Data-Driven Marketing: Leveraging analytics for 5X performance gains in marketing
Mark Jeffery Agile Insights LLC and the Kellogg School of Management [email protected]
© Agile Insights LLC, 2012, All Rights reserved
Data-Driven Marketing: Leveraging analytics for 5X performance gains in marketing 4/26/12 2
Data-Driven Marketing: Leveraging analytics for 5X performance gains in marketing
• Mo<va<on • Research • The 15 essen<al metrics • Analy<cs case examples
– Retail (B2B), Manufacturing (B2B), Pharmaceu<cal Sales (B2B)
• ROI for analy<c marke<ng • Where do you start?
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Data-Driven Marketing: Leveraging analytics for 5X performance gains in marketing
1. Brand Awareness 2. Test Drive 3. Churn 4. CSAT = Customer Sa<sfac<on
Essen%al Opera%ons Metric
Essen%al Financial Metrics
Essen%al Value-‐Based Marke%ng Metric
Essen%al Non-‐Financial Metrics
10. CLTV = Customer Life<me Value
6. Profit 7. NPV = Net Present Value 8. IRR = Internal Rate of Return 9. Payback
5. Take Rate
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Data-Driven Marketing: Leveraging analytics for 5X performance gains in marketing
11. CPC = Cost Per Click 12. TCR = Transac<on Conversion Rate 13. ROA = Return on Ad dollars Spent
Essen%al Web Site Performance Metric
Essen%al Search Engine Marke%ng Metrics
14. Bounce Rate
15. WOM = Word of Mouth Essen%al Social Media Metric
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Data-Driven Marketing: Leveraging analytics for 5X performance gains in marketing
Data-Driven Marketing: Leveraging analytics for 5X performance gains in marketing
• The Business – Major US general merchandise retailer with over $30 Billion
revenues – Direct mail more than 250 Million catalogs per year. Targe<ng
14 -‐ 18 Million customers. Spread over 18 separate mailings. – Genera<ng incremental sales of $900 Million per year.
• Business Challenge – Exis<ng campaign selected the top 40% of customer
households, • Based on Recency, Frequency & Monetary values • Geographic Versioning
– The mailings generated significant sales volume… – However, the ROI was NOT mee,ng the company's
expecta,ons
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Data-Driven Marketing: Leveraging analytics for 5X performance gains in marketing
• New strategy – Split the targeted customers into 25 dis<nct segments, based on a robust
series of variables, ahributes and purchase characteris<cs – Version the mailers, based on products & categories relevant to the various
groups – Eliminated strict cutoff that included only top 40% of customers (RFM), but
instead captured "up-‐sell" opportuni<es among lower value customers with upside poten<al
• Results – Increase in mailer revenue of $215 Million dollars per year, based on improved
targe<ng and campaign management • 1% improvement in number of trips generated among mailed customers • 5% improvement in average purchase dollars per trip • 2% improvement in gross margin, as "right" product featured captured sales without
reliance on 'off-‐price' promo<ons
– Catalog Targe<ng project alone had an NPV exceeding $40MM
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Data-Driven Marketing: Leveraging analytics for 5X performance gains in marketing 4/26/12 11
Source: Russel Walker, Kellogg School
Data-Driven Marketing: Leveraging analytics for 5X performance gains in marketing 4/26/12 12
Data-Driven Marketing: Leveraging analytics for 5X performance gains in marketing
• We don’t know how. • We don’t have the right metrics.
• We don’t know where to start.
• The problem is not too lihle data; quite the opposite, we have lots of data but none of it is useful.
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Data-Driven Marketing: Leveraging analytics for 5X performance gains in marketing
• A marke<ng divide exists between organiza<ons that do data-‐driven marke<ng, use marke<ng metrics and analy<cs, and those that do not.
• The 15 essen<al metrics quan<fy the vast majority of marke<ng ac<vi<es
• Research shows that firms that ‘keep score’ for marke<ng and use analy<cs have significantly beher financial and market performance compared to those that do not
• Measurement combined with analy<cs drives 5X or more performance gains
• There is a systema<c approach to develop a data-‐driven marke<ng strategy: You don’t need 100% of the data to get started
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Data-Driven Marketing: Leveraging analytics for 5X performance gains in marketing