In the year that went by, we had ample opportunity to demonstrate that using your customer data to drive profits really works. Being in the business of doing what we can measure, and then measuring what we do, we’ve been able to compile our favourite metrics for proving the ROI for precision marketing. These are three metrics that need work to track, measure and report, but are well worth the effort in terms of the impact they have on budget allocations for your precision marketing efforts.

 

This is hard to pull off, but one client (not Indian, I’m afraid) was able to share the relative returns of four kinds of marketing spends they had last year. Adwords came out tops in terms of returns on every dollar spent. Next up was CRM (or what we call precision marketing), which yielded 5 dollars of margin for every 1 spent. Local Store Marketing and ATL came in third and fourth.

The outcome of this was a move from a million outreaches through direct contact in the year to a million a month. A 10X increase in CRM budgets.

 

 

There are some dangerous lessons here. ROI on ATL is hard to pin down, and it does have a halo effect that beefs up direct marketing response. One would hesitate to divert budgets away from ATL or LSM beyond a point, but that’s a discussion for another day.

 

An excellent metric we love to measure is the lift generated from consistent dialogue with your customers over a period of time – at least a year. This is, again, not easy as it means a set of your best customers get none of your direct communication around offers/ relationship communication/ milestones etc. One has occasionally used a selection of the non-contactable (on account of DND/ no email/ invalid email) base as the control, as long as it is representative.

We found for a retail client in India, that the target base had done a whopping 70% more than the control that was excluded from the dialogue. We’re going to continue measuring this metric this year to ascertain the longer term impact.

 

 

The impact of this picture for the retail client was big boost in the ability to spend on building that dialogue with customers, and a lot of buy in from top management and retail operations support.

 

This metric is very strong when articulated as “We did X Million outreaches this year and generated Y Million rupees of incremental sales”. The business guys love it - it tells a strong story and helps them prove their operations teams into cooperating on campaign operations. The marketing folks love it as it helps justify spends and budgets like nothing else. The Finance guys love the sound of anything that says “profits over and above business-as-usual”.

It requires a fair degree of discipline, however. It means holding out a control group for every campaign, measuring campaign level lifts and then adding it all up at the end of year. The hard part is maintaining the campaign history that allows you to track – it’s either a lot of hard work, or needs campaign management tools, which can be expensive.

 

 

The outcome of this metric for a retail client in India was a 40% increase in CRM budgets in a year where marketing budgets were being slashed across the board.

 

Yes, we track many metrics in our line of work. From open rates to retention rates and campaign lifts. Eventually the mix of metrics is quite business driven, but some of the high level impact proving metrics – like the ones mentioned here – are quite universal. There’s little arguing a number that shows incremental revenue – and backs it up with the evidence. It gets you those budgets every time!