Data-Driven Marketing: The 15 Metrics Everyone in Marketing Should Know

by Mark Jeffery

Overview

We live in budget-cutting times, and marketing budgets are among the first to get cut. Why? When non-marketing executives take a hard look at the numbers, they often can't see a tangible link between marketing and overall revenue. So if you're a marketer today, you're probably facing the need to do more with less, justify all investments, show results, and still beat the competition. The secret to this balancing act is having—and correctly using—the numbers.

Data-Driven Marketing uses simple, non-technical language to help you to master the latest analytical techniques while maximizing your Return on Marketing Investment (ROMI). You'll take your marketing performance to the next level as you discover:

• Why more than 80 percent of companies don't make data-driven marketing decisions (and suffer for it)
• The 15 key metrics every marketer should know
• The five obstacles to data-driven marketing and how to overcome them
• In-depth examples of how to apply data-driven principles in small and large organizations
• How to use the 15 metrics to improve the performance of your campaigns by a factor of five or more
• New research insights from the Kellogg School of Management, America's leading marketing business school, surveying 252 Fortune 1000 firms, encompassing $53 billion of annual marketing spending
• Free downloadable ROMI templates for all examples given in the book

Every marketing department is under pressure to deliver, but some will thrive and some won't. Data-Driven Marketing provides top-to-bottom coverage of what works, what doesn't, and what makes the difference in this important but misunderstood area. Pick up this essential guide today and you'll not only come out on top, but know (and measure) the reason why.

Product Details

ISBN-13:	9780470595695
Publisher:	Wiley
Publication date:	01/29/2010
Sold by:	JOHN WILEY & SONS
Format:	eBook
Pages:	320
File size:	5 MB

About the Author

MARK JEFFERY is the Director of Technology Initiatives and Senior Lecturer in the Center for Research in Technology and Innovation at the Kellogg School of Management. He has more than thirty publications in management, scientific, and technology journals, and has published twenty-four original case studies with Harvard Business School Publishing. At Kellogg, he directs multiple executive programs including Strategic Data-Driven Marketing and Driving Strategic Value from IT, and teaches in custom executive programs for many organizations including Microsoft and DuPont. He is also the Managing Partner of Agile Insights LLC, a marketing and technology consultancy (www.agileinsights.com).

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Table of Contents

Downloadable ROMI Resources xiii

Acknowledgments xvii

Introduction xix

Part I Essentials 1

Chapter 1 The Marketing Divide: Why 80 Percent of Companies Don’t Make Data-Driven Marketing Decisions—And Those Who Do Are the Leaders 3

The 15 Essential Marketing Metrics 7

Case Examples 9

Marketing Budgets: Key Differences between the Leaders and the Laggards 17

Using Marketing Metrics to Weather Difficult Economic Times 20

The First Step: Defining the Data-Driven Marketing Strategy 22

Chapter Insights 25

Case Examples: Best Buy, Porsche Turbo Cabriolet Launch, DuPont Tyvek NASCAR

Chapter 2 Where Do You Start? Overcoming the Five Obstacles to Data-Driven Marketing 26

Overcome Obstacle 1: Getting Started—Focus on Collecting the Right Data and Create Momentum by Scoring an Easy Win 28

Overcome Obstacle 2: Causality—Conduct Small Experiments 33

Overcome Obstacle 3: Lack of Data—Strategies for Obtaining Customer Data 35

Overcome Obstacle 4: Resources and Tools—Build the Infrastructure for Data-Driven Marketing 39

Overcome Obstacle 5: People and Change—Create a Data-Driven Marketing Culture 44

A Road Map for Implementing Data-Driven Marketing 49

Chapter Insights 51

Case Examples: Royal Bank of Canada, Walgreens, Continental Airlines, Harrah’s Entertainment

Chapter 3 The 10 Classical Marketing Metrics 52

Linking Marketing Activities to Metrics 53

A Balanced Scorecard for Marketing 62

Facing the B2B Measurement Challenge 67

Chapter Insights 71

Case Examples: MasterCard FIFA Sponsorship, Microsoft OEM Comarketing

Part II 15 Metrics to Radically Improve Marketing Performance 73

Chapter 4 The Five Essential Nonfinancial Metrics: #1—Brand Awareness, #2—Test-Drive, #3—Churn, #4—Customer Satisfaction (CSAT), and #5—Take Rate 75

Shaping Perception: Metric #1—Brand Awareness 75

Comparative Marketing: Metric #2—Test-Drive 87

Loyalty Marketing: Metric #3—Churn 91

Customer Satisfaction: Metric #4—CSAT 96

Campaign Effectiveness: Metric #5—Take Rate 99

Chapter Insights 103

Case Examples: Philips Consumer Lifestyles, Navistar America’s Greenest School, Porsche First Mile, Intel, Ray-Ban, Lexus, Dental Care Partners, DSW Shoe Warehouse Downloadable Excel Templates: Churn, Take Rate

Chapter 5 Show Me the ROI! The Four Essential Financial Metrics: #6—Profit, #7—Net Present Value (NPV), #8—Internal Rate of Return (IRR), and #9—Payback 104

Metric #6: Profit 105

Finance for Marketing Managers: Metrics #7—NPV, #8—IRR, and #9—Payback Defined 106

Return on Marketing Investment (ROMI) Framework for Management Decisions 115

ROMI for Sports Sponsorship 119

ROMI for a New Product Launch 122

Stress-Test the Numbers: Sensitivity Analysis 129

Chapter Insights 133

Case Examples: Sports Sponsorship and Web New Product Launch ROMI (Disguised) Downloadable Excel Templates: NPV, IRR, Payback, Campaign ROI, Sports Sponsorship ROI, New Product Launch ROI, Table Function Sensitivity Analysis, Monte Carlo Analysis

Chapter 6 All Customers Are Not Equal: Metric #10—Customer Lifetime Value (CLTV) 134

Metric #10—Customer Value Defined 135

The New Marketing Strategy: Value-Based Marketing 138

Balancing Short- and Long-Term Customer Profitability 146

Customer Life Cycle Management 151

Chapter Insights 154

Case Examples: Sainsbury’s, 3M, Continental Airlines, Royal Bank of Canada, Carnival Cruise Lines Downloadable Excel Template: Customer Lifetime Value

Chapter 7 From Clicks to Value with Internet Marketing Metrics: #11—Cost per Click (CPC), #12—Transaction Conversion Rate (TCR), #13—Return on Ad Dollars Spent (ROA), #14—Bounce Rate, and #15—Word of Mouth (WOM) 156

CPC versus CPM: Optimizing Metric #11—CPC Is the Google Innovation 157

Optimizing Sponsored Search: Metrics #12—TCR and #13—ROA 159

How Good Is Your Web Site? Metric #14—Bounce Rate 168

Changing the Internet Search Marketing Game with Attribution Modeling 172

Beyond SEM: Internet Display Advertising Impact 176

Hypertargeting Display Advertising in Social Media 178

Metric #15—Word of Mouth (WOM) Social Media Marketing Engagement 181

Chapter Insights 186

Case Examples: Google, Air France, Opinmind, Meteor Solutions, Palm Centro, Capcom Resident Evil 5 Downloadable Excel Templates: Search Engine Marketing Metrics (CPC, CTR, TCR, Take Rate, ROA), Air France Click Data, Google ROA Impact, Bounce Rate, Word of Mouth (WOM)

Part III The Next Level 187

Chapter 8 Agile Marketing: Using Near-Time Data to Improve Performance by a Factor of Five or More 189

If You Are Going to Fail, Fail Fast 190

Design for Measurement 196

Chapter Insights 200

Case Examples: Microsoft Security Guidance, DuPont Performance Alliance

Chapter 9 Wow, That Product Is Exactly What I Need! The Three Essential Approaches to Analytic Marketing 201

The First Essential Approach to Analytic Marketing: Propensity Modeling 202

The Second Essential Approach to Analytic Marketing: Market Basket Analysis 206

The Third Essential Approach to Analytic Marketing: Decision Trees 207

Timing Is Everything: Event-Driven Marketing Case Examples 214

The Business Case for Analytic Marketing 218

Chapter Insights 220

Case Examples: Meredith, EarthLink, DIRECTV, National Australia Bank, Ping Golf Downloadable Excel Template: Analytic Marketing ROI Downloadable SAS File: EarthLink Retention Marketing

Chapter 10 What’s It Going to Take? Infrastructure for Data-Driven Marketing 222

Which Data Do You Really Need? 223

Do You Need to Build a Ranch House or Empire State Building Infrastructure? 225

Requirement Complexity 229

Should You Forklift or Rearchitect Data in the Enterprise Data Warehouse? 233

What We Know Can and Will Go Wrong (If You Don’t Watch Out!) 234

Harrah’s Entertainment: Creating the Data-Driven Marketing Infrastructure Portfolio 237

Chapter Insights 246

Case Example: Harrah’s Entertainment

Chapter 11 Marketing Budgets, Technology, and Core Processes: Key Differences between the Leaders and the Laggards 247

Marketing Campaign Management: The State of the Industry 249

Research: Marketing Processes, Technology, and the Link to Firm Performance 252

B2B versus B2C Investment Portfolio Mixes: Leaders versus Laggards 256

Overcoming the Four Barriers to Professionalizing Marketing Processes 260

Upgrading Marketing Campaign Management Processes: A Three-Phased Approach 262

Lessons Learned from the Research: Complexity Requires Governance 266

The Creative X-Factor 268

Tying It All Together 271

Chapter Insights 272

Case Examples: Blendtec Viral Marketing, Nissan Qashqai New Product Launch

Appendix For Instructors How to Use This Book to Teach Data-Driven Marketing 275

Notes 279

Index 285