Measurement for Marketing Effectiveness – data challenges

and how to meet themTrevor Jones

Marketing Databasics25th June 2009

Some themes

A buzz about marketing effectiveness Some history Metrics for marketing basics Getting serious about marketing effectiveness “Common sense systematically applied” A consistent focus on the customer Covering measurement, not targeting/

modelling/ segmentation

A history of the ‘customer view’

Even the ‘early starters’ seldom have an absolutely complete view

Consolidation has been a major issue in the insurance/assurance sector – has held things back

FM sector a late adopter

3

Start of the ‘customer focus’ journey

1980 1990 2000 2010

RETAIL BANKS

LIFE & PENSIONS

GENERAL/CONGLOM.INSURERS

FUND MANAGERS

Things going backwards with the internet!

Silo development Stress on technology rather than customer management Little integration between on-line and off-line behavioural

data A serious un-plugged gap, given the importance of on-line

channel Technology is available to plug it But it is not just about technology, it’s about customer

management on-line

CUSTOMERLIFECYCLE

RECRUITMENTRECRUITMENT

DEVELOPMENTDEVELOPMENT

LAPSATIONLAPSATION

CUSTOMER BASECUSTOMER BASE

Essentially, all marketing spend supports the customer lifecycle

We recruit We recruit themthem

We develop We develop themthem

And we try and And we try and retain them retain them

It’s surprising how often customer-centric metrics and reporting are not in place to allow a high-level assessment of marketing effectiveness to be made

CUSTOMERLIFECYCLE

RECRUITMENTRECRUITMENT

DEVELOPMENTDEVELOPMENT

LAPSATIONLAPSATION

RECRUITMENT

Volumes and costs by channel

Characteristics Source – increasingly difficult

to measure Downstream value? Business health check?

CUSTOMERLIFECYCLE

RECRUITMENTRECRUITMENT

DEVELOPMENTDEVELOPMENT

LAPSATIONLAPSATION

DEVELOPMENT

Cross-sell and up-sell statistics (and goals?)

Beware x-sell ratios! Customer profitability/NPV Marketing measures:

Interaction measurement Contact densities (Campaign measurement

[primary/secondary sales]) Channel impacts/preferences Spend by profit or NPV Feedback to recruitment, forward

look to lapsation

Precursors to campaign optimisation

CUSTOMERLIFECYCLE

RECRUITMENTRECRUITMENT

DEVELOPMENTDEVELOPMENT

LAPSATIONLAPSATION

LAPSATION/RETENTION

Systems issues – can customers get ‘lost’

‘Good’ v. ‘bad’ lapsation Measurement & strategy

Value lost/value ‘saveable’

ROI on retention activities – short and medium term

Business health check?

What to do with marketing metrics

Agree them! Implement them! – and make them easily accessible Use them!

Will give you a high level view of marketing effectiveness

Beware theelephant inthe room!

More silos, marketing measurement and getting more complicated

ATL/BTL/ONLINE marketing spend What are they for? How integrated is the planning? How clearly are goals and response/ performance measures specified

in advance?

Channel cross-over – some examples ATL impact on existing customers? Interaction between channels Measuring the origin of web enquiries/orders

Direct measurement is often not enough

A time series approach

Increasingly, measurement using a time series approach is appropriate, e.g. Marketing spend at customer level v. change in

behaviour/spend Cross-channel effects – e.g. ATL spend and internet

inquiries Separately tracking effect of advertising spend on

existing/new customers

A new approach - a fusion of econometrics and database analysis

Typically, econometrics has been used by ATL agencies to ‘mark their own homework’ Adspend v headline sales

But by combining customer database metrics with time series analysis, the range of what can be achieved expands significantly, for example Measuring response to all types of campaign across all channels Disaggregating ‘new customer’ & ‘existing customer’ effect of

campaigns

We call this:

Thank you.