Time to Outsource Analytics? Six Questions to Ask First

Outsourcing marketing analytics is an important investment for any organization, one that first requires a clear appraisal of business needs and goals. So before you decide, here some questions to consider:

1. Will your business be able to improve its marketing based on analytics?
For example, you may want a provider to build a segmentation study so that you can understand customer behavior, attitudes and other characteristics more deeply. But unless that study is used to drive more effective marketing, perhaps even affecting such areas as product development, it will quickly become a museum piece.

2. Are your needs short- or long-term?
Do you just need an immediate problem fixed or would you benefit from a more continuous relationship? This will influence how you evaluate the provider based on their ability to scale, and will also affect the price you pay per analysis.

3. What value will the analytics drive?
Ideally, this will be a financial measure, e.g., if we can reduce attrition rates by 0.5%, then we will retain $3 million in revenue and $300K in profit. But buyers should remember that a model alone will not produce these results; rather, a marketing program that uses the model will make the difference. Conversely, a badly executed marketing program could actually worsen the problem. Sometimes, "soft" results, like building consensus internally, can represent value as well.

4. Do you want to eventually bring analytics in-house?
If so, look for a provider willing to help you find and train staff, that documents its analysis extensively, and that does not claim proprietary IP rights.

6. Will you get what you want -- and need?
This covers a fairly wide range of issues, but consider a model: Will you be getting customer scores, the model parameters, or source code in a particular language (SAS, PL/SQL, Java)? Companies need to think through such points as ownership of the deliverables and whether the implementation options are contingent on other technologies that only the analytics vendors can deliver. David King is CEO of Fulcrum.