In today’s world of Big Data, simplicity is being lost. Every day, analysts and marketers are inundated with enormous amounts of information about consumers, including shopping patterns, attrition, engagement, annual spend, and more. Then there’s product data, which allows retailers to know which items generate the most margin or brand loyalty. And we can’t forget competitor data, which is essential for keeping tabs on the industry and staying one step ahead of the rest. There’s customer survey data, which can measure brand awareness. Then on top of that, you’re regularly being offered new tools to measure all of these metrics.
Sometimes, we need to slow things down to find clarity. Step back from the noise and take a look at the Big Picture, not just the Big Data. When you see things from afar, you can discern the kind of information that matters to your business from the information that doesn’t produce actionable insights.
In this post, I will outline my process for developing a marketing plan across multiple channels based on ROI. This is not intended as an “End all, be all” formula. It’s more so a way to get you thinking about your marketing and guide some of decision-making when it comes to your marketing budget.
Historical data is an analyst’s best friend. When you know what happened last year, you can easily use that data for future planning purposes. Keep in mind, one data point does not make a trend. You can’t count on that new promotion to keep returning high response rates just because the first campaign was successful. It may have been one and done. I like to use at least three data points for directional purposes, but more are always better.
Although different marketing channels often have very different KPIs, there can be common metrics (Pay attention, because this is where we remove the noise!). With email, you have opens, click throughs, bounces, etc. With direct mail, you might look at metrics like in-home rates and coupon redemptions. You get the point, but to calculate ROI, you’ll need to tie the marketing contact back to a purchase. I know this can be difficult, but once you tie back the purchases you can then use common metrics like response rate, average order, margin % and cost per contact to do comparisons across channels.
Most businesses are affected by seasonality in some way or another. Just because your mobile campaign performed well over summer doesn’t mean customers will respond the same during the holiday shopping season. Use data from comparable time frames year-over-year. I like to build my plans quarter by quarter, but you may need to use different time periods based on your business strategy.
This is where things can fall apart. Let me guess, you need more sales and margin, more customers and higher retention, but your budget was cut this year. That might be a problem, but it doesn’t have to set you back. Ask yourself this: Do you need sales today, or can you afford to spend a few dollars on branding? As marketers, we tend to address the immediate needs of the business, often pushing aside the long view. This is where ROI can really help. Take a look at the chart below.
Let’s say you have $500K to spend for a month-long campaign. Where would you put it?
Here’s what I would do:
Print is not being utilized in this campaign due to its low ROI and low margin per contact. This plan is really looking at the “short run.” The business requires sales now and can’t spend funding on print. Although this might be a tough pill to swallow, your ROI analysis could spur a conversation with higher-ups about branding, which may necessitate a future budget increase.