Marketers Struggle to Reinvent Themselves” and committed to work to understand both the source of the roadblocks as well as to suggest solutions for clearing them. I separated the roadblocks identified by the marketers surveyed into five categories, and today I’ll address Category II:
Category II: Future marketers need to take more risks:
-54% of marketers believe the ideal marketer should take more risks, 45% hope to take more risks themselves, while 25% self-identify as cautious.
-65% of marketers say they are more comfortable adopting new technologies once they become mainstream, which is interesting because 54% of the same group of people surveyed said that the ideal marketer should take more risks!
At the risk of saying this is making my head spin, let’s break it down to understand what risk is and how marketers can remove the roadblocks to become the ROI generators they know they can be.
Let’s Talk About Risk
There are many good definitions and discussions of risk; Wikipedia has a particularly helpful article and here is an excerpt defining risk: “the potential of losing something of value. Values (such as physical health, social status, emotional well being or financial wealth) can be gained or lost when taking risk resulting from a given action, activity and/or inaction, foreseen or unforeseen. Risk can also be defined as the intentional interaction with uncertainty. Risk perception is the subjective judgment people make about the severity and/or probability of a risk, and may vary person to person. Any human endeavor carries some risk, but some are much riskier than others.”
It is worth pausing to consider this last statement “Any human endeavor carries some risk, but some are much riskier than others.” Herein lies the dilemma: we often hear that without risk there is no reward, but how do we differentiate a calculated risk from a foolish risk?
Calculated Risk versus Foolish Risk
Dictionary.reference.com provides the following definition of calculated risk:
“A chance of failure, the probability of which is estimated before some action is undertaken.”
I entered the term “foolish risk” as well, but there was no dictionary definition (possibly because we are not supposed to be taking foolish risks?) So for the heck of it, I entered both calculated risk and foolish risk into the Google search engine which returned about 7,720,000 results for calculated risk and about 25,900,000 results for foolish risk. Wow, with 18,180,000 more results for foolish risk, it is understandable that some marketers may be somewhat risk averse.
But let’s go back to our definition of calculated risk: a chance of failure, the probability of which is estimated before some action is undertaken. Here I have emphasized the phrase “probability of which is estimated” because this is the key difference between a calculated risk and a foolish risk. But, there’s always a catch: “probability” is sounding a lot like the need to use math and statistical analysis. In my previous blog post, Conquering Data Overload, Math Phobia & Advancing Your Career, I quoted Jo Boaler, professor of mathematics education at Stanford University, who wrote: “The personal and educational consequences of math anxiety are great. Math anxiety affects about 50 percent of the U.S. population.”
Okay, I think we’ve identified the source of the roadblock: up to 50% of the U.S. population is affected by math anxiety, math and statistical analysis is necessary to calculate the probability of risk or failure and, on top of that, marketers are expected to be both analytical and creative!
So what are the secrets to conquering marketing risk and increasing ROI? Become risk savvy and employ the right analytical tools to leverage your own native intelligence. Let me explain:
Become Risk Savvy
Gerd Gigerenzer, Ph.D., is Director at the Max Planck Institute for Human Development and Director of the Harding Center for Risk Literacy in Berlin. First, let me say that I love the fact that there is a Center for Risk Literacy. Promotional material for one of Dr. Gigerenzer’s books noted that: “At the beginning of the twentieth century, H. G. Wells predicted that statistical thinking would be as necessary for citizenship in a technological world as the ability to read and write.” I think it is fair to say that Wells’ prediction has certainly come true.
In an interview with The Economist, Dr. Gigerenzer discussed what it means to be risk savvy, saying in part: “Risk savvy means being able to understand the basics of statistical reasoning … And my vision is different from many of my colleagues, who think that people are basically hopeless when it comes to understanding risk, and we need to nudge them into behaviour from birth to death. My own research has shown that we can easily teach people and give them the tools … and I’ve shown that first-graders can also learn to understand Bayesian reasoning [a probability theory that uses the knowledge of prior events to predict future events].”
I hope that those of you with math anxiety are encouraged to learn that Dr. Gigerenzer has so much faith in your ability to learn statistical reasoning. Because this is an important component to marketing success, I promise to write future blog posts to develop this important concept in greater depth.
Leveraging Analytical Tools for Your Success: Learning from Kirklands
Founded in 1966, Kirklands is a leading specialty retailer of home décor with more than 300 stores across the United States. It had experimented with e-commerce for close to a decade with limited results. We often think of risk in terms of taking action, but there is risk to inaction as well, and ultimately Kirklands turned to the Adobe Marketing Cloud for answers.
Karen Light, Merchandising Manager, identified a major challenge, saying: “The digitalchallenge had been optimizing our website to emulate our in-store experiences.”
With the implementation and insights gained from Adobe Analytics and Adobe Target, Kirklands was indeed able to replicate its in-store experience with a redesigned website and saw revenue per customer increase by an impressive 30%.
Site Operations Manager Erica LeBlanc observed that “By using Adobe Analytics capabilities along with Adobe Target and Adobe Social, we can capture more information and quickly run tests to give us a better view of what our customers are doing and what they want.”
The Secrets to Your Success
So here we have it: with the confidence of a globally distinguished scientist that everyone can learn statistical reasoning coupled with the right analytical tools, you’ll be a soaring success.