by Jim Lenskold
Using Strategic Measurements to Boost Effectiveness
Marketing measurements are heavily concentrated on the tactical side of marketing. Results tracking and other forms of measurement are used to attribute responses, sales and other outcomes to specific tactics. This focus is not surprising since daily management activities are dominated by developing and managing tactics. Tactical measurements provide good insight into what’s working, which often fulfills the need for campaign reporting. Strategic measurements go beyond what is working to address why marketing is working or not working, who are better targets, what alternatives can be more effective and where are the untapped opportunities.
Marketers can improve their strategic measurements by asking four questions that will frame out their measurement objectives:
- Why is marketing working or not working?
- Who are the best targets?
- What alternatives can be most effective?
- Where are the untapped opportunities?
Why is Marketing Working or Not Working?
Results tracking tends to evaluate each tactic separately, assigning credit for the expected outcome – response, engagement or sale – to a single tactic or some arbitrary allocation across tactics (see the article “Measuring the Impact of Multi-Touch Marketing” for more on attribution). However the marketing strategy is designed so target segments receive a stream of contacts from diverse marketing tactics in order to drive behaviors and sales.
Strategic measurements are needed to close the gap and better guide decisions aligned to the planned multi-contact strategy.
- Measure the incremental contribution of specific tactics to determine if there is influence in the buyer’s decision process regardless of the response directly associated with that tactic.
- Model the overall marketing mix to identify the primary drivers contributing to sales
- Test the synergies of multiple tactics by varying the integrated set of tactics in different markets or time periods.
- Test the contact timing and frequency to better align tactics and maintain buyer velocity
- Test the influence of messaging, content, and offers on the collective contribution from integrated marketing
Who are the Best Targets?
Targeting is the primary driver of marketing performance and ROI. Additional insight is especially critical if tactical measurements are evaluated on responses or engagement (including leads generated), without detail on sales conversion and customer value. This is common practice when there is a long period of time between a marketing outcome and sales conversion. The same information gap exists when new sales are quantified but incremental customer value comes over a long period of time. Targeting better contacts requires good projections of sales conversion and customer value.
Measurements must identify those marketing initiatives that are better at generating leads or engagement with quality contacts more likely to convert to buyers and more likely to be higher-value customers. There are three approaches to assessing current contacts based on projected conversion and value, progressing from very basic to more sophisticated.
- Assess historical performance by marketing source. Different tactics attract different types of buyers so an assessment of conversion rates and customer value based on past outcomes is a starting point. This approach does not provide insight into improvements that would make a tactical channel more effective.
- Identify key indicators through data mining. Analysis to compare segments that convert at a higher rate to those with lower conversion rates, or higher value segments to lower value segments, can identify the characteristics of contacts that align to each. For example, if high value segments are more likely to; come from select geographic areas, have higher levels of income or revenues, and have certain prior purchase patterns, then marketing programs that generate response and engagement with those types of contacts should have a higher projected value. This approach is based only on visual correlations but will assess marketing outcomes to move directionally toward better performance.
- Run predictive scoring for more precise projections. Predictive models consider many data points to provide a more accurate projection that could not be achieved by visual data mining. Marketing responders can be scored to determine the expected conversion rates and customer value, detecting smaller differences in effectiveness improvements within and across tactics.
Keep in mind that these projections are more valuable and actionable if run separately for conversion rates and customer value.
The following two examples show how these projections support marketing decisions. Without projections, marketing evaluation can only be based on quantities and cost.
* In this example, responders can be defined as actively engaged contacts or leads generated.
With projected outcomes, the decisions reflect responder quality.
Using the first chart showing cost per response, a marketer with an additional $15,000 in budget will invest in more white papers to generate the highest response. But the additional detail in the table with projected outcomes shows that the two programs with the highest cost per response – an integrated program combining Webinars and white papers and Executive Events – generate higher ROI based on being more effective at attracting and converting better responders.
What Alternatives Could Work Better?
Marketers intent on improving marketing effectiveness must adopt the mindset of constantly seeking alternatives to outperform their current plan. Measurements are designed to test alternatives in campaign strategies, spending levels, the marketing mix (changing the intensity and presence of different tactics), offers, and messaging. Without testing alternatives, marketing is betting its success on a single marketing plan and, if it fails to produce the desired results, has no insight to recover. With testing in place, the ongoing learning has the potential for improvement even when marketing is successful. As I covered in the article “Experimenting Your Way to More Effective Marketing,” spend 70% to 75% on your core marketing and use the balance on strategic alternatives will allow for testing of critical marketing program changes.
Where are the Untapped Opportunities?
One of the most significant forms of strategic measurement is in the assessment of overall customer behavior, independent of any specific campaign or tactic. Measurement of the buyers’ purchase funnel to identify key leakage points and gaps in marketing performance provides insight into where untapped profit potential exists. Measurement across key funnel stages is derived through a combination of tracking customer interactions, collecting customer intelligence, and survey research to understand progression and leakage drivers.
Funnel performance measurements that identify gaps can be quantified through an ROI analysis to support the development and testing of new or modified tactics. Measurement of these new or modified tactics can concentrate on a specific outcome based on closing a specific funnel gap. For example, your funnel measurement may identify that there is a high leakage point between attending a Webinar and moving into the stage of research and active buying. Your strategic options may include improving the target for Webinars, changing the content, or adding a new tactic shortly after the Webinar. Measuring the change in funnel progression from Webinar attendance to research and active buying will be the first indication that effectiveness has improved.
Putting more of your resources and effort into strategic measurements will have much greater impact than relying on tactical measurements alone. There are opportunities to better understand the effectiveness of integrated marketing and targeting, test alternatives and assess the collective impact on the buyer’s funnel progression. The first step is to determine which questions most need to be addressed to guide upcoming marketing decisions. Take a look at your current measurements and establish a prioritized list insights needed for more significant improvements in effectiveness. More strategic measurements will provide a good balance to the tactical measurements already in place.