A long-time adtech industry colleague said something to me the other day that stuck with me: “It’s the CRM people that know their business metrics cold, while many media people can’t even tell you their CAC.”
Why is it that some marketing disciplines are inherently grounded in business value while others are focused on campaign metrics?
I have a hypothesis: Direct marketers have historically used – and still use – good ol’ mail. And mail has a significant per-piece costs that require analyses like break-even to understand the response rate and revenue needed to make a profit, especially when prospecting.
Raise your hand if you’ve ever done a break-even analysis before a campaign launch. Anyone? Bueller?
OK, I’ll admit that break-even is probably not the right analysis for everyone – for instance digital marketers who can serve an ad to a prospect for mere pennies (although they may never see it – another topic). But it is representative of the type of metric that can move you closer to a business view of your marketing activity’s impact.
Here are a few ideas for easy-to-calculate business metrics you can adopt today for almost any marketing channel:
Revenue per [Piece]
Retailers commonly measure email’s effectiveness by RPE (revenue per email) or RPME (revenue per thousand emails). It’s a quick way to understand if you’re over-mailing and need to shift to smaller, more targeted campaigns. You can swap “email” for Click, Like, etc. based on the specifics of the channel you’re measuring.
A twist on the concept of net new customers, this ratio shows if your acquisition efforts are outpacing customers who are leaving or going inactive. If your ratio is trending toward 1:1, your growth is stalling and you should evaluate both your acquisition and retention efforts. Again, you can swap in Cancelled, Unsubscribed, Inactive, etc for “lost”.
Customer Engagement Rate
There are so many ways to define “engagement” – everything from opens to shares to visits and more. But what they have in common is that they typically take an isolated campaign view of engagement. But if your goal is engaging people, then you need to measure with that in mind.
An example: Assume you send out four email campaigns each month to a specific customer segment, and each campaign has an open rate of 10%. The question is – is it the same 10% that opens each campaign, or are you extending your “reach” into the database by getting new people to open with each send? The chart below shows the difference between campaign opens/clicks and cumulative reach achieved over time. (Source: “Email Engagement: Often Talked About, Never Defined” by Tim Watson et al, February 2013)
Think of Customer Engagement Rate as a measure of how well you’re activating your most valuable asset – your marketing database.
I’d like to hear from you. What are some of your favorite metrics? Have you developed your own to meet the specific needs of your business? Share your ideas below.
Judy has been named a “Biggest Marketing Hire” by iMedia Connection, and holds a patent in the area of dynamic online advertisement creation.
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