I recently spent the day at the Institute of Direct & Digital Marketing, teaching marketers from the NHS, entertainment, travel, financial services and education sectors about eCRM. The format of the day's course deliberately – because of the variety of industries – avoids detailed best practise, as one size clearly cannot fit all. The focus is on the framework. More particularly on three frameworks: customer journey planning; capability assessment and prioritisation; and business case development. This is well-trod ground for me, I've been teaching this course for around ten years, and I lecture on this to Hult International Business School's Masters Degree Program.
One thing that I've observed over the last few years of teaching eCRM masterclasses is that the recession which started in 2008 kicked eCRM – and CRM – way up the agenda. Provable marketing has taken over. And the clients we've worked with who started out at the geeky end of things are now the marketing directors, precisely because they have been able to demonstrate the commercial results and advantages of rigorous marketing strategies.
During this revolution, creativity seems to have taken a back seat to data, segmentation, analytics, infrastructure and million pound notes. Retention programmes must resonate with a brand's consumers and customers. They have to sing in harmony, and where possible enhance and amplify, the creative direction set out for the brand.
This creative direction, the tone of voice, look and feel and integrity of vision and values, is the context and instruction for how all communications must work. By focusing on the practical, technical, commercial and process aspects of marketing it's a shameful reality that occasionally these things get lost in the drive for results and ROI. Creative thinking provides the glue for all of marketing. Over the last few years, as CRM has blossomed, the most successful programmes have been produced by clients and agencies that have deep creative capability - not as lead, that's for the brand agency, but as interpreters. Why? Because interpreting brand values for the kinds of channel eCRM now makes use of – social media, email, mobile, direct – takes clever interpretive abilities that are execution-oriented. The great creatives take the grand work of the advertising partner and deliver it to individuals on the ground, during the customer journey, matching it to the consumer's transient need states as they travel along the relationship with the brand.
CRM is established as an equal partner to advertising, where it has effectively become the engine room of marketing thinking. It took eleven years. It's time marketers looked up and worked out what the Next Big Thing is.
I don't think it will be any surprise that it's already shaping up to be about partnering, collaborating with and accompanying customers for their entire lifetime, in every channel, in ways that are relevant and – critically – appropriate. CRM implies retention, data, direct, pushing customers along the journey we have defined for them. The new approach requires creative engagement enacted by the brand following the customer, not the other way round.
It requires multichannel or omnichannel thinking, holistic relationship building. It's called Total Customer Engagement and it's been here already for a few years. It is the next big wave. When you've got eCRM or CRM sorted (and you will need to have it nailed down before you can start) you can take a few short steps to transform it into the next big driver of your business as the economy dusts itself off.
Showing posts with label ROI. Show all posts
Showing posts with label ROI. Show all posts
Friday, 14 March 2014
Tuesday, 29 January 2013
Evidence-based marketing: myth or reality?
Apparently a Facebook ‘Like’ is worth £7. Isn’t that brilliant? If you have a hundred thousand followers that makes your social media strategy absolutely rocking news. The question is, says Felix Velarde of digital CRM agency Underwired, how many of you really believe it?
We ran a campaign for an FMCG client a while ago, in which we emailed a segment in the customer database using very specific messaging – it was relevant, timely and well-designed. The click-through rate (CTR) of 88% was staggering in anyone’s book. I’d like to say every campaign we run gets that kind of result, but occasionally we crash and burn too. Anyway, wow, what a great result. But what does it mean?
The digital marketing industry seems to be founded on metrics and key performance indicators (KPIs) of variable – if not downright dubious – quality. If you judge any of the industry awards you will know that half the entries benchmark against industry standards which in a lot of cases appear to have been made up on the spot: “Campaign X achieved a CTR of 12.3%, beating the industry standard 8% and therefore deserving of a Gold.”
This is where I have the first of my issues: even if there *is* an industry standard click-through rate, does it really apply to your campaign? Our campaign got an 88% CTR because it was highly targeted to a known audience expecting the email with a fantastic proposition. If it had achieved 12.3% or even 24.6% it would have been a failure. The truth is that no matter what the CTR is, one thing it is not is evidence of anything that isn’t either subjective (“I say, that’s awfully good isn’t it?”) or comparative (“Blimey, did much better than last time!”).
The second of my issues is that all these benchmarks aren’t evidence of sales. And hard revenue really is the only figure that ever matters (and before you ask about brand consideration or sentiment, these are both abstractions of sales – higher brand consideration may imply higher resulting sales, though you’d have to test it to find out if it’s really useful). So what is the *evidence* behind the assertion of success? How do you track from the planning phase through the campaign, to the reality of the effect on sales?
Well, it’s pretty easy in e-commerce. Straight-through processing (which is what the financial industry calls tracking the customer from first contact to order) in digital is quite simple these days. Ad tracking (display, affiliate, PPC and natural SEO) is relatively easily linked to website analytics, thence to email service providers (ESP), back to websites and even passing through couponing and promotion systems. It’s been done plenty of times by the big brands, and even small brands can buy integrated services. So if you’re an online retailer it’s pretty straightforward.
If you’re an FMCG brand you can still do it, although you may need to be a little more sophisticated about it. For example, this might mean matching your customer segments to commercially available purchase data and running regular surveys to track buying patterns in your base and cross-checking them against buying behaviour. If you’re a retailer you can find mechanisms to collect customer data and purchase behaviour at Point of Sale and match this data back to the single customer view.
The trick here is to get real data about whether your campaign actually worked, as opposed to seeing floating KPIs that may or may not indicate the same thing – but which provide no scientific basis for decision-making. How many times have you seen “successful” campaigns stopped? There’s a simple reason: there was no evidence to show they generated a profit. If there had been and they had produced £26 for every £1 spent, nobody in their right mind would stop them. Evidence is critical. Myth or reality? Evidence-based marketing is the only thing you should be *allowed* to do!
We ran a campaign for an FMCG client a while ago, in which we emailed a segment in the customer database using very specific messaging – it was relevant, timely and well-designed. The click-through rate (CTR) of 88% was staggering in anyone’s book. I’d like to say every campaign we run gets that kind of result, but occasionally we crash and burn too. Anyway, wow, what a great result. But what does it mean?
The digital marketing industry seems to be founded on metrics and key performance indicators (KPIs) of variable – if not downright dubious – quality. If you judge any of the industry awards you will know that half the entries benchmark against industry standards which in a lot of cases appear to have been made up on the spot: “Campaign X achieved a CTR of 12.3%, beating the industry standard 8% and therefore deserving of a Gold.”
This is where I have the first of my issues: even if there *is* an industry standard click-through rate, does it really apply to your campaign? Our campaign got an 88% CTR because it was highly targeted to a known audience expecting the email with a fantastic proposition. If it had achieved 12.3% or even 24.6% it would have been a failure. The truth is that no matter what the CTR is, one thing it is not is evidence of anything that isn’t either subjective (“I say, that’s awfully good isn’t it?”) or comparative (“Blimey, did much better than last time!”).
The second of my issues is that all these benchmarks aren’t evidence of sales. And hard revenue really is the only figure that ever matters (and before you ask about brand consideration or sentiment, these are both abstractions of sales – higher brand consideration may imply higher resulting sales, though you’d have to test it to find out if it’s really useful). So what is the *evidence* behind the assertion of success? How do you track from the planning phase through the campaign, to the reality of the effect on sales?
Well, it’s pretty easy in e-commerce. Straight-through processing (which is what the financial industry calls tracking the customer from first contact to order) in digital is quite simple these days. Ad tracking (display, affiliate, PPC and natural SEO) is relatively easily linked to website analytics, thence to email service providers (ESP), back to websites and even passing through couponing and promotion systems. It’s been done plenty of times by the big brands, and even small brands can buy integrated services. So if you’re an online retailer it’s pretty straightforward.
If you’re an FMCG brand you can still do it, although you may need to be a little more sophisticated about it. For example, this might mean matching your customer segments to commercially available purchase data and running regular surveys to track buying patterns in your base and cross-checking them against buying behaviour. If you’re a retailer you can find mechanisms to collect customer data and purchase behaviour at Point of Sale and match this data back to the single customer view.
The trick here is to get real data about whether your campaign actually worked, as opposed to seeing floating KPIs that may or may not indicate the same thing – but which provide no scientific basis for decision-making. How many times have you seen “successful” campaigns stopped? There’s a simple reason: there was no evidence to show they generated a profit. If there had been and they had produced £26 for every £1 spent, nobody in their right mind would stop them. Evidence is critical. Myth or reality? Evidence-based marketing is the only thing you should be *allowed* to do!
Friday, 22 June 2012
How to measure ROI for email campaigns
ROI isn’t just about measuring. In times like these, to be brutally honest, it’s about winning.
ROI (Return on [Marketing] Investment) really needs to be measured in financial terms to make the sort of sense your Financial Director wants to hear, although if you look at ‘value’ as the output, value can be defined in a number of ways. You could for example define value by how likely a customer is to speak highly of you, though it’s almost impossible to establish a financial value to this. Some of the wilder social media agencies will tell you a Facebook “Like” equals £10, which is every bit as useful as a Tweet being the same as a gumboot!
For simple - monetary - ROI, there are two approaches. You can either track your customer all the way to a completed online sale, or track changes in behaviour against a benchmarked control.
You can add a time dimension to this too by looking at the long-term value of a customer - the Customer Lifetime Value (CLTV) - which may be very different to their short-term value. If you’ve ever subscribed to TM Lewin or Richer Sounds emails, where there’s a constant barrage of sales until you capitulate, you’ll know all about balancing an increase in short-term spend against burn-out. In other words, milking the customer too hard usually increases churn... I may buy three times in quick succession but then you’ll lose me forever.
A customer must, by law, have opted in to your email communications, so you know who they are and, provided your email service provider has half-decent tracking and you can tie their purchases to emailed call to action, then you can see the ROI immediately - you spent X on the campaign, which drove Y sales. Presuming you spent less than the extra profit you generated, it’s probably worth doing again. Over time you can then see curves of drop-off in response and optimise your communications accordingly.
Tracking against a control (or baseline) requires a scientific approach and segmentation (perhaps low, medium and high spenders, defined by behaviour, demographics and motivation). This kind of approach will give you the means to track changes in purchase behaviour and attitude towards your brand over time – powerful stuff, In practical terms, if you have a benchmark (for example Tesco data) then you can compare your audience with Tesco’s and factor out TV campaigns and see the actual effect your email campaign is having.
You’ll probably be able to ascribe certain characteristics to a set of customer segments, for example average purchase frequency, average transaction value and CLTV. (For what it’s worth, you’ll nail 80% of everything you need to achieve with segmentation in around six or seven key segments.) If there’s a clear difference between the reactions of two segments to your campaign, for instance if one segment responds by spending twice as much every month, then you can probably guess which segment to spend the most money on.
This approach also tells you where to spend your advertising budget, because obviously you want more people like them... and conversely you can stop spending money on acquiring more people into the lowest performing segments.
Taken only at its face value, ROI is about working out what you got in return for what you spent. But it’s so much more: it leads you from email marketing to eCRM, and that’s a transformational shift. ROI is about gaining an understanding so you can spend less on low profit customers and more on high profit customers. When you do that, you start winning.
ROI (Return on [Marketing] Investment) really needs to be measured in financial terms to make the sort of sense your Financial Director wants to hear, although if you look at ‘value’ as the output, value can be defined in a number of ways. You could for example define value by how likely a customer is to speak highly of you, though it’s almost impossible to establish a financial value to this. Some of the wilder social media agencies will tell you a Facebook “Like” equals £10, which is every bit as useful as a Tweet being the same as a gumboot!
For simple - monetary - ROI, there are two approaches. You can either track your customer all the way to a completed online sale, or track changes in behaviour against a benchmarked control.
You can add a time dimension to this too by looking at the long-term value of a customer - the Customer Lifetime Value (CLTV) - which may be very different to their short-term value. If you’ve ever subscribed to TM Lewin or Richer Sounds emails, where there’s a constant barrage of sales until you capitulate, you’ll know all about balancing an increase in short-term spend against burn-out. In other words, milking the customer too hard usually increases churn... I may buy three times in quick succession but then you’ll lose me forever.
A customer must, by law, have opted in to your email communications, so you know who they are and, provided your email service provider has half-decent tracking and you can tie their purchases to emailed call to action, then you can see the ROI immediately - you spent X on the campaign, which drove Y sales. Presuming you spent less than the extra profit you generated, it’s probably worth doing again. Over time you can then see curves of drop-off in response and optimise your communications accordingly.
Tracking against a control (or baseline) requires a scientific approach and segmentation (perhaps low, medium and high spenders, defined by behaviour, demographics and motivation). This kind of approach will give you the means to track changes in purchase behaviour and attitude towards your brand over time – powerful stuff, In practical terms, if you have a benchmark (for example Tesco data) then you can compare your audience with Tesco’s and factor out TV campaigns and see the actual effect your email campaign is having.
You’ll probably be able to ascribe certain characteristics to a set of customer segments, for example average purchase frequency, average transaction value and CLTV. (For what it’s worth, you’ll nail 80% of everything you need to achieve with segmentation in around six or seven key segments.) If there’s a clear difference between the reactions of two segments to your campaign, for instance if one segment responds by spending twice as much every month, then you can probably guess which segment to spend the most money on.
This approach also tells you where to spend your advertising budget, because obviously you want more people like them... and conversely you can stop spending money on acquiring more people into the lowest performing segments.
Taken only at its face value, ROI is about working out what you got in return for what you spent. But it’s so much more: it leads you from email marketing to eCRM, and that’s a transformational shift. ROI is about gaining an understanding so you can spend less on low profit customers and more on high profit customers. When you do that, you start winning.
Friday, 17 February 2012
Identifying and prioritising quick wins in email marketing and eCRM
In a recession the pressure on marketers can be intense - more bang is needed for less buck, and every penny has to be justified. Boards and Finance Directors are constrained by a natural conservatism, based on the desire in the uncertain financial climate to de-risk as much of the business as possible.
On the other hand, there's an imperative towards cheaper, more auditable marketing channels. In theory, digital presents the greatest opportunity. For example, if your company traditionally uses direct mail to communicate with your customers, there are instant savings to be made simply by switching from post to email: if you're sending 100,000 mailers out, with each costing 50p in print and postage, then the switch to email will save you an instant £40,000, and probably £45,000 the second time you do it.
But, and it's a big but, if you don't know where to start, then making this kind of switch can be fraught with costly mistakes and a fair amount of fumbling. Making decisions about what to do requires intelligence, experience and a clear view of what the expected returns are likely to be, and that's difficult for most marketers new to channels like eCRM (Email Customer Relationship Marketing). Whilst the conversion from postal to digital seems like a no-brainer, in practice, your brand and your customers may not be suited to email at all, and you may have a major flop on your hands if you make the switch without some testing. ECRM, which provides marketers with - in theory - total tracking from customer to email sent, response behaviour and eventual value, lends itself perfectly to testing and experimentation.
If you want to find out the answer to a yes/no question and you want to test it before you make a decision based on the answer, then you will need a minimum of 383 people in order to get an answer you can be 95% confident, with plus or minus 5% accuracy, reflects your entire database. So if you want to test whether you'll get the same response rate to an email version of your campaign versus your DM campaign, send the email version to 383 people in your database selected at random. If you run segmented campaigns, do the comparison between 383 people in each segment and your control. Only once you've got the answer should you roll out the change across the whole customer base... but by then you will have numbers you can show to the budget holders, which justify the change based on cost savings and minimised risk.
There are of course a number of different things you can tweak to great effect. For example, you could spend money on:
- Improving segmentation
- Improving open rates
- Improving the effectiveness of calls to action
- Switching people from call centre sales to web sales
- Expanding your database.
In my experience, working with brands like Tesco Kitchens, Harveys, Laithwaites Wines and Sony, there are always a number of different changes you can effect. As you can probably tell, I'm a stickler for the numbers; I always want to know what levers I can pull, and what effects that will have on the revenue. Given a variety of possible improvements, all of which will come at some cost, then you clearly need to know what to focus on first. Once we have identified what these opportunities are for a given company, we will always try and attach some numbers to them, and I believe that when you are planning what you do during 2012, when your focus should be on lowering risk and increasing the returns you get from marketing, this is a critical first step.
And in uncertain, recessionary times like these, having confidence in your marketing plan is what differentiates you from your competition.
Wednesday, 2 November 2011
Making sense of the marketing maze
FMCG Magazine, issue 11 volume 13
Why is – and why should it be that – FMCG marketing feels so vague? Everyone thinks the be-all and end-all is the big TV campaign. It takes six months to write, three months to edit, a whole bunch of illustrators, animators, storyboardists and directors’ assistants, a hundred grand in production and a hundred more grand for a slot in Corrie. This elephantine effort would be fine, were it not for one tiny flaw: you know fifty per cent of it works, but you don’t know which fifty per cent. The elephant in the room is accountability, and in today’s climate marketers must, must be accountable, as must their marketing. We’ve come out of a recession, and are wobbling around the edge of a second iteration. Consumer confidence is low, partly driven by what people see in the financial sections of the TV news and partly driven by the doom mongers in the red tops. Businesses like yours aren’t bonkers so there is close scrutiny of every budget from procurement to overheads to manufacturing to marketing. The days of the “Let’s do TV, it works for the big brands” being sufficient justification for the board are over.
There is a second driver at work here: FMCG brands don’t sell to consumers, you sell to intermediaries – Nisa, Bookers, Asda, Tesco. You might argue that they should be doing your marketing for you (in fact, perhaps you should argue; if you spent your TV budget on selling more lines into Tesco they would have a vested interest in pushing your products hard, and yet we have devised ourselves an effective if expensive pull-oriented strategy, presumably because such tactics are too much like hard work). Yet we compete for shelf-space, PoS, the (very) occasional appearance in a promotion or an ad. FMCG brands focus their marketing towards the end consumer, essentially cutting out the middle man and appealing for share of basket. Works beautifully for the supermarkets.
So, two drivers: bypassing the supermarkets to get straight to influencing the consumer, and a terrible lack of clarity about whether this consumer focus can become more focused. Oh, and a third factor: the supermarkets sneakily deciding to launch their own brands (as distinct from own-brand) competing directly with yours. Anyone would think you were in trouble.
Over the past sixteen years – in fact ever since the Snickers® MegaBite online community was created for the brand’s Euro96 sponsorship – digital has become a valid and very useful channel for reaching and engaging consumers. Multi-brand FMCG companies have created websites, communities, games, multimedia, email and mobile campaigns very successfully, if success is measured in awards, media exposure and word of mouth. Over the past ten years, online channels have become properly measurable. The rise of analytics, and analytics specialists, has allowed marketers to track users’ online behaviour in great detail. Marketers are familiar with terms like UX (User Experience), IA (Information Architecture) and User Journeys (a term we appropriated from the supermarkets as it happens). We can drive people to websites, deliver appropriate experiences that support the brand architecture (brand onion, pyramid, pretzel... your ad agency will have its own version), and increase dwell time (the amount of time a consumer spends wandering around, through engagement or confusion, your website).
Digital can track absolutely everything. So it’s slightly surprising that most FMCG brands have not, because they believe they cannot, tracked the value they get from it. In the days when nobody knows which fifty per cent of the advertising works, you would think that having such an auditable medium would be a lifeline.
Digital means a consumer’s activity can be tracked all the way through to a sale. For example, if you sell a tin of beans on your website, we can track a visitor from before they get to the site (their first click on a Google Adword or a banner) through the site, around the site, to the basket and to a successfully concluded sale. We can attribute sales value to visits, which in turn means we can optimise campaigns, spend more on the sources which produce the highest sales, and generally be pleased that you know which fifty per cent is which. We can distinguish good from bad and make commercial decisions based on evidence. And evidence-based marketing is what your board wants.
FMCG doesn’t trust digital in the same way. It’s why, for example, most brand campaigns have a limited shelf-life online, and why websites get replaced with alarming frequency. You’re marketing to the end consumer, but you’re selling indirectly. This perception is common among FMCG marketers: indirect means indistinct. Decision making is therefore down to gut instinct – and how many awards the campaign wins. For me, that makes online marketing for FMCG brands a hopeless case. I want to know how to attribute value, no matter how indirect the sale is.
So let’s discuss a method which means that indirect doesn’t necessarily make it quite so hopeless. We’ve used it over the last four years for McCain Foods.
We started with a database of customers, acquired from a number of sources: bought lists, competition entries, newsletter opt-ins; in fact anywhere we could find data. We cleaned it up, got rid of the stale, unidentifiable, lapsed and suspect data, and created a robust base of legally opted-in people. We put together an email programme. This was pretty simple, consisting of product descriptions, recipe ideas, offers and simple calls to action. This gave us a backbone we could measure, and measure we did.
You will be familiar with the normal email marketing metrics: Open Rates, Click Through Rates and dwell time. We benchmarked the programme, making sure we had some consistency to start off with, so we could run some experiments. The first experiment: when should we send these emails? We sent the same email every couple of hours to a different section of the database to establish which time of day got the best open rates. At this best time of day we sent an email every day of the week to see which day of the week got the best open rates. Inside eight days we had the optimum send time.
The second experiment involved benchmarking against the real world. The assumption was that anyone in the database would be more engaged with the McCain brand than the general population (for obvious reasons: these people have opted in to regular emails, and they are getting regular brand exposure). What we wanted to do was to see if we could affect behaviour over time. Working alongside the brand tracking studies already being performed by Hall & Partners, Underwired created a comparable set of questions to mirror the study, in effect asking the same questions of the database so we could compare database versus general population at start, then after six months.
The results at the start were entirely predictable: 61% of people in the base loved the brand versus 20% in the general population. By the end, after the email marketing programme had been in action for six months, that score had risen to 64%, and in fact the gap had widened to 11%. The programme was clearly driving changes in perceptions of the brand, against a general fall in the advertising-only scores. But still, indirect and indistinct. How do we change this?
The next step for the campaign was to find a value benchmark. This consisted of two distinct phases: first find the comparison data, and second find a way to accurately measure any changes wrought by the digital activity. By using email only, the customer journey was kept very simple, and there was a built-in mechanism for running surveys so we could establish consumers’ shopping behaviour.
First we sourced a chunk of useful data. This came by way of Dunnhumby providing real-world shopper behaviour from Tesco customers; we sought out product choice, average purchase value and purchase frequency.
We continued this stage of the journey into attribution by refining the segmentation of the McCain database. The segmentation was fairly simple: brand engagers, brand resistors, category resistors, neutrals. This was also split demographically. The segmentation was tweaked to exactly match the Tesco shopper profiles so we could accurately compare one with the other.
So what have we found? We have discovered that when we put a person into the eCRM programme, in the first six months their purchase frequency goes up by 3%. Knowing what we know about average purchase value (in £s) and frequency for each segment, we can therefore easily find out not only how much the change is worth within the base, but also how much we should invest in acquiring more people into the database in order to drive ever-increasing incremental profit.
So what does this mean? Well, for one it means we know precisely which segments are worth investing in, how much to invest, and what the sales volumes we drive will be. This makes TV seem vague indeed – we do, now, know how to attribute value even when we’re marketing directly yet selling indirectly. We can justify every penny of the digital marketing budget (or at least that portion that’s spent on auditable campaigns) and, in a recession or in a post-recession world, that means we can be certain that what is being done is being done right.
Thursday, 5 May 2011
Measuring the value of FMCG brand marketing
FMCG marketing is a peculiar art. Brand marketing using consumer channels only incidentally targets the people who buy their products from them (the retailer's buyers) – so marketers are doing the work they might argue they want the retailer to do. In essence, the FMCG brand bypasses the intermediary and reaches out to influence the end consumer, hoping their demand will motivate retailers to decide to stock their products. By way of persuasion, brands use the consumer marketing they do to convince retail buyers that their product will be in demand, so to buy ahead of demand. There's a little inference, quite a bit of assumption, and a sprinkling of hope and magic dust. But perhaps not that much measurement, except well after the fact once the sales figures have come in at the end of the quarter.
This has in fact always been a problem for traditional marketing channels. Advertising has to date been measured using wonderfully vague but industry standard "brand consideration" scores. The numbers in themselves are relatively meaningless, because at bottom it's a benchmarking score, not a value attribution. But it does give us a means of comparing before and after and this with that, provided we can survey a sufficiently representative sample size.
Until the advent of digital, the assumption was that brand consideration and eventual total sales was as much as could be done. With the coming of the web, for e-commerce brands, suddenly it all became very joined up, and we could see the direct results of a call to action on a customer. Once this had been established for campaign-based marketing, marketers moved on to incorporating eCRM - long-term engagement strategies - into the list of activities whose value could be attributed to a tangible commercial result.
For non-ecommerce situations however it has been frustrating that nothing substantially better than brand consideration, the old advertising-oriented KPI, has taken over as the principal yardstick for marketers. The new digital standard metrics that have been added are once again comparative: dwell time on site, page impressions, open rates, click-through rates and recall. They allow some kind of industry and ‘before-and-after’ benchmarking, but contribute little by way of showing us what value a campaign has contributed.
In 2008 McCain Foods, the dominant (read: most successful) frozen potato products manufacturer, started an eCRM programme. The company used segmented email campaigns to try and drive changes in attitude that could be measured over time.
Quite sensibly, they started with brand engagement indicators, improving open rates, click-through rates and dwell time. One of its segments, brand resistors (typified by people who felt the category was unappealing due to perceived wellbeing issues or the brand unappealing due to perceived premium pricing), went from a 14% engagement rate to 63% over the course of ten months - great indicators. But no indication of what this meant in terms of commercial value.
Brand consideration was measured within each segment, and compared to the same scores in the general population. McCain quite quickly proved that engaging people in timely, relevant and meaningful dialogue over time could have a direct effect on brand consideration. The gap between those in the eCRM programme and those not in the programme widened by 11% in ten months. If this kind of marketing was judged in the same way as TV, it was a screaming success. But McCain wanted to go one step further and find a way of attributing actual commercial value to its online marketing. With limited budgets, and a new recession, being able to state that spending £1 generated £26 in incremental sales would be marketing nirvana.
So McCain set about devising a way to measure changes in value driven by its eCRM campaigns. The segmentation was tweaked so it exactly matched the commercially available Tesco segmentation. A Golden Questions Survey benchmarked eCRM programme participants' purchase behaviour (frequency, product choices, average spend per month), and this was compared with the Tesco data corresponding to the same segment. The eCRM programme was rolled out for each segment with relevant, engaging content and offers. And over time the survey was repeated, comparing the eCRM customers' behaviour with their Tesco analogues. In the most engaged segment of around 50,000 people, average purchase frequency went up by 3.1% in six months. Multiplying this rise in frequency by average transaction value showed a staggering rise in incremental revenue over the year. And because it can tell you precisely how much money it makes for every £1 it spends, McCain has invested hugely in expanding its eCRM programme, developing sophisticated new websites and online campaigns. By using some lateral thinking to provide a means to attribute commercial value to FMCG marketing, this peculiar art has finally come of age.
This has in fact always been a problem for traditional marketing channels. Advertising has to date been measured using wonderfully vague but industry standard "brand consideration" scores. The numbers in themselves are relatively meaningless, because at bottom it's a benchmarking score, not a value attribution. But it does give us a means of comparing before and after and this with that, provided we can survey a sufficiently representative sample size.
Until the advent of digital, the assumption was that brand consideration and eventual total sales was as much as could be done. With the coming of the web, for e-commerce brands, suddenly it all became very joined up, and we could see the direct results of a call to action on a customer. Once this had been established for campaign-based marketing, marketers moved on to incorporating eCRM - long-term engagement strategies - into the list of activities whose value could be attributed to a tangible commercial result.
For non-ecommerce situations however it has been frustrating that nothing substantially better than brand consideration, the old advertising-oriented KPI, has taken over as the principal yardstick for marketers. The new digital standard metrics that have been added are once again comparative: dwell time on site, page impressions, open rates, click-through rates and recall. They allow some kind of industry and ‘before-and-after’ benchmarking, but contribute little by way of showing us what value a campaign has contributed.
In 2008 McCain Foods, the dominant (read: most successful) frozen potato products manufacturer, started an eCRM programme. The company used segmented email campaigns to try and drive changes in attitude that could be measured over time.
Quite sensibly, they started with brand engagement indicators, improving open rates, click-through rates and dwell time. One of its segments, brand resistors (typified by people who felt the category was unappealing due to perceived wellbeing issues or the brand unappealing due to perceived premium pricing), went from a 14% engagement rate to 63% over the course of ten months - great indicators. But no indication of what this meant in terms of commercial value.
Brand consideration was measured within each segment, and compared to the same scores in the general population. McCain quite quickly proved that engaging people in timely, relevant and meaningful dialogue over time could have a direct effect on brand consideration. The gap between those in the eCRM programme and those not in the programme widened by 11% in ten months. If this kind of marketing was judged in the same way as TV, it was a screaming success. But McCain wanted to go one step further and find a way of attributing actual commercial value to its online marketing. With limited budgets, and a new recession, being able to state that spending £1 generated £26 in incremental sales would be marketing nirvana.
So McCain set about devising a way to measure changes in value driven by its eCRM campaigns. The segmentation was tweaked so it exactly matched the commercially available Tesco segmentation. A Golden Questions Survey benchmarked eCRM programme participants' purchase behaviour (frequency, product choices, average spend per month), and this was compared with the Tesco data corresponding to the same segment. The eCRM programme was rolled out for each segment with relevant, engaging content and offers. And over time the survey was repeated, comparing the eCRM customers' behaviour with their Tesco analogues. In the most engaged segment of around 50,000 people, average purchase frequency went up by 3.1% in six months. Multiplying this rise in frequency by average transaction value showed a staggering rise in incremental revenue over the year. And because it can tell you precisely how much money it makes for every £1 it spends, McCain has invested hugely in expanding its eCRM programme, developing sophisticated new websites and online campaigns. By using some lateral thinking to provide a means to attribute commercial value to FMCG marketing, this peculiar art has finally come of age.
Friday, 29 January 2010
High ground for brands in a W-shaped recession
This is my first blog post for a few weeks, because I've been busy. I've actually been busier with pitches than I've been for more than a year. And quite evidently I am not alone. There's something in the water I think.
It's generally at this time of year that the pitches for the new year are well out of the way. We used to win our big accounts either just before Christmas or just before the other financial year starts in April. This year is different for us, and we've seen a surge in pitch work for eCRM actually happening in January. We think there's a logical explanation for this, and it comes down to the great typographical recession debate that's been going on for the past few months: is this a U, V or W-shaped recession?
If you are a marketer, then the past year of austerity has probably been quite trying. Selection for auditable marketing – eCRM and DM while a no brainer for some, has been held up by (respectively) lack of experience and expense. ECRM is cheap and responsive, works beautifully for retail and FMCG, and generates monetary returns, but very few companies have done it so in times of restriction and risk aversion new forays were rare. DM is proven and runs on the same principles as eCRM, but it's extremely expensive and lumberingly slow (not to mention impossible to port directly to digital because it requires native digital community experience). The most logical path for marketers has therefore been difficult to take.
But a year without engaging consumers with either big budget media or small budget retention marketing is dangerous. Smaller nimbler brands can operate with startup mentality and gain a disproportionate step up. A year after budgets stopped, a year during which eCRM has proven itself with spectacular achievements for foresightful adopters, marketing budget holders are facing a situation where we're either in recovery having reached the other side of the V or U, or at the very least on a temporary island in the middle of the W.
It's time to re-engage with customers and at the very least reinvigorate relationships with them. If it's the W then there's a window of opportunity. If we're out of recession (and personally I find it difficult to believe there won't be a backwash from the debt that's been stacked up to facilitate quantitative easing – let alone the poke in the eye that repairing the country's potholes is about to deliver), then it's time to spend. And clients are doing just that. Cautiously to be sure, and only on things that can be proven to work.
Marketers have been dabbling in eCRM. It's now time to take the plunge. The worst that can happen is that it does turn out to be W-shaped, but brands will have reconnected with customers at a critical time to ensure they stay brand loyal during the next leg of hardship. The best that can happen is that the process of spinning up extraordinary loyalty early means a spectacular resurgence in sales.
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