Marketing Analytics Presentation 11_16

8/8/2019 Marketing Analytics Presentation 11_16

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Translating and Interpreting MarketingAnalytics

Identifying And Utilizing High Quality Data To DriveBusiness Decisions

David Weinberger

Mather Strategy and Marketing

Marketing Planning & Analysis 2010 SummitNovember 16th, 2010

mather:

43 Woodstock Street

Historic Roswell District

Roswell, GA 30075

www.matherstrategyandmarketing.com
http://www.matherstrategyandmarketing.com/http://www.matherstrategyandmarketing.com/


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Analytics

How Are You Translating and Interpreting

Marketing Analytics?

Page 2


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Agenda

Translating and Interpreting Marketing Analytics

High Value/High ImpactV

Focus on Reoccurring Marketing Processes

Ensure Marketing Analytics Drive Business

Performance, Metrics and Scorecards

Continuously Test to Optimize Marketing Execution

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The Role Of Marketing

Customer, Consumer,

Shopper, Market Insights

Application Of Insights

Marketing Investment ROI

Acquisition, Retention, Up-Sell, Cross Sell

Consumer/Market Trends

Role ofMarketing

Brand Planning

StrategicPlanning

CustomerRelationshipManagement

Revenue

Management

Marketing Return

on investment

Channel

Development

New Product

Development

Analytics &Insights

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Identify RecurringMarketingProcesses

Ensure Marketing

Analytics Drive

Business Metricsand Scorecards

Continuously Test toOptimize Marketing

Execution


- Brand Planning

- Channel Selection

- Marketing Investment

Decisions (ROMI)

- Revenue Management

- Customer RelationshipManagement

- Strategic Planning

- New ProductDevelopment Repeatable Processes:

Increase Productivity Ensure Consistent

Decision Making Increase

Entrepreneurship Focus On Value-Added

Initiatives

21 3

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Identify Reoccurring Marketing Processes

- Increase Consideration, Purchase, and Equity- Brand Planning

- Increase Conversion- Channel Selection

- Identify Organic/InorganicGrowth Opportunities


- New ProductDevelopment

- Optimize Sales and Profits- Marketing InvestmentDecisions (ROMI)

High Value/High ValueV

Marketing Processes

- Increase Customer Lifetime Value(Acquisition and Retention)


- Increase Profitability- Revenue Management

1

Selection Criteria

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Marketing Investment Decisions

What Is Your ROI?

How does marketing drive revenues and profit? What is the ROI for marketing overall and by tactic? Where are the opportunities to improve Marketing spend?

How Can You ImproveMarketing Spending?

How can the marketing budget be optimized ? What is the optimal allocation of the marketing budget by

brand, channel and market? What is the impact of TV versus non-traditional marketing

tactics, such as internet and social media?

Key Questions to Ask About Your Marketing Investments

1

How Much Are YouSpending ?

How are you allocating Marketing spending? Which customers are you targeting? Which Channels generate the highest ROI?

Identify Reoccurring Marketing Processes


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8


1 Identify Reoccurring Marketing Processes


NationalTV

Radio

Spot TV

Media Response Curve - Example

Media Spend

Revenue


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Marketing Activity Lift Example




Page 9

-3

-2

-1

0

1

2

3

4

5

National

TV

Radio Direct

Mail

Coupons Spot TV Hispanic Price

Reduction

Sports


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RevenueIncrease

Direct Mail

National TV

Radio

Coupons

PriceReduction

Spot TV

CostReturn on

Investment

Hispanic

Sports




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3.4 25 13.6

4.2 23 18.3

2.3 24 9.6

2.3 23 10.0

1.7 22 7.7

3.2 12 26.7

-2.4 10 -24.0

-1.9 10 -19.0

Return on Investment - Example


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Use Scenario Modeling to Improve Marketing Spend Effectiveness - Example


1Identify Reoccurring Marketing Processes


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BudgetAllocation

Return onInvestment

10% 25 13.6

5% 23 18.3

15% 24 9.6

10% 23 10.0

20% 22 7.7

5% 12 26.7

25% 10 -24.0

10% 10 -19.0

BudgetAllocation

$ CostReturn on

Investment

XX XX XX

XX XX XX

XX XX XX

XX XX XX

XX XX XX

XX XX XX

XX XX XX

XX XX XX

Current Proposed

Direct Mail

National TV

Radio

Coupons

PriceReduction

Spot TV

Hispanic

Sports

$ Cost


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12




Marketing Investment Vs ROI - Example

Increase Spending.

Test different Medium,Targets, and MessagingOptions

Ensure you arespending optimally onthe decay curve.

Modify spending levelsto maximize ROI

Reduce Spending.Assess Target, Medium,and Message

Reduce spending.Revaluate target,medium and message

$0.00Low High$0.00

High

Marketing $ Investment

ROI

Low


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Key Metrics

- Marketing Tactic ROI

- Volume Trends Versus Objectives

- % Customers Acquired

- % Increase In Revenue

Marketing Spend Effectiveness Scorecard

1




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Marketing Mix Simulation

Media Planning Optimization

Advertising Decay Curves

Impact of Marketing Tactics

Impact of Marketing Tactics by Segment, Geography

Marketing Tactic ROI

Volume Trends Versus Objectives

% Customers Acquired

% Increase In Revenue

Monthly

Bi-Annual

Annual




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Ensure MarketingAnalytics Drive Business

Performance, Metrics andScorecards


Execution


- Marketing activities arequantified based onBusiness metrics

- All functional groups are

measured on the sameCustomer and

Business metrics

- Marketing focused oncreating profitablegrowth:

- Customer acquisition- Customer retention- New usage occasions- New segments

21 3

- Brand Planning

- Channel Selection

- Marketing InvestmentDecisions (ROMI)





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Key Questions

What type of customers should we acquire? What incentives should we use?

What Marketing activities to increase profitability?

What is the likelihood a specific customer will churn?

How is a customers value affected by various Marketing activities or targetedincentives? What will happen to my bottom line if those attributes change by

10%?

How do we operationalize CLV to impact retention and drive increased customer

satisfaction through targeted customer experiences?

CLV analysis (Present value of a customers total contribution to your cash flow) identifieskey strategic opportunities to grow revenues and profits

Ensure Marketing Analytics Drive BusinessPerformance, Metrics and Scorecards

2

Customer Relationship Management CLV Analysis


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Page 17

Allocate acquisition and retention resources to optimize Marketing dollars

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0 60 120

180

240

300

360

420

480

540

600

660

720

Expected Lifetime

(Area Under Curve)

Likelihood of Survival:New Customer


2


ARPU Average revenue per user

CCU = cash cost per user

CLV = [(ARPU CCU)*(Expected Lifetime)] PV - CPGA


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Page 18

Database

Monthly Increments

Customer/Subscriber Handset Market Demographics Credits/Fees

Historical Data

DatabaseCall / IVR Reporting

Operations Reporting

Marketing Reports

CLV Reports

Customer, Purchase, Market, Demographic and other Qualitative metrics are used toconstruct the CLV model


2



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LTV Model Development Process

Construct a customer service history Start date

Usage statistics (e.g., MOU, service plan, IVR minutes)

Service changes

End date

Attach indicators to the service history Demographics (e.g., income, age, gender, market, language)

Industry-specific metrics (e.g., handset data, technology features)

Organization-specific metrics (e.g., payment methods, fees, credits)

Develop a survival (retention) model

Calculate a best fit (regression) model correlating the customer variables

to survival rates.

Calculate the CLV using the survival rates

How the model is built and implemented is crucial to making CLV

scores actionable



2

k l


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Key Drivers of Customer Lifetime Value


2

Attribute Baseline ChangeEffect

CLV CPGA ARPU CCU

Customer Type New Existing

Acquisition Month April

May

February

Handset Age 12 mths Increase

Income Tier 4 Increase

Age 43 Increase/Decrease

Average MOU 1,486 Increase

Average IVR 12 Increase

Gender F M

ODP (Handset Revenue) $100 Increase

Monthly Contract Price $45 Increase

Monthly Fee Revenue $10 Increase


k i l i i i


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Develop strategies for Customer selection, Customer segmentation, Resource allocation,Customer Acquisition Priorities, and Cross Selling Priorities

1) Up Sell and

Cross Sell

1) Assess

customer

value, ensure

good

collection

1) High end

services

1) Retention

campaigns

2) Customized

offers

Low High

Low

High

CLV

Probability

Of Staying

Retain

MaintainNurture


2


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E M k i A l i D i B i


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2

2 5 m n C m n , I nc . ll ri h t r rv

Scenario 1

Example: Investment Simulation

-30%+30%+30%Radio

-30%No change+30%Television

Scenario 3Scenario 3Scenario 2Scenario 2Scenario 1Scenario 1

Spending ChangeSpending Change

N/AN/A+30%Direct Mail

N/AN/A+30%Out of Home

N/AN/ANAMagazine

N/A+30%+30%Newspaper

-30%-30%+30%Special Promotions

N/A-30%-30%Events

-30%-30%-30%Trade

N/A+30%+30%Logos

XXXXXXResults

N/A-30%+30%Sponsorships (Sports)

-30%+30%+30%Public Relations

2 5 m n C m n , I nc . ll ri h t r rv

Scenario 2


-30%+30%+30%Radio






N/AN/ANAMagazine



N/A-30%-30%Events

-30%-30%-30%Trade

N/A+30%+30%Logos

XXXXXXResults



2 5 m n C m n , I nc. l lri h t r rv

Scenario 3


-30%+30%+30%Radio






N/AN/ANAMagazine



N/A-30%-30%Events

-30%-30%-30%Trade

N/A+30%+30%Logos

XXXXXXResults



Determine Leverage Points Level of investment?

Product Focus

Type of message (brand vs. product

message)

Marketing Mix (TV, Outdoor, Events)

Segment Mix (Targets, Geographies)

Generate Strategic Alternatives

Model and compare alternatives High

Medium

Low

Include CLV metrics in cross functional scorecards


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Ensure MarketingAnalytics Drive Business



Execution

21 3

- Facilitates BestOrganizationalThinking

- Optimizes Marketingexecution

- Enables Marketingto quickly react tonew Trends,Customers, and

Segments

- Increases MarketingROI




measured on the sameCustomer andBusiness metrics



- Brand Planning

- Channel Selection

- Marketing InvestmentDecisions (ROMI)





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Continuously Test to Optimize Marketing Execution3

Revenue Management Value Based Pricing

Strategic Pricing Four Elements of Marketing

Product Print content, Web site content, Design

Promotion Advertising, Brand development, Sales

Distribution Delivery, Customer service

Pricing Acquisition offers & renewal prices

Sources: The Strategy and Tactics of Pricing by Tom Nagle and Reed Holden; Mather Economics LLC analysis

Use Pricing to capture value created by your brand/company. Failing tointegrate pricing with your overall strategy and other value-creatingactivities leads to lost revenue

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Cost-plus pricing

Historically, the most common method used by companies

Price is determined as a set mark-up over a cost basis that often includes

allocated overhead and direct operating costs

A biased cost basis can lead to unprofitable pricing decisions!

Customer-driven pricing

Focused on what customers indicate they are willing to pay

Prices adjusted to meet sales objectives

Often leads to less profitable pricing

Competition-driven pricing

Matching competitions prices

Not as common in Newspaper industry

Value-based pricing is focused on the value customers place on the product.

Different customers value your products and services differently.

Sources: The Strategy and Tactics of Pricing by Tom Nagle and Reed Holden; Mather Economics LLC analysis



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Strategic Pricing Framework: Focus On Charging for the Value of the Product/ Service

Costs Customers Competitors

StrategicObjectives

Goals

Tactics

High quality localTV coverage;

online audiencegrowth; total market

coverage25% customer

churn; 65% market

penetration; 10%revenue growth Targeted acquisition

offers; Start sourceallocation; renewalprice optimization

(Market BasedPricing)



Sources: The Strategy and Tactics of Pricing by Tom Nagle and Reed Holden; Mather Economics LLC analysisPage 26


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Use Test and Control groups to identify the impact of different Marketing Tactics to

retain customers.

Indicators of Elasticity

Elasticity varies by customer

Tenure

Service frequency

Pricing history

Payment method

Income

Age

0.6%

0.8%

1.0%

1.2%

1.4%

1.6%

1.8%

2.0%

0% 2% 4% 6% 8% 10% 12% 14%

StopR

ate

% Price Increase

Price Increases vs Stop Rate

Large Price

Increase, Low Stop

Rate

(Highly Inealstic)

Small PriceIncrease, High

Stop Rate (Highly

Elastic)

Higher Income

Higher Income

Lower Income

Medium Income

Medium Income



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The Role Of Marketing

Customer, Consumer,Shopper, Market Insights

Application Of Insights

Marketing Investment ROI

Acquisition, Retention, Up-Sell, Cross Sell

Consumer/Market Trends

Role ofMarketing

Brand Planning

Strategic

Planning

CustomerRelationshipManagement

Revenue

Management

Marketing Returnon investment

Channel

Development

New Product

Development

Analytics &Insights

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Ensure Marketing

Analytics Drive Business



Execution

21 3

- Facilitates BestOrganizationalThinking

- Optimizes Marketing

execution

- Enables Marketingto quickly react tonew Trends,Customers, and

Segments

- Increases MarketingROI




measured on the sameCustomer andBusiness metrics



- Brand Planning

- Channel Selection

- Marketing Investment

Decisions (ROMI)





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O tli f F ilit t d P T D l M k ti


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Outline of Facilitated Process To Develop MarketingAnalytics Road Map

Day One Morning

Identify Core Marketing Metrics - 1 hour session Aligned with Corporate objectives

Identify available data

Determine interdependencies

Prioritize metrics to be used

Determine Key Marketing Processes - 2 hour session Develop fish and bone diagrams

Identify data and process interdependencies

Identify data and process voids

Prioritize based on Revenue and ROI opportunities

Day One Afternoon

Identify Analytics Based on - 4 hour session

Prioritized Marketing Processes (Top 3 -5) Identify Exception Reports and Scorecards

Identify top five reoccurring analyses across functional groups

Identify advanced analytical needs

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Outline of Facilitated Process To Develop Marketing


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Day Two Morning

Team Breakout Sessions For Top 3 -5

Marketing Processes - 4 Hour Session

Identify Exception Reports and Scorecards

Identify top five reoccurring analyses used across functional group Create specifications for advanced analytics

Develop fish and bone diagrams

Identify data and process dependencies

Identify data and process voids

Prioritize based on Revenue Opportunity and ROI

Day Two Afternoon - 4 Hour SessionTeam Report Outs

Review fish and bone process

Agree on metrics and data needs

Prioritize Analytics development

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Outline of Facilitated Process To Develop Marketing


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Output From Facilitated Process

1. Road Map With Key Marketing Processes Identified2. Prioritized Marketing Processes And Analytics Identified

3. Alignment On Metrics For Key Scorecards, Exception Reports,

Reoccurring Analyses, And Advanced Analytics

4. Data Dependencies, Voids And Interrelationships Identified


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Who Are We?

Strategic Marketing And Applied Analytics Consulting Group

33

Our Approach: Customer-focused, data and insights-driven

with a bias towards adding value to the business

Our Focus: Developing business and marketing strategies andtactics to maximize customer acquisition and Customer

Lifetime Value

Our Consultants: A mix of PhDs, marketers and strategic

consultants from world-class companies

Our Essence: Making sense of complex data through

advanced analytics and technology to support key business

decisions


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What Makes Us Different?

Proven and established advanced analytics capabilities to

draw insights from large quantities of data

Experts at data capture, integration and visualization

Experts at solution delivery in the enterprise space and

cutting edge technologies

Deep understanding of how customer insights drive business

decisions

Mix of marketers, consultants and PhDs

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We excel at uncovering growth opportunities from large andcomplex data sets -- We are problem solvers!


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Our Core Capabilities

35

TechnologyCustomer DrivenGrowth Strategy

Marketing Strategy &Capabilities

Data Analytics

Portfolio strategy

Value propositionand brandarchitecturedevelopment

Marketingcapabilitiesdevelopment

Customer drivenstrategic planning

Customer centricorganizationalalignment

Customer path-to-

purchase strategyand touch pointoptimization

Customer and channelsegmentation

Marketing spendeffectiveness

Customer LifetimeValue

Promotion analytics

Customer Acquisition

and Retention

E-mail/On-line/ Search

optimization

Pricing analytics

Cross-sell/up-sellopportunities

Customer Path-to-purchase analysis

Test & learn protocol

Social mediatracking &engagementmethods &technologies

Technologyrequirements &

planning

Data capture,storing, analytics &visualizationtechnologies

Marketing analyticsroad map andexecution

Copyright 2009 Mather LLC. All ri ghts reserved.


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mather:

43 Woodstock Street

Historic Roswell District

Roswell, GA 30075

770-993-4111 main

www.mathereconomics.com

David Weinberger

770-649-0472

[email protected]

Contact Information
http://www.mathereconomics.com/mailto:[email protected]:[email protected]://www.mathereconomics.com/

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Marketing Analytics Presentation 11_16