Marketing and Customer Analytics

Most retailers admit that they traditionally have been product-focused and know surprisingly little about their customers. Their desire for more insight into customer buying behavior has driven many to invest in business analytics solutions… The reports generated by existing tools are primarily performance summaries, great for understanding overall sales or same-store performance, but they don’t help retailers fitness their assortments and promotions to attract and retain customers“. – Report by Fact Point Group.

I have been thinking of writing on Marketing Analytics since the last round-table at BI-Exchange here in Pittsburgh hosted by Datavibes, where the topic was being presented by speaker from large health and nutrition product retailer. It was interesting to listen on how they manage their customer database and use lots of email marketing for campaigning and promotions.

While email marketing and loyalty card and social media has been picking up, it is important to know how customers have been reacting to it. As recommended  in Good marketing practices by Dr. Dave Schrader, Director Marketing and Strategy at Terradata,  Collect the ‘clues’ (purchases, browsing history, calls to call center, responses to marketing campaigns, survey responses etc). Then use these ‘clues’ to make customized offers.  He also emphasizes that fewer-but-relevant messages is all needed for higher conversion rate and satisfaction. So what all clues or in technical words KPIs should we be monitoring while planning or measuring success of our Marketing strategy? I think like most other BI recommendations there is no direct answer or ‘n’ KPIs that can give you an answer. It really depends on lot of different factors like company structure, presence, marketing channels etc. In some cases a lot can be achieved just by monitoring few KPIs and in others advanced tools like basket analysis or statistical techniques like predictive analytics are required for effective Marketing analytics. Some of the common KPIs that we can possibly capture or mine using all this data for planning, development, execution, management, monitoring or collectively MPM (Marketing performance measurement and management) are:

  • Response rate
  • Lead to pipeline ratio
  • Lead to closed sales ratio
  • Inquiry growth following campaign
  • Lead to pipeline conversion
  • Marketing cost per lead per segment
  • % of leads generated
  • Marketing budget ratio
  • Return on Marketing Investment (ROMI)
  • Contact rate
  • Effective reach (% of targeted-audience)
  • …etc.

What can we expect to achieve using Marketing analytics?

  • Demographical demand analysis
  • Direct Marketing
  • Lead Generation
  • Cross and Up-Sell
  • Customer Insight
  • Loyalty analysis
  • Customers buying pattern
  • Promotions effectiveness
  • Product/Service Analytics
  • Pricing and sales modeling
  • Coupon conversion percentage
  • Store conversion rate
  • …etc.

It is important to consider all the channels while running marketing analytics (Tele Marketing, Direct Mail, Emails, Trade shows, Organic Traffic, Social Media etc.).

Email Marketing is no more sending promotions or newsletter. It has rather become ‘preference driven’. Netflix and Pandora are two of my favorite examples when talking about preference driven options. Companies have similarly been using analytics on email marketing analyzing factors like what links were clicked, click to sales conversion, customer patters, cross sell etc. Some of the email campaigns that are actively used are:

  • Active Subscribers
  • Welcome campaigns
  • Preference campaigns
  • Birthday campaigns
  • Holiday campaigns
  • Special promotion campaigns
  • Reactive campaigns

Rewards Programs or Loyalty Cards are win-win for both company and customers. Credit card companies and Airlines were the first ones to start these and soon taken over by many others like car rentals, hotels, super markets, grocery chains, retailers, restaurant chains to anything, even the smallest local coffee shop or spa  in your neighborhood where you can get your nth coffee or haircut for free.  Companies can learn about purchasing patterns and cross purchasing while customer get rewarded for their loyalty to stick with the same company. Some of the KPI that can be are:

  • Conversion rate
  • Response rate
  • Time taken to reach reward
  • Rewards used

With the popularity of facebok, twitter, linkedin etc. Social Media Marketing has been picking up. You can now find your favorite airlines, bands, retailers or events like concerts or conferences  etc on these sites advertising few extra miles or discount coupon when you subscribe or ‘like’ their page. Why is it all this hype about followers on social media? These platforms are not just an interaction medium but really is a huge customer database but now the question that lies in front of everyone is how to use it. One of my favorite example from the Microstrategy’s CEO Michael Saylor at his keynote at Mircostrategy World this February in Las Vegas was of I-phone/Android app by a wedding dress retailer that taps into Facebook data for relationship status changes to Engaged, send targeted customized messages with promotions and have an option to update the status for bridesmaids to register at website for further discounts on dresses. If you really think there is lot that can be done with the huge customer data that has been accumulating everyday. Some of the KPIs that can be used for social media marketing are:

  • Message reach
  • # of tweets/mentions
  • Ratio of positive comments
  • # of followers/fans
  • Links to th sites
  • Topic trends

When we talk of Marketing analytics, Customer Analytics is something that does not go untouched. Looking at customer behavior helps to make important business decision regarding direct marketing, geographic selection and CRM. In simple words, is it profitable to acquire or retain the customer or let it go. Affinity or Market Basket Analysis is one of the often asked advanced data analysis technique that is used to discover co-occurrence relationships among activities performed by specific individuals or group e.g. if you buy a certain group of items, you are more (or less) likely to buy another group of items. It can be used for cross-selling and up-selling, in addition to influencing sales promotions, loyalty programs, store design, and discount plans.

Please provide us feedback by taking the poll below and adding comment on this blog on how you are using marketing analytics within your organization.

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About Abi Gupta

Business Intelligence enthusiast with background in predictive analytics and six sigma and interests in best practices, visualizations and capturing trends in BI.
This entry was posted in KPIs and tagged , , , . Bookmark the permalink.

2 Responses to Marketing and Customer Analytics

  1. Pingback: KPIs in Retail and Store Analytics |

  2. Pingback: KPIs in Retail and Store Analytics - Datavibes

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