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More About This Title Data-Driven Marketing: The 15 Metrics Everyone inMarketing Should Know
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How organizations can deliver significant performance gains through strategic investment in marketing
In the new era of tight marketing budgets, no organization can continue to spend on marketing without knowing what's working and what's wasted. Data-driven marketing improves efficiency and effectiveness of marketing expenditures across the spectrum of marketing activities from branding and awareness, trail and loyalty, to new product launch and Internet marketing. Based on new research from the Kellogg School of Management, this book is a clear and convincing guide to using a more rigorous, data-driven strategic approach to deliver significant performance gains from your marketing.
- Explains how to use data-driven marketing to deliver return on marketing investment (ROMI) in any organization
- In-depth discussion of the fifteen key metrics every marketer should know
- Based on original research from America's leading marketing business school, complemented by experience teaching ROMI to executives at Microsoft, DuPont, Nisan, Philips, Sony and many other firms
- Uses data from a rigorous survey on strategic marketing performance management of 252 Fortune 1000 firms, capturing $53 billion of annual marketing spending
- In-depth examples of how to apply the principles in small and large organizations
- Free downloadable ROMI templates for all examples given in the book
With every department under the microscope looking for results, those who properly use data to optimize their marketing are going to come out on top every time.
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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
