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.

Email unbound

Everyone thinks of email as being more or less a broadcast medium. Email agencies and bureaux send millions of emails as newsletters every month to addresses lodged in databases. Some send them daily. Noone expects a reply.

But email has a richer use. With apologies for the reminder, but email was the way you had a conversation without picking up the phone. You send a message to your mate, and when they’re ready to answer they do. You can have conversations in real time, or with a delay for timezones, research or holidays. Email involves your counterpart in the decisions about how the conversation is paced, where it leads to, when it changes venue, when you meet up.

We appear to have lost sight of the dialogue. It’s easy to do so: if you’ve got 20,000 address on your database or 800,000, managing dialogue can be a daunting prospect. And notice I said addresses, not customers. More often than not the email broadcasts marketers manage go blind to everyone they can reach. So email gets a bad reputation, and newsletters have dwindling response rates. Where once it thrashed Direct Mail, now response rates are in the lowest single figures.

We all know what the solution is though. Segmentation makes response rates leap.

Imagine you’re sending an email to ten thousand people with three unbeatable holiday offers in it, one for families at the top, one for retired people in the middle, and one for singles at the bottom. And let’s assume that everyone reads the first offer, two thirds read down to the second and a third scroll down to the third. If the audience is equally split between the three target groups, the maximum possible response rate is 6,666.

If we could divide the audience into three segments, and send one email with one offer to each, the maximum possible response rate is ten thousand. That’s a huge difference in effectiveness. If you started with this three-part email, and it really is an unbeatable offer, just by segmenting it you increase your sales by 50%.

So that’s segmentation. Segmentation is a science – one which we practice and improve all the time. It can be really simple like the example above, or it can get very complex. We can segment by, for example, behaviour (what media they consume, do they request a brochure before making a decision, which wines do they prefer), or by demographics (where they live, how many there are in the family, what they earn), or by motivation (whether they are interested in their kids’ health, or the environment, or what their neighbours think). When we start working with a client this is what we address first, by looking at what data is available either in the client’s hands or commercially, because this will give us insights into what messaging might work to drive increased response.

Segmented email marketing is incredibly powerful, but it’s nothing to do with technology, and the technology vendors will always work with specialist eCRM partners with long experience in segmentation strategy to devise the campaigns they deliver for you.

ECRM adds something really special to all this. ECRM is channel-agnostic, in other words it’s concerned with reaching the customer wherever they are - email, SMS, social media or websites. A great eCRM strategy uses every touchpoint available to deliver the right messages for the right moment in the decision-making cycle to the right person. ECRM leverages segmentation through email, but creates a relationship through observing how customers behave and what they find most motivating by  tracking across every digital venue, mobile to landing pages to social media, and that’s when email marketing becomes something different, something which transforms businesses through radical changes in revenue.

De-fragmenting Digital

Most clients have a web agency, an online media agency, an online advertising agency... Some have an email delivery platform, or an email marketing agency, SEO and PPC specialists. And then the advertising agency or the sales promotion agency do tactical stuff (virals and vouchers, gobbling money to little useful gain). You might have some of these, or work for one.

Most clients spend lots of time getting their agencies to improve what they’ve got by 3%. That’s a 3% better website, or a 3% better performing ad campaign. It’s all, from what I can see, very tactical, very incremental, deeply fragmented.

But we’re in a recession, and it’s just not good enough. There’s a huge opportunity to think again, to take stock and look around at what’s possible today, not what was possible five years ago when you started on the road to improvement. Today customers expect to have a voice, they expect you to listen to their needs, observe their behaviour and deliver them relevant, timely brand-engagement-inducing nudges and touches, wherever they are, online or off.

ECRM offers a slightly different way of looking at things, provided you define eCRM as a strategic approach rather than an executional method. It requires that you head back into the customer data, evaluate all the touchpoints you currently have - the website, ads, emails, SMS, social media - and create a strategy that is designed not to have the most engaging website, but the most engaging customer journey. This way you become channel-agnostic, and digital execution becomes subservient to how you relate to your customers, not the other way round.

It’s worked particularly well for companies like McCain Foods who’ve turned digital on its head and are now having a single conversation across several different channels. Brand engagement with brand resistors has gone up from 14% to 63% in ten months, which is staggering.

Using a top-down strategic view doesn’t mean getting rid of your agencies, it just means they’ll all be working to a single over-arching strategy, rather than just doing the best they can do in their niche. It means you get a coherent plan that can be delivered as usual through segmented email or segmented microsites, but is flexible enough to incorporate new channels (like social media) as they emerge.

All digital de-fragmentation takes is a little strategic thinking, but what it leads to can be revolutionary.

This post first appeared on my Revolution Blog on BrandRepublic.