Lecture 10 Flashcards
Our Journey…
The importance of data
How to collect
Customer Data
DMP
Marketing
Technology Stack
Channels, Ad
Platforms, Search &
Modelling, EXO, I&A
How to evaluate
success?
56% of organizations report __ their marketing technology
underutilizing
21% of companies have platforms or tools they’ve purchased that
aren’t being used at all
Only __ of marketing departments say they have all of the marketing tools they need and fully use them
9%
How to Evaluate Martech (1)
What type of Marketing effort are we evaluating?
- Marketing Execution
- Marketing Operations
Marketing Execution
- Content Production
- Websites
- Online & Offline channels
- Direct Marketing
Marketing Operations
- Management of BI,
reporting, dashboard & KPIs - Production planning,
workflow and collaboration
How to Evaluate Martech (2)
What is the objective of
our evaluation?
Measuring Accountability
- Impact Evaluation
- Cost/Benefit Analysis
Impact Evaluation
- How does the martech improve our knowledge & reporting processes?
- Are insights actually implemented?
- Do recommended changes lead to better performance?
- Do users enjoy increased data accessibility or productivity?
Cost/Benefit Analysis
- What are costs and resources required for implementing or maintaining martech?
- What are the quantifiable benefits in terms of time, resources, and cost
savings? - Is the martech ROI positive?
How to Evaluate Martech (2)
What is the objective of
our evaluation?
Lesson Learning
Needs Assessment
Process Evaluation
Needs Assessment
- Does every team get the required data for good decision making?
- Does every team feel they have the right tools at their disposal?
- What was the original need for the martech?
- Do teams understand how to use it?
Process Evaluation
- How well is the martech working?
- Is it being used as originally intended or designed?
- How successful is or was
implementation? - Are workflows more efficient?
How to Evaluate Martech (3)
Does Martech pass our
success threshold or
meet expectations?
- yes
- no
6 Keys to Successfully Evaluate MarTech
Is there an associated (and robust) community?
What are the all-encompassing costs?
What will ROI look like?
How extensive is the support offered?
How does the functionality align to your goals?
Does this brand have an innovation mindset?
Is there an associated (and robust) community?
The community around a software is almost as import as the software itself
What are the all-encompassing costs?
Go beyond the base cost and
review all far-ranging expenses associated to it
What will ROI look like?
After calculating real costs also define a real
return on this investment and its feasibility
How extensive is the support offered?
In addition to customer service,
evaluate what kinds of free resources the company offers
How does the functionality align to your goals?
Clearly articulate
your goals and define benchmarks to measure against and
accomplish within the first 6-12 months
Does this brand have an innovation mindset?
Evaluate the software
provider ability to innovate, martech is an evolving space with evolving needs
Knowing how to measure the success of Martech deployment is fundamental to
achieve its greatest benefits
At the start of any initiative, it is important to identify all __ __ __ along with the metrics and personnel needed to quantify them
potential impact areas
In addition to traditional measures (i.e. usage, business continuity, revenue
impact, etc..) measures such as __ should also be developed
innovation, time to problem resolution, and customer-focused metrics
Marketing’s main purpose is to
find, keep and grow the value of customers
Customer related metrics must be part of
the equation
(i.e. churn rate, avg $ per customer,
up sell/attach rate)
Define how will we measure the success of the initiative in terms of how it will
help Marketing/Sales/Customer Service to
acquire more customers, grow the customer base or retain most profitable customers
How to Create Martech Customer Metrics
- Hold a brainstorming session to identify at least one customer metric
(specific and concrete) for each zone - Evaluate each metric based on data obtainability, linkage to company
goals and estimated financial impact - Select metrics with highest score on all 3 criteria for measuring the success
of the technology implementation
To move forward on your technology strategy with confidence an assessment
of Martech is needed to
obtain insights on which tools should stay, being
replaced or improved
Martech Assessment
Integration
Adoption
Usage
Impact
Integration
How well the system is
integrated to other tools within the MarTech
Adoption
How well the system’s
capabilities are being
leveraged by the team
Usage
How much time and resources is spent using the system
Impact
System’s impact on helping a
company achieve its marketing objectives
To ensure vendors can deliver on expectations and help meet marketing
objectives, companies should review 4 areas during the evaluation:
Automation
Data Sophistication
Cross-Channel Capabilities
Analytics & Reporting
Automation:
The most robust platforms leverage automation,
perhaps via artificial intelligence, to helps businesses execute
programs at scale
Data Sophistication:
Determine what data the vendor is using to make decisions (such as your data, third-party data or their own)
Cross-Channel Capabilities:
Determine if the solution is capable of
executing marketing programs across all channels (i.e. email,
website, paid digital media, social media, etc…)
Analytics & Reporting:
How the vendor or tool will deliver results. Ensure insights are useful and enable you to measure elements that impact your business objectives
Success metrics _ across the Martech (i.e. consumption, retention, engagement, lead, etc…)
vary
Consumption Metrics
Used to evaluate the effectiveness of content marketing activities
How many people are viewing/downloading your content?
How much time are they spending reading your content?
Common Consumption Metrics
- Page Views: total number of pages viewed
- Unique Visitors: also known as users, provides the audience size
- Avg Time on Page: how much time users spend on the website
- # of Downloads: how many people took time to fill out a form to access gated content on your website
Retention Metrics
Used to evaluate how well content is able to retain existing visitors
How many users come back to consume your content?
How often do they come back?
Common Retention Metrics
- Bounce Rate: % of visitors who leave the website after viewing
only one page. A high BR indicates not compelling content - % New vs. Returning Visitors: If % of returning visitors is higher than
the % of new visitors, your content is doing a good retention job - Unsubscribers: how well content is being received by existing users.
Keep a track of opt-outs from your email list to understand if your
content needs any changes
Engagement Metrics
Used to evaluate brand loyalty and audience involvement with
content. It also provides a guide towards developing engaged audience that can be converted into customers
How do you justify the ROI on your content marketing activities?
Common Engagement Metrics
- Blog Comments: # of comments posted in the comments section
of your blog - Page Depth: Also known as pages per session, this metric gives you the average pages your audience visits per session
- Click-Through Rate: ratio of clicks on the links to the views it garnered
- Social Media Engagement: # likes, comments, favorites etc. your content generated on different social media platforms
Lead Metrics
Used to track new leads and where they came from. Top priority for content marketers as you are just one step away from converting attention into revenue
How many users come back to consume your content?
How often do they come back?
Common Lead Metrics
- Gated Content Downloads: #of downloads generated by each
piece of downloadable content (i.e. ebooks, reports, presentations or
whitepapers) - New Newsletter Subscribers: if a user signs-up for your newsletter
whilst on the blog, it shows a strong indication of staying updated
with your latest content
Marketing ROI
Companies spend vast sum of money on marketing communication
Global spending on media is expected to reach $2.1 trillion in 2019, up from $1.6 trillion in 2014
But is all that money well spent? And more fundamentally, does marketing actually work? Marketing ROI analysis can help answer those questions.
Website Metrics
Traffic Sources
Visits
Unique Visitors
Conversion Rate
Page Speed
AOV
UPT
Email Metrics
Receive
Open
Clicks
Bounces
CTR
Conversion
File Health
Social Media Metrics
Impressions
Reach
Engagement
Share of Voice
3rd Party Advertising Metrics
CPC
CPM
Leads
Clicks
Conversion
CTR
What is Marketing ROI
A way of measuring the return on investment from the amount a
company spends on marketing
It is also referred to by its
acronym, MROI, or as return on marketing investment (ROMI)
It can be used to assess the
return of a specific marketing
program, or the firm’s overall
marketing mix
Benefits of MROI
Justifying marketing spend
Deciding what to spend on
Comparing marketing efficiency with competitors
Holding themselves accountable
Benefits of MROI
Justifying marketing spend:
Marketing is a significant expense and
leaders want to know what they’re getting for it. MROI helps prove
marketing impact on the profitability of the firm
Benefits of MROI
Deciding what to spend on:
MROI is most often calculated at the
campaign level so marketers know which efforts have a higher return
and warrant further investment. It also informs future spending levels,
allocation of the budget across programs and media
Benefits of MROI
Comparing marketing efficiency with competitors:
Track competitors’
MROI to gauge how your company is performing against others in the
industry. While MROI is not usually public information, managers can
use published financial statement data to estimate it
Benefits of MROI
Holding themselves accountable:
Marketing is not about winning creative awards but delivering customers and sales.” Measuring how
efficiently the marketing organization is using the company’s money
keeps everyone accountable for using those funds wisely
How to Calculate MROI
MROI = (Incremental Financial Value Gained as a Result of the Marketing Investment - Cost of the Marketing Investment) / Cost of the Marketing Investment
MROI Calculation Goal
The goal is to end up with a positive number, and ideally as high a number as possible
Some companies establish a threshold for MROI that takes into account
its risk tolerance and cost of capital, below which they are hesitant to make investments.
If a program doesn’t promise to deliver at or above that level, they are unlikely to invest and if you end up with a negative ROI, the project is harder to justify on financial terms.
Challenges in Calculating MROI
Difficult to decide which expenditures to include (i.e. cost of the media vs staff time).
Difficulty of measuring incremental financial value, hard to define a
baseline in a dynamic environment. Usually companies look at
historical data and project them into the future or use A/B testing to
assess the incremental lift.
Measuring the lag time associated with most marketing spending. If
you spend $1 today, it might take 3 years for it to “work” and for
the consumer to make a purchase (i.e. cars)
It can also be difficult to figure out which incremental profits are
attributable to which programs as most companies are using a mix
of programs to persuade consumers
Mistakes When Using MROI
It is easy to only recognize the incremental profits in ST sales and underestimate LT benefits to brand value
CFOs are under pressure to deliver quarterly earnings, and may not be patient for the LT effects of marketing. You’re asking them to believe in forward movement in a progression through a customer’s purchase journey that can take a long time
This is where the concept of CLV can be useful. By calculating how much one customer is worth in comparison with others, marketers can show a CFO the impact of marketing spend over the course of
the company’s ongoing relationship with that customer
The key is to remember that while marketing expenditures hit the P&L immediately, every dollar you spend today is building your brand as an asset for the future
CLV
Estimate of the average revenue that a customer will generate throughout their lifespan as a customer
Help determine marketing budget, resources, profitability and forecasting
CLV
How to Calculate Subscription model:
Take the average monthly amount expected
from each customer and divide it by your churn rate
(i.e. if you
charge $500 per month and your churn rate is 5% then CLV is 500/0.05=
$10,000)
CLV
How to Calculate Non-Subscription model:
Total income you expect to gain from a new customer including add-ons and upsells. Calculated by multiplying the AOV by number of Expected Purchases and Time of
Engagement
Expected CLV Equation
CLV(infinite lifetime) = CM/(i* + 1 – r) – CAC
where
CM = expected contribution for the customer (segment)
i* = i (=the risk-free discount rate) × risk factor
r = retention rate for the customer (segment)
CAC = customer acquisition costs
1 - r = Growth Rate
