The Metric-Minded Marketer

Most marketers will accept that some portion of marketing will always be an art that is tricky to measure. However, it’s difficult to deny the overwhelming need for marketers who can “crunch the numbers.”

Aberdeen research from the past five years suggest marketers are getting more savvy, more technically minded, and more numerical.

These are necessary byproducts of a rapidly changing environment with new channels, like digital, mobile and social, which have forced all organizations to rapidly evolve the marketing function to maintain a competitive advantage.

Best-in-Class organizations reveal data-driven decisions about strategy, tactics and marketing effectiveness are a component of almost every marketing decision they make.

Best-in-Class were 2.8 times more likely to indicate they heavily relied on data driven decisions to optimize marketing performance (“Data Driven Marketing”; September 2009)

What Drives You?

Naturally, the next logical question is what exactly do 53 percent of Best-in-Class organizations do to heavily leverage data in marketing?

For one thing, they are measuring and calculating metrics across a wide variety of areas. In the recent “Data Driven Marketing” study, Aberdeen asked all respondents to rank the relative importance (to the company) of a series of data-driven activities, including segmentation, modeling and performance analysis. The respondents were asked to select between current focus and future focus, extremely important and somewhat important, or not critical.

Measuring ROI was as a top data-driven concern for 51 percent of Best-in-Class organizations (See Table 1). Likewise, Best-in-Class rely on data to identify who to target and how to target them more effectively (47 percent). As a result, data cleansing emerges as an extremely important current focus with respect to data analysis for Best-in-Class organizations (47 percent). Garbage in, garbage out.

Table 1: Best-in-Class Priorities for Data Driven Marketing

Current FocusFuture FocusExtremely ImportantMeasure Marketingt ROI (51 percent)

Customer Segmentation (47 percent)

Data Cleansing (47 percent)

Profitability Analysis (41 percent)

Track Customer Retention (33 percent)

Customer Profiling (29 percent)Cost per Customer Analysis (35 percent)

Marketing Planning Analysis (33 percent)

Lifetime Value Analysis (33 percent)

Marketing Mix Modeling (31 percent)

Cross-Sell Analysis (29 percent)

Predictive Modeling (27 percent)

Data Mining (25 percent)

Behavioral Analysis (25 percent)Somewhat ImportantBehavioral Modeling (25 percent)

Source: Aberdeen Group, September 2009

The New Rules of Customer Engagement

Research from the Aberdeen Group revealed Best-in-Class organizations are three times more likely to engage in personalized initiatives (“Email Marketing: Get Personal with Your Customers”). In fact, even the use of light personalization (in the salutation of an email) can generate a lift that is, on average, two times greater than non-personalized mass email campaigns.

The new paradigm in customer engagement assumes consumers have control over the buying process, not marketers. Making data-driven decisions becomes crucial within this paradigm. Marketers now have to embrace the customer-centric shift and deliver relevant, timely content when and where the buyer wants to receive it. This demands multi-channel engagement and automated personalized content delivery that can all be supported by customer data.

However, despite the added benefits of personalization, few marketers are capable of engaging customers in a one-to-one personalized dialogue online or offline.

Why? For one thing, disparate technologies. In the the April 2009 “Marketing Automation: A Strategic Guide for Optimizing End-To-End Marketing Activities” benchmark, 67 percent of all respondents used separate technologies for email marketing, Web analytics, campaign management, lead management, and Web content management, etc.

This is partly a byproduct of a fast-growing space with few barriers to entry; there are literally hundreds of vendors providing a fragmented set of marketing and sales technology solutions. In the late ’90s, the digital landscape provided fertile opportunity for new entrants, and an eclectic mix of solution providers found their niche, resulting in a handful of notable leaders and a bucket full of competitors poised for growth. These disparate solutions create data integration challenges that prevent marketers from building centralized profiles for use in personalized customer engagement.

Key Insights From Best-in-Class

Best-in-Class organizations overwhelmingly have access to more relevant data than all other organizations, and they have a predisposition to use this data for numerical analysis. Many skeptical marketers question the validity of using data that may not be delivering a complete picture of operations. Will the CMO really value a metric that has been calculated based on assumptions? Will the CFO or CEO accept this?

The data suggests even discernible trends based on assumptions deliver enough insight to give organizations that measure key metrics like ROMI, profitability, retention and the marketing mix a competitive advantage. Interviews with Best-in-Class companies suggest many marketers will openly admit they will never be able to be 100 percent confident in any marketing-related metrics. However, that doesn’t make them less valuable, and it certainly doesn’t mean marketers should throw in the towel and not try to measure.

Ian Michiels is a research director and the practice leader of the Customer Management Technology Group at the Aberdeen Group. He can be reached at [email protected].

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