Marketing and advertising folks are increasingly called upon to prove an ROI on our craft, which is why we were delighted when our friend Tim Earnhart of Werkshop Branding asked CEO Jim Alcott to speak on the science of marketing at Werkshop's DIG Seminar Series event.
The topic: How to use statistics, analytics, and data to help clients and creative agencies refine marketing strategy and measure campaign performance.
For those who couldn't make it to the DIG event - especially our awesome clients in Portland, Ore., and across the country who've helped us create a fantastic body of analytics and data insights work - here are some key takeaways:
1. "Half my advertising is wasted. I just don't know which half." Still true?
John Wanamaker, whose Philadelphia and New York department stores were print advertising pioneers in the 1880s, coined this well-known adage in our industry. But while that may have been true in 1880, it's not so much in 2016. Most of us are familiar with metrics used in measuring the effectiveness of the campaigns we're running - particularly in a digital environment.
But can we predict in advance of the campaign - before we spend any money on it - what is likely to be most effective? Yes! If we use science to identify the right audience, we can predict with statistical accuracy whether we're directing our advertising campaign to people who have the propensity to buy. We're not talking about people who live in a particularly desirable zip code or census tract among other people who seem to look like people we think are our buyers. We're talking about individual people who actually share hundreds of statistically significant, rank-ordered attributes of the very same variables of those we can prove are our customers. It's math, and it's what analytics teams do for creative teams every day.
2. What if we want a different kind of customer than the ones we currently have? As Jim pointed out in his seminars this week, we get this question quite regularly - particularly from clients who are working hard to diversify their customer base. When marketing analysts mine customer data to understand existing customers, they're using that as a baseline to generate opportunities for future growth. What if you want your growth to come in audiences different from where it's been in the past? The answer is to do something different. Consider a new product or service line. If you've already done that, you either need to market to them differently or reconsider them as viable prospects.
3. The WHERE is as important as the WHO. Let data - rather than conventional wisdom - reveal the best trade areas. When considering location-based decisions, science-minded marketers and consultants will advise clients to consider a number of variables, including population density, demographic traits, traffic patterns, commercial development and density, etc. An overly generalized trade area chosen by drawing a 3-mile or 5-mile ring around a location is not precise enough.
The map above shows trade area polygons drawn around three client stores (trade areas are the black shapes and the stores are the red dots). Notice how much variance is in the polygons.
3. Know the CPA. Jim loves Shark Tank, and even though he agrees that Mr. Wonderful is kind of a jerk, he respects that he often asks contenders about the CPA - cost per acquisition (or CPO - cost per order). If you don't collect enough data, it's sometimes a challenge to know the lifetime value of a customer when customers drop in and out and vary on how much they spend and what they purchase. But it should always be possible to answer the question of CPA. How much are you spending to acquire a new customer? Knowing the answer to that will help you determine your marketing and advertising spends, and will keep you focused on selecting the right product lines and services when you begin to launch new ones. Knowing the CPA/CPO up front is another way to use science when making marketing decisions, and it will ensure a good return.
4. What's the ultimate success metric? The key to measuring performance is you have to track the right KPIs. Jim gave a great example of this at the sessions this week. We tested an email campaign wherein we used two different subject lines with two different "friendly from" senders to see which combination would have the highest open rate. "You're invited from Sue Rogers" got the best open rate. People were curious who Sue Rogers was, and why she was inviting them to something, so they felt compelled to open the email.
But when they opened the email and saw that it was a daycare center asking them to RSVP to tour a facility, they felt tricked. The click rate on the invitation RSVP was actually down 25% on that "winning" open rate combination. And the rate of those RSVP'ing for center tours was even lower.
The takeaway on that particular example: Be transparent and clear in addition to friendly and welcoming.
Thanks again to everyone who attended the DIG sessions this week, to Emma Marketing Services and Hyatt Place for hosting, and especially to Tim for creating, organizing and starting them in the first place! We're always delighted to work with Werkshop Branding, a team that is as appreciative of the science of marketing as they are passionate about the art of it.
If you would like to learn more about how marketing science can add ROI to campaigns, please give us a shout. I'd love to chat directly and am at email@example.com or 615-394-9247. Or we're happy to stay in touch via Twitter @AlcottMarketing.