Any business managers still skeptical about the power of analytics should keep their mouths shut following this week's election. The Presidential race was a demonstration of the power of analytics over gut instinct and experience.
According to Time.com, President Barack Obama's campaign relied on analytics and techniques that will be familiar to smart businesses.
[F]rom the beginning, campaign manager Jim Messina had promised a totally different, metric-driven kind of campaign in which politics was the goal but political instincts might not be the means. "We are going to measure every single thing in this campaign," he said after taking the job. He hired an analytics department five times as large as that of the 2008 operation, with an official "chief scientist" for the Chicago headquarters named Rayid Ghani, who in a previous life crunched huge data sets to, among other things, maximize the efficiency of supermarket sales promotions.
While Obama's team won praise in 2008 for its "high-tech wizardry," it suffered from a proliferation of databases. Volunteers making phone calls through the Obama Website worked with different lists than callers in the campaign offices. Get-out-the-vote lists and fundraising lists were different. Businesses face these issues all the time, as sales lists for different business units differ from each other, as well as from CRM systems.
For the first 18 months of the re-election drive, the campaign started from scratch with a single, massive database, capable of merging information from pollsters, fundraisers, field workers, consumer databases, social media, mobile contacts, and the main Democratic voter files in swing states.
How did the campaign use that data?
- To predict what kinds of people would be persuaded by what kinds of appeals. "Call lists in field offices, for instance, didn't just list names and numbers; they also ranked names in order of their persuadability, with the campaign's most important priorities first."
- The campaign discovered that people who had unsubscribed from 2008 campaign email lists were susceptible to being pulled back into the campaign. Marketers call this technique "retargeting."
For example, if a consumer puts an item in their shopping cart but decides not to buy it, marketing automation software will fire off an email to the consumer the next day to attempt to nudge the consumer to buy, perhaps with a special discount offer. It works for selling pants online, and it turns out to work for electing a president, too.
- Strategists tested scripts for different demographic groups, and whether a call from a local volunteer would perform better than someone from a non-swing state, like California.
- The new database allowed the campaign to beat fundraising goals as well.
The campaign also used sophisticated online marketing techniques, targeting ads based on individual behavior that was tracked with cookies, said the Wall Street Journal. "A wealthy urban liberal sees different ads online than a working-class centrist. People who care more about jobs see different ads than people who focus on social issues."
But the most visible way that metrics won the 2012 election was in predicting the winner. While TV pundits used their long experience and gut feelings to say the election was too close to call, or even predicting a Romney landslide; statistician Nate Silver, writing at the New York Times blog FiveThirtyEight, called the election with staggering accuracy.
Just predicting that Obama would win wasn't particularly interesting. After all, a coin-toss can predict the winner half the time in a two-person race. No, Silver's analytics predicted the outcome in 49 of the 50 states (Florida still hasn't weighed in as I write this late Wednesday), and got the margin of victory right within a half percentage point. (Silver predicted 50.8 percent Obama and 48.3 percent Romney. The reality as of Wednesday was 50.4 percent Obama to 48.1 percent Romney.) See for yourself:
Actual Election Results Wednesday
Nate Silver's Final Prediction Tuesday
And Silver wasn't alone. Several other statisticians made similarly accurate predictions. Silver, in particular, was widely derided by political pundits before the election, but now he's getting the last laugh as he called the election right, and the pundits got it wrong.
The 2012 election is one where science and analytics beat instinct and experience. The lesson is clear for business as well as politicians.
The 'Moneyball' Election
A Case Study in Inadequate Analytics
Profiles Add Context, Clarifying Analytics Reports
— Mitch Wagner , Editor in Chief, Internet Evolution