Around the world, marketing professionals working with brands large and small are facing a problem.
It’s never been easy to measure marketing impact and quickly find ways to drive a higher ROI, and what makes the situation worse is that many of the tools upon which we rely were developed when we were primarily marketing on a handful of television networks, on a few radio stations and in local newspapers.
The challenge has only grown with the proliferation of entertainment and news options available with cable television, non-terrestrial radio, email, social media and the myriad distractions popping up almost every day.
Where we stand today
“We still don’t have a consistent view of the customer,” Gartner analyst Christi Eubanks told me in a recent conversation. She believes that this perspective is critical if we want to “optimize spend, increase attention, and maximize satisfaction.” This failure to get a “consistent view of the customer” can cause significant challenges when marketers look to maximize the performance of their marketing mix.
The challenge is simple to understand, but, until recently, difficult to solve. Marketers have a view of call center performance. They get reports galore on email marketing open rates. They receive click-through rates for digital and gross rating points (GRP) for measuring TV campaigns. Their point-of-sale (POS) systems deliver retail sales numbers and brand tracking studies to help them assess awareness. They have net promoter score surveys to gauge consumer satisfaction.
Marketers are managing their business by these metrics — so why would a consistent view of the customer be necessary? The Marketing Mix Models aren’t fast or detailed enough. Digital Attribution lacks a holistic media view. Datamanagement, analytics and optimization need to be connected to systems to implement action.
For example, let’s say your display marketing manager is laser-focused on generating online sales. Measuring display advertising performance based on its ability to drive e-commerce seems a logical connection. However, if you’re selling both on your website and in retail locations, this approach may fail to measure the impact online display has on sales at your brick-and-mortar locations.
Without a consistent view of the customer, you may miss the insight that display advertising with coupons was converting because of interaction with the TV campaign running at the same time.
Even organizations that have historically been analytics thought leaders find themselves challenged to evolve their companies’ measurement approaches. Often, marketing managers don’t have visibility or control over every consumer interaction. Therefore, it is tempting to hold managers accountable based upon indirect proxy metrics — a click, GRP, an immediate sale or something that is narrow and easily measured.
Inertia from old methods has become a trap for some. On the one hand, marketers know that they have to be masters of data-driven decision-making. On the other hand, there are real challenges that must be overcome if a company wants to move to a unified system of measurement that encompasses the entire consumer journey.
Mark Greatrex, CMO at cable TV company COX Communications (and a client of my company), recently shared his perspective on the challenge. In their retail stores, the COX team learned that focusing on narrow conversion metrics incentivized behavior that hurt overall sales.
The company failed to appreciate that their retail team members might be closing a transaction with one customer and educating another customer about the benefits of their solutions. The focus on conversion failed to recognize the need for customer education. They had to look at the consumer journey and meet the consumer at the point in the journey with the support that mattered most. This shift in thinking allowed the COX team to optimize their efforts to overall sales of the store rather than the short-term selling behavior of each staff member. In doing so, they increased sales overall.
COX isn’t the only company working to overcome the pernicious, limiting conclusions of siloed measurement. Leading brands are finding that the old way of measuring marketing performance are restricting overall marketing ROI and failing to uncover the hidden opportunities to leverage interaction effects between channels.
Outlined here are some specific pitfalls from real-world situations, though the companies involved will remain anonymous.
Failing to link email marketing to overall sales
In one fashion retailer’s efforts, the email marketing manager was focused exclusively on the company’s ability to drive sales through its online store. This well-meaning team member was blasting out emails to chase a few more online sales.
As one might anticipate, open rates for the additional emails were declining, but they were driving incremental sales to the e-commerce site. The problem was that the majority of this company’s sales were happening in brick-and-mortar locations.
Unfortunately, the team wasn’t measuring the impact of email on offline sales. Without a consistent view of the customer, and with a siloed focus on the immediate online sales, nobody saw that the declining open rates of the additional email blasts were hurting open rates and costing the company 3x more sales than it was generating.
Inability to link price promotion to incremental sales
Marketing Mix Modeling is notorious for losing sight of the consumer. One OTC pharmaceutical company’s brand manager could see that lowering price drove higher sales volumes.
Unfortunately, this siloed approach can’t reveal whether this consumer would have bought at a slightly later date at full price (and profitability). Rather than managing for lifetime value, the brand offered two-for-one promotions and turned loyal customers into repertoire buyers that were only loyal to the deal.
Longitudinal analysis showed that the overuse of promotions eroded profitability. The brand didn’t make any additional sales; they only succeeded in getting consumers to pull forward purchases (pantry loading) at a lower price than they would have paid had they optimized from a customer journey perspective.
The immediate increase in sales driven by price promotions was hurting overall revenue.
Need to tie messaging to the lifetime value of customers
One credit card company had been declaring success based on the immediate take rate for their card. As many do, this company was using various offers including cash awards, airline miles and direct appeals to the lifestyle benefits of the card.
The company’s original measurement of success, based on the initial customer acquisition, made it look like cash awards were the best driver of new accounts. Fortunately, this credit card company tracked conversion data from credit card offers over the course of a year.
While cash awards won the immediate “new card” issued contest, it was the focus on the benefits of the card, without cash or airline miles, that won the profitability contest. The lifetime value of customers who had responded to lifestyle messages trumped the short-term gains of creative that focused on cash awards.
On one level, it is intuitive that we should want a consistent view of consumers. On another level, we have to recognize that we must help members of the marketing team better understand their contribution to success. Employing fractional attribution that looks at the complete customer journey, as well as applying empirical analysis, can help.
In this world of fragmented media and consumer attention, those who rely on customer-centric, consumer-journey driven decision-making will have a real competitive advantage in the marketplace. Today’s solutions generate insights in such a timely fashion that nimble marketers can incorporate them into active campaigns to drive massive performance improvements, rather than waiting for weeks or months to see results.