Either William Lever or John Wanamaker once said: "Half the money I spend on advertising is wasted; the trouble is I don't know which half." This idea that we never know what return we get from marketing spend is one that has permeated over the years and is prevalent amongst many business leaders. Sometimes I don't think marketers help themselves by behaving in a way that just further drives this misconception. I have always had the view that everything is measurable - including everything I do as a marketer.
My basic framework for measuring anything is very simple. Everything you do, you do to drive a result. Every action is motivated by the intent to create an outcome. So measuring the effectiveness of your action should be tied to how successfully you created the outcome or the results you were hoping for. Now the tricky part comes in making the connection between your immediate action and the ultimate end result you are seeking to drive. And this is where marketers sometimes drop the ball.
The gap often comes when the end result you are seeking, for example increased sales, can not be tied to the direct action you are initiating, for example an advertising campaign. But that's often the case, even beyond marketing. The trick is to understand the chain of results that can ultimately be correlated to the end result. For example, when I was at Texas Instruments where we didn't sell online, the question was often asked by business leaders as to the value of our marketing campaigns. How could they be assured that the millions we were spending was leading ultimately to sales and especially sales to new customers.
The approach we took was to try and map the customer journey from the point they interacted with our campaigns. We also tried to understand the same journey from the other direction backwards - ie for a customer making a purchase, what other behaviors do they exhibit leading up to the purchase. What we found through this exercise is that obviously these customers spend a lot of time on our website downloading datasheets and application notes, watching videos, participating in our community and requesting samples of chips for their protoypes. In fact through some simple number crunching we discovered that 95% of the customers who purchase something had placed a request for the sample for that product earlier in their design cycle.
Now we were able to turn this around and measure the marketing campaigns in their ability to generate a sample request, and how many of those came from new customers. This became the "ultimate" down-funnel conversion. We evolved from there and mapped out an entire conversion funnel identifying key activities that a customer would perform online (or offline) as they go through their design/purchase process. With this framework theoretically you could even model a specific value to each of these conversions based on their correlation to revenue generation. You could for instance put a $ number against each conversion reflecting its ability to eventually drive revenue for the business. So for example, a downfunnel conversion would have a much higher value than an upper funnel conversion. Of course if these conversions were online then measuring them is a lot easier, but with the right diligence and systems every offline conversion can also be tracked and measured.
In Part 2 of this post, I will outline some concrete examples of how typical marketing activities can be measured based on my experience in ecommerce.
My basic framework for measuring anything is very simple. Everything you do, you do to drive a result. Every action is motivated by the intent to create an outcome. So measuring the effectiveness of your action should be tied to how successfully you created the outcome or the results you were hoping for. Now the tricky part comes in making the connection between your immediate action and the ultimate end result you are seeking to drive. And this is where marketers sometimes drop the ball.
The gap often comes when the end result you are seeking, for example increased sales, can not be tied to the direct action you are initiating, for example an advertising campaign. But that's often the case, even beyond marketing. The trick is to understand the chain of results that can ultimately be correlated to the end result. For example, when I was at Texas Instruments where we didn't sell online, the question was often asked by business leaders as to the value of our marketing campaigns. How could they be assured that the millions we were spending was leading ultimately to sales and especially sales to new customers.
The approach we took was to try and map the customer journey from the point they interacted with our campaigns. We also tried to understand the same journey from the other direction backwards - ie for a customer making a purchase, what other behaviors do they exhibit leading up to the purchase. What we found through this exercise is that obviously these customers spend a lot of time on our website downloading datasheets and application notes, watching videos, participating in our community and requesting samples of chips for their protoypes. In fact through some simple number crunching we discovered that 95% of the customers who purchase something had placed a request for the sample for that product earlier in their design cycle.
Now we were able to turn this around and measure the marketing campaigns in their ability to generate a sample request, and how many of those came from new customers. This became the "ultimate" down-funnel conversion. We evolved from there and mapped out an entire conversion funnel identifying key activities that a customer would perform online (or offline) as they go through their design/purchase process. With this framework theoretically you could even model a specific value to each of these conversions based on their correlation to revenue generation. You could for instance put a $ number against each conversion reflecting its ability to eventually drive revenue for the business. So for example, a downfunnel conversion would have a much higher value than an upper funnel conversion. Of course if these conversions were online then measuring them is a lot easier, but with the right diligence and systems every offline conversion can also be tracked and measured.
In Part 2 of this post, I will outline some concrete examples of how typical marketing activities can be measured based on my experience in ecommerce.
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