The Cost of Information
There’s no shortage of marketing reports (MI reports, trading KPIs packs, customer dashboards, etc.). Whilst these can be useful, they tend not to cover the specific disciplines that must be in place when measuring the impact of particular 1-2-1 marketing activities. Most business dashboards track high-level measures, reporting on overall trends and KPIs. However, they are unlikely to generate detailed measurement of specific 1-2-1 marketing activities, primarily because the impact of individual initiatives is often lost in the overall mix of wider marketing programmes when looking at high-level metrics.
Having a proper measurement framework in place is key to understanding your 1-2-1 marketing investment, but it does come at a cost:
- Investment in data and systems to capture and store data that drives the metric generation
- Marketing focused analysts to interpret the results and present clear recommendations
- Comparable control groups that did not receive the message (or offer), which means that some customers will not buy the product or will not be retained
This is a commercial cost and this is the ‘cost of information’. This is the real price of effective measurement and campaign insight. Whilst this may impact short term commercial objectives, it drives corporate learning and a programme of continual ‘test & learn’ improvement.
Establishing a Measurement Framework
In order to establish a measurement framework for a particular activity, we need to:
- Understand the particular business question or hypothesis that we’re looking to answer
- Identify the change in behaviour that we want to measure (e.g. phone calls, clicks, applications, sales, channel usage, etc.) and the level of accuracy
- Look at ways of isolating the impact of the activity in order to measure the incremental benefit
Central to robust measurement (be that an individual marketing campaign or a customer engagement programme) is the idea of using a correct control cell – failure to create and use an appropriate control cell will seriously harm your measurement. The only difference* between the treatment group (those individuals receiving the message or offer) and the control group should be the factor being investigated (be it offer, creative, channel of communication, etc.). Everything else should be the same, including factors like:
- Customer profile (age, segmentation, geographical region, etc.)
- Propensity score distribution
- Level of general communication (e.g. exposure of other marketing collateral, etc.)
- Time period of measurement
This is generally best achieved when control cells are created by taking an appropriate size random ‘hold out’ sample from your target audience after all data processing work has ceased – this ensures there is no bias. Measurement results can be easily exposed to challenge and scrutiny if a measurement framework is not established and core principles not adhered to. This is the nightmare scenario as it detracts from all the positive project work undertaken. When building a case for further investment, you don’t want to spend time responding to measurement challenges – the results should be clear and robust and hold up to scrutiny.
Fact Based Insight
Poor measurement creates a distraction from the focus of the presentation or paper. This is especially true in the case of a business case for further marketing spend where the audience is often Finance colleagues (who are well versed in the art of numerical scrutiny). Robust measurement ensures the reader’s focus is on the recommendations within the document – the section which will drive business change.
Robust measurement ensures decisions are made on fact based insights, not on opinions of individuals. It ensures that the impact of marketing spend can be quantified and brings robustness to decision making, driving recommendations for future activities.
Measurement is critical. Performed correctly, measurement provides the insight to shape future activity. Appropriate time and effort must be spent on establishing a measurement framework before the marketing activity starts – measurement cannot be an afterthought!
* There are occasions where alternative techniques can be employed such as design of experiments or use of longer term non-contact fallow cells but that’s a discussion for another blog!
David is currently part of the team working with Standard Life to implement their customer engagement strategy and their use of data-driven customer decisioning. Further details can be found from this recent press release:
Senior Consultant at Comet Global Consulting
David is a Senior Consultant within the Strategy & Insights practice at Comet. He is an experienced CRM & customer insight professional, with a passion for delivering customer centric projects using data, systems, analytics & insight. David has 15 years' analytics experience in Financial Services (both in the UK & Canada) and is a keen believer in working with people, whether that’s coaching & developing individuals, working with client teams, or actively participating in his role as a member of the Direct Marketing Association’s Scottish Council.