Marketing Metrics; getting the right mix when the environment is moving and the product or market you are selling may not yet exist

October 3, 2016 / Mark Harding

Student ID: 215203034

In the telecommunications industry the change in technology and the speed that it becomes obsolete is causing investments being made on technology and allied services before a market is created. This means that marketing metrics can only give a guide to potential opportunities and risks. With the merging of technologies new major players are entering the market and services are being offered to differentiate the product supplied.

As a relatively new discipline and science, Marketing possess large opportunities and risks with the maturing of the sector. What makes something a science, is the ability to measure, evaluate, and replicate observations and experiments. In the telecommunication sector products are becoming more a complete entertainment package rather than just telephones which was the mainstay of the sectors up to the 1980’s. One example of the rapid change in the market is that the first apple iphone was released just over nine years ago (29th June 2007) with the latest release iphone 7 on 16th September 2016.

With the rapid growth in the performance of the iphones marketers are relying on the next purchase will be the latest model released, this is indicated by the industry having 2 year contracts, which allows for 2 model upgrades from the previous model being available. Figure1 shows the growth in memory capacity, which is required in the transition from a data and telephone environment to one that is now video rich environment. The local telecommunication carriers have had to provide infrastructure to support these services with multibillion dollar investments, these need to be supported by research on what will be required, when and where, the lead times on these investment are measured in years.

apple

Figure 1: Apple press release

For many years marketers believed they added value to a company’s bottom line for many years this was taken as a given, with little evidence to support or disprove the theory. Matt Palmquist referred in his article “What Can the Cola Wars Teach Us about Brand Loyalty?” refers to the Cola wars throughout the late 1990’s, with both Coca-Cola and Pepsi spending significant money on campaigns to differentiate their brands with little positive impact on market share or profitability. In fact, according to (Koschmann & Sheth) is that mature brands like Coca-Cola and Pepsi are better off trying to find new segments and new consumer groups through product innovation rather than trying to poach loyal customers from other mature brands.

In the Telecommunication this has been highlighted by AT&T purchasing DirecTV on the 24 July 2015 in the USA on the deal was aimed at increasing AT&T’s market share in the pay-TV sector; the purchase was reported by AT&T at US$48.5 Billion. This provides a differentiation to the opposition in the segment. New players in the segment include Google and Time Warner Cable each with differing product strengths and geographical reach.

Previously as demonstrated in the Cola Wars example, companies believed that all marketing was beneficial regardless of the type of marketing being applied, irrespective of the product, competition or environment. With a push for marketers to demonstrate accountability for their decisions (Mintz & Currim, 2013), marketers started to use metrics to measure and assess the effectiveness of marketing campaigns.

Big Data has become one of the tools of marketing metrics, Telecommunications can use information to track internet traffic to gather vast amounts of data for their own use or (once cleansed of identifying information) saleable to third parties. This data can be used to show return on investments in near real time management or for demonstrating return on marketing investment. The key to getting the right results relies on asking the right questions.

What are the Metrics?

In an industry like telecommunications large investments, require a large amount of data to be managed and interpreted in a timely manner. AT&T had the rights to the original iphone this allowed AT&T to build a large customer base of smartphone users. This allowed AT&T to have a large amount of Big Data to do analysis on all facets of business and marketing forecasting.   This allows a company’s planning on expenditure and marketing to be allowed and assessed.

A broad range of business and Marketing Metrics are used by companies to assess the performance of a marketing-mix decision according to Mintz & Currim.

Dashboards are also becoming a popular way for large amounts of data to be presented and track the performance of key metrics that a company has prioritised (Iacobucci, 2014 , pp. 218). Dashboard use has grown enormously and allow companies to track traffic use including longitudinal information to see changes over time for all aspects of business metrics including marketing.

dash

Figure 2: Example Dash Board

Do Metrics work?

Marketers have adopted the use of marketing metrics with the premise that they should be able to be accountable, both in terms of business metrics but also in the harder to define metric – improvement in Brand Equity (Ambler & Roberts (2008, p. 734).  Unfortunately many other academic works including theirs indicate that for marketers, there is no one size fits all metric for marketing and even for the same information the question can change as the environment changes.

For the metrics the product and the environment are paramount, a prime example of this is Blackberry who went from the dominant player in the mobile phone market to a bit player as the product and marketing could not keep up with the opposition.

bloomberg

Figure 3: Bloomberg

This is not to say that Marketing Metrics don’t work, it is simply that the metrics must match what is required to make the right strategic decision, that delivers alignment and insight of the effectiveness of marketing activities, and how it interacts with the business as a whole simply and that one obvious metric is suitable for all companies or even one campaign as the environment the data can be reviewed to provide insight into longitudinal studies as well as current insights to allow for appropriate marketing strategies.

References

Apple Inc. (2004-2016). Press Release Library. Retrieved September 29, 2016.

Bloomberg

http://assets.bwbx.io/images/users/iqjWHBFdfxIU/ivivda7R0N48/v1/-1x-1.jpg Retrieved September 29, 2016.

Iacobucci, D., 2014 . Marketing Management (MM4). Mason: South-Western, Cengage Learning.

Koschmann, A. & Sheth, J. N., n.d. Do Brands Compete or Coexist? Evidence from the Cola Wars. Kilts Booth Marketing series, 2(051), p. 22.

Mintz, O. & Currim, I. S., 2013. What Drives Managerial Use of Marketing and Financial Metrics and Does Metric Use Affect Performance of Marketing-Mix Activities?. Journal of Marketing, 77(March), pp. 17-40.

strategy+business: Corporate Strategies and News Articles on Global Business, M. C. a. M., 2016. What Can the Cola Wars Teach Us about Brand Loyalty?. [Online] A http://www.strategy-business.com/blog/What-Can-the-Cola-Wars-Teach-Us-about-Brand-Loyalty?gko=e8aae Retrieved September 29, 2016

 

 

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Marketing Metrics; getting the right mix when the environment is moving and the product or market you are selling may not yet exist

W-A-T-T : TO MEASURE

A customer in Victoria, looking to sign up with an electricity retail company for their utilities, can be quite challenging. Thanks to the marketing team efforts, who are constantly alluring customers like us about what benefits they can offer and why they are different to their competitors. If you thought they were the mobs who supplies electricity, then you need to go back to your drawing board and rethink again.

Electricity retailers are mediators who is just customer facing helping customers to bill for what you use. They are business who has negotiated buying electricity on your behalf to resell them back to you. In Victoria, there are a total of 21 electricity retailer suppliers fighting the battle of being the top most retailer, within a population of approximately 2.7 Million consumers among Residential, Small business and large business. [Energy Retailers Comparative Performance Report – Customer Service 2014-15]

The main objective among these retailers is to gain consumer volume to remain profitable. Operating in a very competitive and non-customer facing, service market, the marketing team in this sector has a direct influence on the strategies adopted to generate consumer leads. There is considerable investment undertaken by these retailers to promote their business to influence consumer behaviour’s decision to choose them as a preferred service retailer.

Some of the key marketing activities undertaken by these energy retailers are media advertisement, website traffic measurement, internet marketing activities – SEO, social events and promotions, sponsorship programs and campaigns.

It is important for the marketing team to monitor their effectiveness of their marketing strategy as it leads to an understanding of how business is performing. Table 1.1 shows possible marketing measures that can be used by energy retail companies

Table 1.1
table-1-1

These measures have a direct influence on how the energy sector performs in terms of revenue generated, market share increase, pricing strategy determines profitability, as the financial performance is based on how Marketing efforts drives consumers to choose their retail company.

Financial measures such as Gross profits and Earnings before income and taxes (EBIT) are based around increase in customer volume and how much was billed during the reporting period, which is a measure of customer value.

Table 1.2
table1-2

These metrics indicate a direct relation between how Marketing plays an important role in the energy retail industry. These statistics gives an indication to Managers on how well their marketing mix design has helped business to grow and be profitable and what changes they need to make in their design to correct and improve.

References

Sharp, B. (2013) Marketing Metrics Marketing: Theory, Evidence, Practice. Oxford University Press, Melbourne, Australia.

Mintz, O, Currim, IS (2013). What drives managerial use of marketing and financial metrics and does metric use affect performance of marketing mix activities? <  Journal of Marketing, 77 (2), 17-40.

Davis, J 2013, , Measuring Marketing : 100+Key Metrics Every Marketer Needs, John Wiley & Sons, 2nd Edition, Singapore.

https://www.aer.gov.au/system/files/AER%20Annual%20Report%20on%20the%20Performance%20of%20the%20Retail%20Energy%20Market%20201415_0.PDF

https://www.originenergy.com.au/content/dam/origin/about/investors-media/senate-submission-carbon-risk-disclosure-160331/annual-report-2015.pdf

http://switchon.vic.gov.au/bills-pricing-and-meters/energy-retail-companies-contact-list

http://www.esc.vic.gov.au/wp-content/uploads/2016/05/RPT-2014-15-Comparative-Performance-Report-Customer-Service-20160502.pdf.pdf

Impulse buys and neuro marketing

No one knows what the future looks like. Except marketing managers who look forward to the next generation technology which allows brain and computer to communicate seamlessly across multiple formats, operating systems with no delay, and presumably no secrets.

Chances are, these marketing managers are Science Fiction nerds, and they’ve spent a lot of time reading novels throughout highschool and university.

In 1996, a British Sci-Fi author, Peter F Hamilton, released his first book of the Night’s Dawn Trilogy: “The Reality Dysfunction”. I bought it by accident around 1999, the appeal being it was by far the thickest Sci-Fi book I’d ever seen – over 1000 pages in a paperback. Little did I know it would become the benchmark on how I would judge other science fiction writers.

peter-f-hamilton-the-reality-dysfunction-1354549924

The most interesting thing by far in this book were “neural nanonics”. A system which allows a person to access a vast network containing all information ever recorded in history of mankind (the internet I suppose).

What occurred to me almost immediately was the speed at which you could sell and buy products and services. If you could place an idea in a person’s mind at the speed of thought, that person could potentially make purchase goods and services faster than ever before.

Fast forward to February 2013, and we got Google Glass!

google-glass

If you’re looking for a way to market to potential customers, what better channel (without accerss directly into their brain, of course)! The system tracks your location, knows your purchasing habits, so a marketing system can offer you any number of goods or services instantly:

“10AM after a meeting?” – there’s a great barista serving espresso around the corner! Preorder to collect on your arrival!

“Been to the gym?” – How about a protein shake at Boost, or a massage at the local physiotherapist to take those aches away?

THIS IS MARKETING HEAVEN

Forget the speed at which you’re being marketed to now on Facebook, or during your Google searches. Here you have a system which can sell you stuff every minute of every day. Grocery shopping can become a breeze. You simply tell your headset to add to your shopping list, and presumably AndroidPay will take care of the rest!

You wake up the next morning with your groceries conveniently waiting at your front door.

Is this a good thing though? I know I’ve sat there at 1AM looking through useless junk on eBay, for no apparent reason, and just had to have a soldering kit shipped from Hong Kong express posted, arriving early 2019 for only $17.95. Wait, what? Yes, I actually bought one.

So what number of impulse buys might you get if you can simply say (or think) yes, and your headset (or neural nanonics) buys your new car, or the dream holiday (which you had to have, but cannot afford).

With the complex algorithms driving the way the internet already flashes potential purchases to us in today’s world, just imagine what level of sophisticated selling there will be tomorrow. I imagine there are marketing executives tripping over themselves at the prospect. For one, the retail chain won’t be needed. A manufacturer can simply market directly to you (although you can be sure the internet providers, and google will want a cut). In a similar manner to Amazon, the purchase can simply be packed and shipped without having to utilise a major retail chain, with several middlemen.

But the shopping hangovers are probably going to be horrific. I can spend money quicker than I can earn it, so imagine those instant flashes: “Need more Credit”? “YES PLEASE”! and so you descend down the spiral towards absolute chaos in a retail version of hell, where credit is cheap and consumer electronics cheaper.

Damn, I think I might have to burn my iPad now…

apple-on-fire

 

Wading in a metric tonne of data

Marketing is becoming increasingly scientific, and while there is a lot of room for creativity in terms of advertising and marketing, the metrics, or numeric data, is where the action happens. Big data can be overwhelming, with so many pieces of information from various sources that can tell a company exactly the who, what, where, when and why of their customers. But is this the bottom line? If we step down through the metrics, we can see how customer retention and customer acquisition could be the keys to success in what marketing dollars gain.

large-895567_960_720-2Big data can tell an organisation minute details about the customer, right down to what they’re clicking on a website, and the analysis of that data can assist the organisation’s interactions with the current and future customers (Marr, 2016). Making sense of all of those numbers would probably take a long time, and a specific skill set, which is why the focus is shifting towards the financial metrics and away from the more intangible ones. There is a lot of data to choose from and the main metrics considered are marketing activity metrics (rise and fall of sales figures), Customer profile metrics (data on the individuals such as age, gender or data on a company such as industry and size), memory metrics (brand awareness, customer satisfaction, purchase intentions), behavioural metrics (activities of the buyer) and financial metrics (profit, return on investment, customer value) (Sharp, 2016).

“Marketers are constantly focused on improving campaign effectiveness — more data is great, but more impactful and easy-to-work-with insights are better”  –Steven Fuld, senior vice president, Sony Corporation of America (PURSWAY 2013)

Many Metrics
While all of these different metrics provide useful information, there is ongoing debate as to whether financial measures in isolation are adequate to demonstrate something as multidimensional as brand equity (Ambler and Roberts, 2008). However some companies are satisfied that the financial metrics should be the key focus. For example, a recent study conducted with Microsoft Corporation showed that their marketers are focussing more on business-focussed metrics that show the link between the customer experience and the financial outcomes (CMO Council, 2016). This is typical of the trend towards using the financial data to tell the company what it really it needs to know, which is what are they getting for their money.

big-data-1515005_960_720If we consider the key financial metrics that can be used to formulate marketing strategy are Return on Investment (ROI), Cost Per Acquisition (CPA), Return on Advertising Spending (ROAS), Customer Lifetime Value (CLV) and Customer Retention Rate (CRR) (Goulart, 2016), we can learn a lot about our marketing dollars just by focussing on one of those metrics.

Return on Investment or ROI
Return on investment is calculated  using the formula ROI = Net Profit/ Cost of Investment, and can be compared to other ROI.  Even the recommended top ten online marketing metrics recommends measuring ROI, as it demonstrates the profitability of a particular marketing campaign (DeMers, 2014).  For example, ROI can be the most useful way of comparing whether it is more beneficial for a company to spend money on acquisition or retention of customers, as both have their merits.

Research has shown that existing customers boost bottom line growth in more ways than do new customers. Concentrating your efforts on building and nurturing relationships with your existing customer base is worth the investment (Hoovers, 2016). But what if it’s more economically viable to acquire new customers? By breaking down customer acquisition to a formula that tells you the cost of converting a person into a customer you can compare the ROI of retention to acquisition. The cost of acquisition would be worked out by dividing the expenses related to acquisition by the number of new customers acquired (Optimove, 2016).  Customer retention has been considered a “missed mark” in marketing for most companies, as many companies have not fully grasped  the power of the customer retention relationship (Newnorth, 2016).

presentation-1454403_960_720
Customer retention and customer acquisition don’t have to be two parallel lines that never meet  because word of mouth is a great tool (Jao, 2013), but these kinds of marketing have a way to go. For companies to be successful in retention marketing they must commit to a new way of thinking that must be implemented from the top down. (Jao, 2015).

As you can see, metrics can go from big data to small data and help show you the bottom line.

 
References

CMO Council (2016) Marketers looking to measure customer experience based on business outcomes not campaign metrics, PR Newswire [online] http://www.prnewswire.com/news-releases/marketers-looking-to-measure-customer-experience-based-on-business-outcomes-not-campaign-metrics-300217111.html

DeMers, J (2014) 10 Online Marketing Metrics You Need To Be Measuring, Forbes [online]
http://www.forbes.com/sites/jaysondemers/2014/08/15/10-online-marketing-metrics-you-need-to-be-measuring/

Goulart, M (2016) 5 Critical Marketing Metrics to Follow, Entrepreneur [online]
https://www.entrepreneur.com/article/278758

Hoovers
http://www.hoovers.com/lc/sales-marketing-education/customer-acquisition-vs-retention.html

Jao, J (2013)
Customer Retention Should Outweigh Customer Acquisition http://www.cmo.com/features/articles/2013/7/18/customer_retention.html#gs.null
Jao, J (2015)
 Customer Retention Is King: The Future Of Retention Marketing, Forbes [online] http://www.forbes.com/sites/jerryjao/2015/01/21/customer-retention-is-king-retention-marketing-provides-greater-roi/#1e381b9f609a

Marr, B (2016)  How Big Data Analytics can improve your marketing, Data Informed [online] http://data-informed.com/how-big-data-analytics-can-improve-your-marketing/

Newnorth (2016) Five reasons why customer retention is better than acquisition

Five Reasons Why Customer Retention is Better Than Acquisition

Optimove (2016)  http://www.optimove.com/learning-center/customer-acquisition-vs-retention-costs

Pursway (2013) ‘Marketers Monetize Customer and Prospect Real-World Relationships’
http://www.pursway.com/marketers-monetize-customer-and-prospect-real-world-relationships/1891/

 

 

 

Sharp, Byron (2013). Marketing : theory, evidence, practice. Oxford University Press, South Melbourne, Vic

How do we report our marketing results up the line?

The Crunch.

Your firm has just spent all of the marketing budget for the period and the board asks how effective the campaign was?  How do you answer in a language they understand?  Do you go into detail about the 5 C’s, do you describe the STP process and how that was applied to your product, do you run on about the 4 C’s and the choices the team made?

Chances are that would not be a meaningful exchange, nor would you have gained any ground in securing your budget for the next period.  Your managers need tangible information.  Li Ling-yee 2011 wrote ‘From a managerial perspective, top management increasingly calls for “marketing accountability” pressuring marketers to produce metrics that document marketing’s ROI.’  Marketing an its effects and results cannot be easily explained to those who have not been exposed to the theory, the process and the choices made along the way.   Marketers are being held to account for their marketing activities.

Marketers need to be able to translate what they have achieved in monetary terms, even if those effects have not yet been realised.  For the simple manager, an increase in profits are one of the only metrics they may understand.   Many managers have asked marketers to come up with a single metric, referred to as a silver metric, such as Return on Investment (ROI),

roi

 

 

 

 

image source – http://crowepr.com/breaking-down-return-pr-return-on-investment-roi/

 Discounted Cash Flow (DCF),discounted-cash-flowimage source – https://dmoving.wordpress.com/

Return on Customer (ROC),and profit margins, to show results in a single monetary value.  This is not an effective comparison as there are many facets that require analysis to demonstrate effective marketing.

Metrics

The key is to develop a number of marketing metrics to demonstrate how effective any market campaign has been, showing a multitude of angles or facets to cross reference and compare with when evaluating results.  Some more effective metrics that are used within business, include behavioural, memory, physical availability, marketing activity and customer profile.

Behavioural metrics capture customer behaviour which include loyalty, motivation, attitudes and emotion.  How likely is a customer to refer this product, how likely will this customer return for a repeat sale.  When considering memory metrics we look at how likely the customer is to recall our brand as being front of mind when faced with an image or text.   Physical availability covers locations where the consumer can access the product, how much shelf space does the product command and at which retail outlets?   It is useful to report on the actual marketing activity undertaken for any particular campaign such as newspaper advertising, social media posts, discounts given etc.  Finally understanding the customer profile including age, gender, physical location, when and what they buy can be valuable information to feedback to the organisation.

The Dashboard!

cloudbridge-marketing-dashboard-management-overview

image source – http://market.qlik.com/cloudbridge-marketing-dashboard.html

The astute manager may ask for a dashboard to be developed (if internal software does not exist) to illustrate the results of the metrics discussed above.  The translation of those metric into a pictorial form is more effective in communicating the information in the form of charts as opposed to data.  R. Meenakshi (et al) wrote about data visualisation. The term dashboard relates to a set of easily understood charts that can, at a glance relay appropriate levels of user information.  Dashboards have created the ability to easily show non-marketing managers what the measured metrics are showing in easily reported form.

The Results

Having successfully delivered the information in a tangible format to your management team, the marketer would have demonstrated how marketing activities were undertaken, what information has been gathered and how it can be used for future campaigns.  Demonstrating a clear understanding of consumer behaviour, identifying trends and highlighting opportunities for growth would empower the senior management team to commit future funds to marketing, as its existence is not a luxury, a department to wind down in tough times, but a necessary function of a business to survive.

Philip Hunter – Student ID 800624597

References:

Volume 40, Issue 1, January 2011, Pages 139–148

Business-to-Business Marketing in the BRIC Countries

http://dx.doi.org.ezproxy-f.deakin.edu.au/10.1016/j.indmarman.2010.09.002

doi:10.1016/j.procs.2015.08.036 – Procedia Computer Science

Volume 58, 2015, Pages 371-379

Second International Symposium on Computer Vision and the Internet (VisionNet’15)

Ambler, T, Roberts, JH (2008). Assessing marketing performance: Don’t settle for a silver metric  Journal of Marketing Management, 24 (7/8), 733-750.

 

Is acquisition enough – a telecommunications example

By Charmaine Calleja 211807066

I have been an Optus customer for over 5 years…. until recently.   I was won over by Optus initially because they were advertising a significantly cheaper package than rival competitor Telstra.

Over the first couple of months with Optus I experienced a few issues with the modem coverage at home and was pulling my hair out at the lack of customer service and support provided.  Unfortunately, I was locked into a contract for 24months and couldn’t justify the contract termination fees to change.

While waiting for my contract to end, my modem had eventually been upgraded and the service had improved, and a few more years passed.

Recently, another advertisement caught my eye…….

telstra1

Immediately, the thought of moving to what is known as ‘the most superior telecommunications provider in Australia’ captivated me.   Everyone always talks about Telstra having the best mobile reception in Australia and the most reliable internet service around.

So, I embarked on the journey to switch providers.    Now, of course, we cannot live without the internet at home, so before cancelling the Optus service, I arranged for the connection of the Telstra service.  Things were looking up!  My new modem arrived and was installed, Foxtel was installed, and my new mobile phone sim card had arrived.

The next step was to call and cancel my Optus service.  Ironically, it was the fastest phone response time I had encountered.  The Optus call centre were quite eager to put me through to their retention team and the representative there worked very hard to create an offer to entice me to stay – if only they had been this responsive to my needs 24 months ago!

So what did my telecommunication adventures tell us about marketing evaluation and success?

It is clear that with the right combination of Product and Price, advertising can be veryps-of-marketing successful in the acquisition of new customers.  An enticing proposition coupled with a trusted and reputable brand can drive customers to tackle the barriers sometimes faced with switching between competitors, which can be particularly difficult in industries like telecommunications and banking.

 

In their 2016 financial reports, both Telstra and Optus claim to have continued focus on driving growth and long term shareholder value, an area in which Telstra having been claiming success for some time with the number of 3G subscribers hitting milestone figures in 2007.

growth

Is increasing the number of customers alone reason for claiming marketing success?

There are a number of financial metrics that organisations now rely on to determine how well a marketing strategy or project has performed, such as:

  • Profit Contributionsmetrics
  • Profit Margins
  • Return on Investment
  • Customer Value
  • Customer Life time value

While these metrics can lead to marketing departments being accountable for contributing to creating business value, they also come with their limitations and challenges for example:

  • Financial metrics alone can lead to extremely short term focuses which leads to a lack of investment in long term growth.
  • There is no one metric that can provide an adequate report of performance. In fact most argue that a combination of financial and non-financial measures is required.
  • Some metrics can be open for interpretation. For example, a small investment with a high ROI may contribute less in dollars than a larger investment with a lower ROI.

Retention is the key

retention

Within the telecommunications industry it is not uncommon for customers to be locked into 12, 18 or 24 month contracts.  This essentially works to extend the customer life time value and increases the barriers for customers to switch to competitors.

Locking customers for 2 years does not mean that the organisation can forget about actively managing customer retention.  Long term success comes from customer retention as it is well documented that is cost more to acquire a new customer than to keep and cross-sell products to existing customers.

For my experience, Optus applied customer retention strategies when the customer has called to leave and not actively through the customer life time with the organisation.  At this stage, in most cases, the horse has already bolted!

Telstra on the other hand, have identified the importance of keeping their existing customers happy and are investing initiatives such as creating WiFi hot spots around the country for their customers to use.  Although this cannibalise their potential earnings through use of the 3G and 4G networks, Telstra place more value on keep their existing customers happy.

On this basis, organisations who invest in and measure both short-term (acquisition of new customers) and long-term success (the retention/customer life time value of the customers acquired) provide a more comprehensive view of the success of their marketing performance.

References

ANNIE, L 2001, ‘Branded for success: Telstra leads the fame game with a $9.4b price tag’, Age, The (Melbourne), p. 4

Telstra 3G subscriptions top 2m’, ABC Premium News, 2007.

Docurated. 2016. How to Measure Marketing Effectiveness: Tips from 26 Experts. [ONLINE] Available at: http://www.docurated.com/all-things-productivity/whats-your-1-way-to-measure-marketing-effectiveness. Accessed 03 October 2016.

Telstra. 2016. Telstra Annual Report 2016. [ONLINE] Available at: https://www.telstra.com.au/content/dam/tcom/about-us/…e/2016-Annual-Report.pdf. Accessed 3 October 2016.

Singtel (Optus). 2015. Singtel Annual Report 2016. [ONLINE] Available at: https://media.optus.com.au/annual-reports/2015/singtel-annual-report-2015/. Accessed 3 October 2016.

Ambler, T, 2008. ‘Assessing marketing performance: don’t settle for a silver metric.’ Journal of Marketing Management, 24/No. 7-8, 733-750.

Currim, I, 2013, ‘What Drives Managerial Use of Marketing and Financial Metrics and Does Metric Use Affect Performance of Marketing-Mix Activities?’, Vol 77, 17-40.

Ledbetter, D, 2016, ‘Why Retention is more important than acquisition for Mobile Marketing’, Business 2 Community. Online available at http://www.business2community.com/mobile-apps/retention-important-acquisition-mobile-marketing-01447606#Hcsll14x7AJW0MEr.97 Accessed 3 October, 2016.

Are Financial Metrics Used In Marketing Measurement Overrated?

Shane Sutton 213555376 Suttonshane

Another way of putting this is, is marketing being overrated to say that it influences financial metrics. Marketing does influence financial performance but to what degree it does is probably definitively immeasurable.  In a businesses ROI, Return is measured by the change in profit. A businesses profit can change for many non-marketing reasons such as the changes in the economy, customer preferences, product quality. So how can you measure the change in profit directly attributable to marketing.

Marketing according to Iacobucci 2012 p3 is defined as “an exchange between a firm and its customers”. Thus a broad definition denoting marketing is a lot more than just advertising. Therefore we look at what financial metrics are available to measure the effect of marketing.

Lamest and Brady contend that marketing is losing its importance. They quote Webster JJ (2005) ”a major reason for this …is marketing’s inability to illustrate its contribution to business success”. One way of rectifying this is to use metrics to show marketing has the ability to point out that it does in fact create shareholder value.

By the way  according to Chambers Australia’s advertising spend is going to increase from $12.9Bn in 2014 to $16.4Bn in 2019. With that big of a spend marketing is very important and a big cost to businesses who partake (some would say it is an investment of the business). So there will be $16.4Bn worth of expenditure marketers will have to justify to the CFO & CEO. Thus marketing remains very important.

Marketo.com say to “Use metrics that matter to the CEO and CFO….in today’s economy CEOs and CFOs care about growing revenues and profits”.

Such financial metrics to use would be those discussed by Ambler and Roberts being ROI, Discounted Cash Flow, and Return On Customer. Ambler and Roberts find many objections to using these metrics and contend one better way is to measure the intangible marketing asset (brand equity).

Let’s take a look at ROI, Return On Investment which is measured by:-

Change in Profit/Investment. Change in profit attributable to the marketing spend. Investment equals the marketing spend. Given the broad definition of marketing, everything the company does is marketing related. This therefore implies any change in profit is attributable to marketing.

What does a company do when they sign a sports star or celebrity to wear their products? Would Nike have done an ROI when they signed Michael Jordan back in 1984?  I do not think so. Yes they would have done some homework to ensure they would get a good payback.

Today a business would be indebted to crunch some numbers in order to sign up a sports star or celebrity. Nike for instance can definitely say marketing has improved company performance, but the question still remains to what degree has marketing affected financial performance.

Does the average consumer buy products because they have been endorsed by a sports star, celebrity or do they just go into a store and buy what fits, is comfortable and looks good. This is something which seems to get lost in the metrics. One thing the average consumer does know is that every time they hear of a sports star, celebrity endorsing a product, is that they have to pay more for their goods to pay for the endorsement.

No doubt there are consumers who do buy goods because they are endorsed by a sports star, celebrity but to what degree this happens is once again immeasurable. As long as the revenues and thus profits increase everyone assumes it relates to the endorser.

Srinivasan and Hanssens in their paper Marketing and Firm Value do contend “If marketing’s contributions were readily visible in quarterly changes in sales and earnings, the task would be simple”. They also go on to say “much of good marketing is building intangible assets of the firm, in particular brand equity, customer loyalty and market-sensing capability”.

This backs up the difficulty in measuring marketing contributions to profit as against non-marketing contributions. Intangible assets, the main one being brand equity, gets mentioned in lots of literature. The only thing is that Intangible asset measurement is very subjective and difficult to measure. Intangible asset valuation is a difficult area for the accounting fraternity, so to measure the effect of marketing on brand equity increases this difficulty.

In the end the financial metrics will get used, but I still believe the true effect of a marketing event on financial performance is immeasurable.

References

Ambler Tim, Roberts John H., Assessing marketing performance: don’t settle for a silver metric. Journalof marketing management. 2008, Vol. 24 No. 7-8 pp 733-750

Chambers, Pippa, Adnews, 15 June 2015.   http://www.adnews.com.au/news/australia-set-for-16-4-billion-ad-market-worth-by-2019

Iacobucci Dawn, Marketing Management, 2012 South-Western, Cengage Learning

Marketo.com – The Definitive Guide to Marketing Metrics & Analytics

https://au.marketo.com/definitive-guides/marketing-metrics-and-marketing-analytics/

What’s really important?

Lucy Vadasz: 900286226

In research conducted by Mintz and Currim in 2013, out of 438 managers only 25% reported on 8 of 10 marketing-mix decisions (2013, p. 27). Merely 16% reported on price promotions and only 10% reported on distribution decisions.

But with distribution decisions and price promotions so relevant in developing an integrated marketing campaign or pitching for marketing budgets, why are managers neglecting to include these insights in their reports? It’s because it’s time consuming, costly and frankly many marketers don’t know where to start.

Marketing metrics are difficult to report on for many reasons:

  • Brand equity isn’t measurable on the back of a campaign, it takes years to build. Brand scores and customer perception surveys take time to implement and evaluate, as well as $$$ (see brand equity composition in figure 1)
  • Above the line (ATL) advertising is difficult to measure. Marketers have tried trackable URLS and the fleeting scannable QR code. In reality, Google is the primary online entry point for consumers therefore direct response is often not attributable.
  • Digital data is complex and often not easily to translate into dollars. Formulas are available but not watertight and calculations take time and dollars. Additionally, online conversions may be missed and not attributed.
screen-shot-2016-10-03-at-9-21-05-pm

Figure 1: Aaker and Joachimsthaler 2000, p. 31

However, before looking at what should be reported on in marketing eyes, I want to consider why are we reporting? and who is our target audience?

Ideally, the metrics used in reports depend on the user of the data. So, when marketing management is reporting to board-level, marketers may choose to represent financial data such as Return on Investment (ROI), Discounted Cash Flow (DCF) and Return on Customer (ROC) (Ambler & Roberts 2009, p. 734). However, when digital marketing agencies are reporting to their clients, it may include marketing metrics, such as market share, loyalty and share of customers (Mintz & Currim 2013, p. 29).

So how would you demonstrate the value of digital marketing to your CEO?

10 years ago, your Chief Executive Officer (CEO) may rolled their eyes or cited wastage should you wish to invest in digital advertising. Now, CEO’s sit in meetings requesting spend on digital marketing, although their knowledge of the acronyms is often dubious.

cartoon-of-meeting-business-boss-says-let-us-explore-our-digital-options-eh1et8Today, digital marketing and social media plays a fundamental part in integrated marketing campaigns, not to mention ‘always on’ strategies.

But why now? What’s the benefit and why the demand?

It’s because it’s highly measurable AND allows for two-way flow of communication, otherwise known as a conversation with your customers.

Highly measurable

Impressions, page views, time spent on page are a few arbitrary inclusions in many social media reports. Unfortunately, this doesn’t mean much to anyone, let alone the budgetary decision makers.

What CEO’s really want to know:

  • Conversion rate: although this doesn’t always indicate a sale, it shows movement down the sales funnel.
  • Channel source: where your customers are coming from. This helps to validate spend within your marketing strategy.
  • Lifetime value: as the old saying goes, it costs five times more to attract a new patient than retain one.
  • Marketing ROI: proving that what you spent on marketing can be returned through sales.

(Alley Watch 2015)

It’s about destination to sale

“Half of executives are not informed, engaged or aligned with their company’s social media strategies in any capacity,” Altimeter Group ‘The Evolution of Social Business.’

Account-level view of metrics through to conversion – this is what is important to CEO’s – company growth! Figure 2 shows that while traffic to site is important and content quality is vital in motivating users, this is expected success. The CEO wants know the outcome of the marketing efforts – warm leads, conversions and sales. It’s the end outcome that impacts the businesses bottom line.

sales-destination-to-conversion

Figure 2: Alley Watch 2015

So what does that mean for marketers?

So how do we prove to CEOs or the senior leaders writing our budgets that digital marketing is necessary:

  • Reframe digital reports
  • Connect social plan to organisational strategy
  • Encourage involvement in social engagement

There is no one-size-fits-all for marketing analysis… when it comes to reviewing performance, the analysis depends on the marketing mix and developing a cluster of metrics to suit.

References

Aaker, D. A., & Joachimsthaler, E 2000. Brand leardership. New York: The free press.

Ambler, T and Roberts, J 2008, Assessing marketing performance: Don’t settle for a silver metric. Journal of Marketing Management, 24, 733-750.

Mintz, O and Currim, I 2013, What drives managerial use of marketing and financial metrics and does metric use affect performance of marketing-mix activities? Journal of Marketing, 77, 17-40.

Webber, C and Solis B 2006, The Evolution of Social Business’ Altimeter Group, United States.

Alley Watch ‘6 Online Marketing Metrics You Need to Know’, 1 December 2015, retrieved 27 September 2016 <http://www.alleywatch.com/2015/12/6-online-marketing-metrics-need-know/>

Does acupuncture really helps In Vitro Fertilization success?

Does acupuncture really helps In Vitro Fertilization success?
Acupuncture is frequently marketed as a successful complementary therapy to improve one’s well-being and health. Acupuncture is a form of Chinese medicine that is very well marketed in the field of female fertility, particularly, that of In Vitro fertilisation. All communication mediums including television, newspapers and social media platforms often display marketing strategies promoting Chinese medicine as well as acupuncture, as effective approaches to the achievement of success with fertility and pregnancy. Marketing promotions with powerful pictures depicting strong emotional messages such as the following can be easily been seen on any communication medium:

Figure 1:

Source: https://drhelenalim.com/2015/09/25/the-benefits-of-acupuncture-in-ivf/

Figure 2 :

Source : http://acupunctureaventura.com/acupuncture-and-ivf-support-aventura-floridanull

Ping Ming health argues that Chinese medicine has a deep understanding of women’s reproduction system and can helps to prepare the female body for conception, prevent miscarriages and support for post-labour recovery (www.pingminghealth.com.au).

Furthermore, they also argue that their own traditional acupuncture techniques centred on the rebalance and the restoration of maximum bodily functions. Female and fertility support accounts for 11% of the top 20 support needs presented to Ping Ming Health. The following silver metric below highlights that the use of acupuncture to promote female fertility and IVF support is one of the highly sought support need by the female consumers group.

Figure 3:

Source:
http://www.pingminghealth.com/clinic/acupunture-for-fertilitynull

However, there are still out there few scholars and researchers that continue to be sceptical and do not necessarily agree with the argument that acupuncture is effective at all. The debate of acupuncture as a method of treatment in contemporary western medicine is not fully empirically supported (Stener-Victorin, Wikland, Waldenstorm & Lundeberg, 2002). However, despite this, one cannot turn a blind eye to the fact that a high percentage of female individuals continue to seek either alternative or complementary support from acupuncture.

Are all these marketing strategies promoting acupuncture as a successful approach to fertility and pregnancy MISLEADING? Are acupuncture providers invest thousands of dollars in marketing strategies just to attract all those female consumers through their clinic’s door so they can increase their revenues? Should this be the case, certainly, one can concludes that the female consumers group is an easy target who is also a vulnerable individual consumers group as they go through some emotional and sensitive rollercoaster wanting to have a baby.

Figure 4:

Source: https://www.salubre.com.au/blog/faqs-ivf-and-fertility-acupuncture-melbournenull

To test the true meaning behind the marketing messages that acupuncture does work and does increases the rate of fertility, I decided to do more research and seek some sort of metric evaluation data supporting the emotional messages communicated behind those marketing strategies, marketing pictures and phrases and therefore whether the investment in marketing does brings in any return.

Fortunately, I was able to source some metrics presenting an evidence supporting the above-mentioned argument that acupuncture in fact does work. The following data metric shows numerous studies evaluating use of acupuncture for In Vitro Fertilization.

Figure 5:

Source http://www.qiraku.com/ivf.htmlnull

AND I was also able to find the following metric evaluation data-

Figure 6:

Source: http://morden-acupuncture.com/Our_secret.phpnull

AND this metric evaluation:
Figure 7:

Source : http://www.readingacupuncture.com/infertilitynull

Nevertheless, the above metrics evaluate whether the introduction of acupuncture as a complementary and or alternative therapy is effective. Clearly the answer is YES. Those evaluation metrics prove the argument that acupuncture does support fertility and conception.

This also proves that the investment in marketing strategies using emotional pictures and phrases promoting acupuncture as an effective treatment does pay off. As a result, the rate of female consumers seeking acupuncture treatments increases; and therefore the profits for acupuncture providers are secured and on the rise.

However, I strongly believe that the above evaluation metrics do not necessarily completely represent the consumer’s satisfaction rate. In this case, I believe clients’ testimonials could also be one effective marketing evaluation. To find out more about this, I did further research and came across the following testimonial:

Figure 8:

Source: http://www.consciousacupuncture.co.uk/fertilitynull

In my view, individual personal stories of how acupuncture has assisted and supported is another powerful way to evaluate how marketing of acupuncture been successful. Testimonials are also powerful tools as they also represent emotional pictures and phrases that could support the ‘market’ of acupuncture and generate new incoming clientele to the clinic’s door and therefore generate new revenues for the providers.

By Annette Anat Elbaz 97551477

References:

Alternative Treatments in Reproductive Medicine: Much ado About Nothing. Stener-Victorin, E., Wikland, M., Waldenstorm, U., Lundeberg, T. (2002). Journal of Human Reproductio Vol. 17, pp. 1942-1946.

http://www.drhelenalim.com

http://www.webmd.com

http://www.ivf.com.au

http://www.pingminghealth.com

http://www.consciousacupuncture.co.uk

http://www.readingacupuncture.com

http://www.morden-acupuncture.com

http://www.qiraku.com

http://www.acupunctureaventura.comnull

‘Please sir, may I have some more’…….money for my marketing budget

Published by Kelly West – Student ID:  500122265

oliver

During recessions marketing budgets top the list for dollars to be cut from their budgets. Is this fair? Money has to be saved from somewhere for organisational survival right? Well this now avid ‘expert’ marketing blogger (self-proclaimed) argues that marketing is just as critical as any other organisational department such as Human Resources, Finance or IT. To be balanced though I also argue that like any other organisation departments, the marketing budget and spend must be justified and the effectiveness measured. In the Marketing Department metrics can be used to just this.

This blog discusses the following:

  • The importance of marketing metrics,
  • The different types of marketing metrics and,
  • Marketing metrics strengths and weaknesses

 

Why are marketing metrics important?

Let us start with the basics, what are metrics?  Metrics are defined as a wide range of tools that managers can use to evaluate performance (Investopedia, 2007). As described by Sharp (2013, p. 81), ‘marketing metrics let managers know how the brand and business is performing.’ If my argument above that marketing is just as critical as any other organizational department then marketing managers need a way to justify organizational spend on marketing and at the risk of putting it simply, this is why marketing metrics are so important.

If we think about it there are many other reasons for why marketing metrics are important, as metrics allow for the measurement of performance, there are many other benefits that managers could realize from using marketing metrics.  As stated by Iacobucci (2014), ‘you can’t manage what you don’t measure.’ Some other benefits managers could realize from using marketing metrics include:

  • The ability to track performance and identify areas of improvement,
  • Make measurements to allow managers to make marketing decisions and,
  • Assist in reporting of performance to key stakeholders

Now that we have discussed and all understand why marketing metrics are important, let’s focus next on the type of marketing metrics.

we-love

What are the different types of marketing metrics?

Many people, including myself before I really understood this topic, saw financial metrics (the measurement if financial performance) as the only metric that mattered. Amber & Roberts (2008) challenged my view and question if a single financial indicator, also known as a ‘silver metric’, can provide an adequate report on performance.

Sharp (2013) identify various types of marketing metrics that could be used, these include:

  • Financial,
  • Customer Profile Metrics,
  • Behavioral Metrics and,
  • Memory Metrics

Financial metrics include:

  • Profit Margins,
  • Return on Investment (ROI) = Returns – Investment/ Investment (Burrows, 2014),
  • Profit Contributions and,
  • Customer Life Time Value

Customer profile metrics include:

  • Customer demographics/ descriptors of customers
    • Gender
    • Age
    • Income

Behavioral metrics include:

  • Sales,
  • Market Share and,
  • Purchase Frequency

Memory metrics include:

  • Brand Awareness,
  • Attitudes,
  • Brand Image Associations and,
  • Net Promoter Scores

The conceptual model as show in figure 1 below is identified by Mintz and Currim (2013), this model supports Amber and Roberts (2013) view that managers should not just focus on financial metrics.

Capture 1.JPG

 

What are the strengths and weaknesses of marketing metrics?

Many of the positives of using marketing metrics have been discussed above such the ability for managers to have data to assist in their decision making, enabling reporting to key stakeholders and justifying increases in marketing budgets.

There are also some limitations with marketing metrics and it is important that these are recognized by all of you budding marketing gurus so you will be able to be aware of them and implement strategies to counteract the limitations.

A major potential limitation of metrics is if only one type of metric is used, such as financial. Whilst financial metrics are important they must be used in conjunction with other metrics such as customer profile or behavioral. Another limitation of metrics is the quality and integrity of the data used, as the saying goes, rubbish in = rubbish out. It is critical that the data used for metrics is quality and the interpretation is unbiased and the metrics speak for themselves.

albert

Australian business are predicted to spend in excess of $13.5 billion in 2016 alone. With businesses investing this sort of money in marketing it is easy to see why marketing metrics are so important as they assist managers evaluate, justify if you will, this necessary spend! If managers use marketing metrics effectively they may even be able to justify increases in marketing budgets and no longer have to beg like Oliver Twist for more  $$!

Student ID:  500122265

References

Clark, B. and Ambler, T., 2011, ‘Managing the marketing metrics portfolio’,   Marketing Management, 20 (3), p. 16-21.

Burrows, D., 2014, ‘Too many metrics: The perils of training marketers to calculate ROI’  

Iacobucci, D., 2014, Marketing Management (MM4). Mason: South-Western, Cengage Learning.

http://www.investopedia.com/terms/m/metrics.asp [Accessed 3 October 2016].

Sharp, B., 2013, ‘Marketing Metrics Marketing: Theory, Evidence, Practice’, Oxford University Press, Melbourne, Australia.

http://www.smh.com.au/business/media-and-marketing/australian-advertising-market-to-hit-135-billion-in-2016-20151220-glrs3i.html [Accessed 2 October 2016].