Tracking response first step in divining ROI

Too few marketers take a return on investment (ROI) approach to their marketing efforts - that is, if they're measuring at all. The result? Less than stellar success with customer relationship management efforts, and improvements in customer loyalty, profitability and share...

Too few marketers take a return on investment (ROI) approach to their marketing efforts – that is, if they’re measuring at all. The result? Less than stellar success with customer relationship management efforts, and improvements in customer loyalty, profitability and share of wallet that are underwhelming, to say the least. Little wonder many marketers have difficulty getting their bosses to approve funding for data-centric marketing.

Yet, considering the challenges of establishing an ROI model, it’s not surprising that few marketers have found an ROI measure that satisfies the top brass.

Here’s the root of the problem. Organizations haven’t historically integrated their marketing efforts across the spectrum of customer touch-points. And as the range of potential customer touch-points expands, the issue only gets worse.

For example, an organization may promote a special offer on its Web site, in its stores, through its call centre, or through customer statement stuffers. Let’s assume the special offer and accompanying marketing message is sufficiently compelling to inspire a customer to make a purchase or answer a call to action. So what then? Most organizations have no idea where their customers heard about the offer, or what compelled them to purchase. Was it the direct mail that caught their attention, or was it the Web message that elicited a response? If a marketer doesn’t know the answer to those questions, they’ll have no idea how to improve their future marketing efforts.

Tracking customer response is the first step in measuring marketing results, and building an ROI model. A simple coding tactic that links a specific piece of paper-based or Web-based communication to a specific customer may be all that is needed for effective customer response tracking. In other words, when a customer calls a 1-800 number in response to a promotion, all the call centre rep has to do is ask the customer, ‘What’s the number on the top right-hand corner of the paper or Web page that you’re looking at right now?’ It’s all about preloading your outbound marketing efforts so that when a customer responds, you’ve already been expecting them. It’s just a match of actual versus expected results – a post-campaign analysis, if you will.

The next level of ROI sophistication is to establish some form of customer-centric information file – a central repository where you can store information about customer contact points, experiences and transaction behaviour across the organization. This database should contain basic demographic data, as well as show you how often the customer has contacted your organization, the communication channel they used, the marketing mechanism they responded to most frequently, the questions they asked, the complaints they made, the answers they received, and the purchases they made.

All data input into the customer information system should be accessible by everyone in the organization, so that everybody has a big-picture view of the customer, irrespective of the department in which they work or the customer channel with which they’re involved. Creating a database that offers such an all-encompassing view of your customer is challenging, but not impossible. All it takes is solid information technology support to integrate your customer care systems such as billing, order fulfillment and operations. In other words, you have to ensure all your important customer systems are talking to each other.

Even so, the implementation of effective customer response tracking and an integrated customer information file is not enough to build a true ROI model for your data-centric marketing efforts. You must be able to use the information you have collected to make better business and marketing decisions that enhance the lifetime value of your customer relationships. This requires developing costing models to understand the effort required to speak to consumers and to gather information about them through each respective channel.

This is the next level of sophistication in marketing – integrating marketing costs and revenue generated across various customer touch-points for each and every customer.

When marketing professionals use their customer information file to analyze customer interaction behaviour over a period of time, they are able to create an historic view of each customer. Marketers can see channel preference, profitability, lifetime value and product offerings, then act accordingly.

Most organizations fail to achieve this level of marketing sophistication to support delivery of ROI in marketing activities. That’s because most organizations are not structured in a way to support and encourage cross-referencing of customer behaviour across multiple touch-points. The dominant mind-set is that everyone in every department has their own budget and everyone manages their budgets and their program evaluations independently.

Marketing budgets are based on marketing tactics rather than a customer-centric strategy. This has to change. An integrated marketing ROI model is only as good as a company’s system for monitoring customer interactions, its infrastructure for archiving customer data, and its process for leveraging customer data to continuously improve its marketing program.

Rob Shields is managing director of data insight and strategy for Toronto-based Optus Corporation, specialists in paper-based and Web-based one-to-one marketing.