Measurement for Marketing Effectiveness – data challenges and how to meet them

1. Measurement for Marketing Effectiveness – data challenges and how to meet them Trevor Jones Marketing Databasics 25th June 2009

2. Some themes • A buzz about marketing effectiveness • Some history • Metrics for marketing basics • Getting serious about marketing effectiveness • “Common sense systematically applied” • A consistent focus on the customer • Covering measurement, not targeting/ modelling/ segmentation

3. A history of the ‘customer view’ • Even the ‘early starters’ seldom have an absolutely complete view • Consolidation has been a major issue in the insurance/assurance sector – has held things back • FM sector a late adopter Start of the ‘customer focus’ journey 1980 1990 2000 2010 RETAIL BANKS LIFE & PENSIONS GENERAL/CONGLOM.INSURERS FUND MANAGERS

4. Things going backwards with the internet! • Silo development • Stress on technology rather than customer management • Little integration between on-line and off-line behavioural data • A serious un-plugged gap, given the importance of on-line channel • Technology is available to plug it • But it is not just about technology, it’s about customer management on-line

5. Essentially, all marketing spend supports the customer lifecycle CUSTOMERLIFECYCLE • We recruit them RECRUITMENT CUSTOMER BASE • We develop them DEVELOPMENT LAPSATION • And we try and retain them It’s surprising how often customer-centric metrics and reporting are not in place to allow a high-level assessment of marketing effectiveness to be made

6. RECRUITMENT CUSTOMERLIFECYCLE • Volumes and costs by channel • Characteristics • Source – increasingly difficult to measure • Downstream value? • Business health check? RECRUITMENT DEVELOPMENT LAPSATION

7. DEVELOPMENT CUSTOMERLIFECYCLE • Cross-sell and up-sell statistics (and goals?) • Beware x-sell ratios! • Customer profitability/NPV • Marketing measures: • Interaction measurement • Contact densities • (Campaign measurement [primary/secondary sales]) • Channel impacts/preferences • Spend by profit or  NPV • Feedback to recruitment, forward look to lapsation RECRUITMENT DEVELOPMENT Precursors to campaign optimisation LAPSATION

8. LAPSATION/RETENTION CUSTOMERLIFECYCLE • Systems issues – can customers get ‘lost’ • ‘Good’ v. ‘bad’ lapsation • Measurement & strategy • Value lost/value ‘saveable’ • ROI on retention activities – short and medium term • Business health check? RECRUITMENT DEVELOPMENT LAPSATION

9. What to do with marketing metrics • Agree them! • Implement them! – and make them easily accessible • Use them! • Will give you a high level view of marketing effectiveness • Beware theelephant inthe room!

10. More silos, marketing measurement and getting more complicated • ATL/BTL/ONLINE marketing spend • What are they for? • How integrated is the planning? • How clearly are goals and response/ performance measures specified in advance? • Channel cross-over – some examples • ATL impact on existing customers? • Interaction between channels • Measuring the origin of web enquiries/orders • Direct measurement is often not enough

11. A time series approach • Increasingly, measurement using a time series approach is appropriate, e.g. • Marketing spend at customer level v. change in behaviour/spend • Cross-channel effects – e.g. ATL spend and internet inquiries • Separately tracking effect of advertising spend on existing/new customers

12. A new approach - a fusion of econometrics and database analysis • Typically, econometrics has been used by ATL agencies to ‘mark their own homework’ • Adspend v headline sales • But by combining customer database metrics with time series analysis, the range of what can be achieved expands significantly, for example • Measuring response to all types of campaign across all channels • Disaggregating ‘new customer’ & ‘existing customer’ effect of campaigns • We call this:

13. Thank you.