Data Driven Marketing

1. Mark Jeffery
Agile Insights LLC
and the Kellogg School of Management
mjeffery@agileinsights.com
©
Agile
Insights
LLC,
2012,
All
Rights
reserved
Data-Driven Marketing:
Leveraging analytics for 5X performance gains in marketing

2. Data-Driven Marketing:
2 Leveraging analytics for 5X performance gains in marketing 4/26/12

3. • 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?
Data-Driven Marketing:
3 Leveraging analytics for 5X performance gains in marketing 4/26/12

4. Data-Driven Marketing:
4 Leveraging analytics for 5X performance gains in marketing 4/26/12

5. Data-Driven Marketing:
5 Leveraging analytics for 5X performance gains in marketing 4/26/12

6. 1.
Brand
Awareness
2.
Test
Drive
Essen%al
Non-­‐Financial
3.
Churn
Metrics
4.
CSAT
=
Customer
Sa<sfac<on
5.
Take
Rate
Essen%al
Opera%ons
Metric
6.
Profit
7.
NPV
=
Net
Present
Value
Essen%al
Financial
Metrics
8.
IRR
=
Internal
Rate
of
Return
9.
Payback
Essen%al
Value-­‐Based
Marke%ng
10.
CLTV
=
Customer
Life<me
Value
Metric
Data-Driven Marketing:
6 Leveraging analytics for 5X performance gains in marketing 4/26/12

7. 11.
CPC
=
Cost
Per
Click
Essen%al
Search
Engine
12.
TCR
=
Transac<on
Conversion
Rate
Marke%ng
Metrics
13.
ROA
=
Return
on
Ad
dollars
Spent
Essen%al
Web
Site
14.
Bounce
Rate
Performance
Metric
15.
WOM
=
Word
of
Mouth
Essen%al
Social
Media
Metric
Data-Driven Marketing:
7 Leveraging analytics for 5X performance gains in marketing 4/26/12

8. Data-Driven Marketing:
Leveraging analytics for 5X performance gains in marketing

9. • 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
Data-Driven Marketing:
9 Leveraging analytics for 5X performance gains in marketing 4/26/12

10. • 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
Data-Driven Marketing:
10 Leveraging analytics for 5X performance gains in marketing 4/26/12

11. Source:
Russel
Walker,
Kellogg
School
Data-Driven Marketing:
11 Leveraging analytics for 5X performance gains in marketing 4/26/12

12. Data-Driven Marketing:
12 Leveraging analytics for 5X performance gains in marketing 4/26/12

13. • 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.
Data-Driven Marketing:
13 Leveraging analytics for 5X performance gains in marketing 4/26/12

14. • 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
Data-Driven Marketing:
14 Leveraging analytics for 5X performance gains in marketing 4/26/12

15. Data-Driven Marketing:
Leveraging analytics for 5X performance gains in marketing