Creating Value With Metrics
Geoff Wolf, EVP, J.Schmid & AssociatesJude Hoffner, Principle, Hoffner Marketing
Agenda• Why data metrics are the building blocks for creating value
• What data metrics create value • How to create value with data metrics
• When are data metrics most effective in creating value
• Case Study• Q & A
Why Metrics Are The Building BlocksMetrics are a Measurement Process
Measure Getting From Here to There
Building Blocks What are they?
Rules for Building Blocks - This is KEY ! We must have consistency
Here
Start With Awareness of What You Will Be Measuring With Metrics
There
12
34
Brand KPI’s•Merchandise / Services •Sales representatives •Retail store traffic•Web Visits
KPI’s & Value•Dollars•Number of Leads•Quotes
Value Today•Stake in ground today
Value Tomorrow•Goal for tomorrowBuilding Blocks
BRAND FIRSTWhat key performance indicators drive YOUR brand?
WHAT VALUE DO KPI’S DRIVE Specifically where is value created?
MEASURING VALUE1. Where are you today?2. Tomorrow?
BRANDING
Advertising and Promotion
Strategic Planning
Market Research
Look & Feel
Why It Matters
Differentiation
Social Factors
Brand Statement
BRANDING
KPI’s Driving Value
Stake In The Ground
Objective is to be able to repeat value1
Archive rules over time2
Details, details, details3
✓
Get everyone to sign off on these4
RULES
Take-Aways
Not Seen BeforeWhat KPI’S Matter to YOUR Brand
Monday AMDefine Value for YOU
ValueToday? Tomorrow?
What Data Metrics Are Important1. Mostly Driven by Attribution2. Segmentation3. Scale4. Chasing Purchasing Behavior
AttributionMedia Channels
CODE DESCRIPTION Order Allocation Table # DaysAMAZON AMAZON Y 56Catalog Catalog 180Email Email Y 1SEMBRND PAID SEARCH BRANDED Y 56SEMNOBR PAID SEARCH NON BRAND Y 3SEOBRND NATURAL SEARCH BRANDED Y 56SEONOBR NATURAL SEARCH NON BRAND Y 3WEB WEB
Allocation Rules
Pre-Attribution
Catalog, Phone, Fax & Mail
858004138.5%
Direct to Site2178405
9.8%
Email3136570
14.1%
Misc Other1296597
5.8%
Organic Search4126504
18.5%
Paid Search2144953
9.6%
Referral332490
1.5%
Unknown516376
2.3%
Demand by Channel Pre-Match FY '13 Total Demand = $22,311,936
Post-Attribution
Catalog18546650
83.1%
Direct to Site468535
2.1%
Email124912
0.6%
Misc Other294800
1.3%
Organic Search1030047
4.6%
Paid Search572125
2.6%
Referral125237
0.6%Unk
11495125.2%
Post-Match Demand FY'13Total Demand = $22,311,936
Value
Total Demand = $22,311,936
Total Demand = $22,311,936
Pre-MatchPost-Match
Changed Email Rule
Total Sales 1/1/10-1/13/11 4,531,809$ Omit -$ % ofInput to Matchback 4,531,809$ Total Sales
Matches to 2011 Mail Files 64,846$ 1%Matches to 2010 Mail Files 2,879,853$ 64%Matches to 2009 Mail Files 122,099$ 3%Misc/Old Catalog 280,253$ 6%Total Catalog 3,347,052$ 74%
SEO 198,300$ 4%SEM 112,762$ 2%AMAZON 47,844$ 1%EMAIL 588,632$ 13%UNKNOWN WEB 237,220$ 5%Total Non Catalog 1,184,757$ 26%
TOTAL 4,531,809$
Total Sales 1/1/10-11/12/10 2,672,470$ Omit -$ % ofInput to Matchback 2,672,470$ Total Sales
Matches to 2010 Mail Files 1,725,137$ 65%Matches to 2009 Mail Files 120,969$ 5%Misc/Old Catalog 183,536$ 7%Total Catalog 2,029,642$ 76%
SEO 117,869$ 4%SEM 64,707$ 2%AMAZON 35,698$ 1%EMAIL 281,017$ 11%UNKNOWN WEB 143,537$ 5%Total Non Catalog 642,828$ 24%
TOTAL 2,672,470$
Two Days One Day
Attribution is Challenging
SegmentationPost-Match Demand FY'13
House File Segments
Group 1 - New-to-FileBuyersLeads
Group 2 - Buyers Assigned to Outside Sales Representative
EngagedNot Engaged
Assigned to Inside Sales RepresentativeEngaged
Not EngagedLocated Within Drive GEO to Retail Store
EngagedNot Engaged
All Other
Group 3 - Leads Assigned to Outside Sales Representative Assigned to Inside Sales RepresentativeLocated Within Drive GEO to Retail Store
Note:"Engagement" will need to be defined and then flagged on each customer record
Scalable = Somewhere to Go
Purchase BehaviorInside Sales
Retail Stores
Direct Mail
Web Site
Sales Reps
Take-Aways
Not Seen BeforeScope of Attribution Process
Monday AMDefine Segmentation for YOU What drives YOUR value
ValueThink Customer Behavior
How To Create Value• Define Value• Testing• Part II Today = Testing
DEFINING VALUE WITH DATA METRICS ?
CAUSEMarketing Strategies & Tactics
PREDICTING RESULTSReturn On Investment
ROI VALUE
Quick Breakeven Analysis Organic Affiliate Paid Search
Shopping Engines Direct Mail
Average Order $ 267.00 $ 267.00 $ 267.00 $ 267.00 $ 267.00 Gross Margin 158.60 158.60 158.60 158.60 158.60 Total Variable Fulfillmt Cost (9.43) (9.43) (9.43) (9.43) (9.43)Contribution Margin $ 149.17 $ 149.17 $ 149.17 $ 149.17 $ 149.17 Variable Marketing Expense $ 0.005 $ 0.867 $ 0.503 $ 0.039 $ 1.254
Breakeven Values$/Contact $ 0.01 $ 1.55 $ 0.90 $ 0.07 $ 2.24 RR% 0.00% 0.58% 0.34% 0.03% 0.84%
1Observed Response 0.05% 0.55% 0.30% 0.03% 0.80% 0
Contribution (Cost) $ 139.91 $ (8.56) $ (18.65) $ (6.87) $ (7.58)
ROI VALUE@ 1.0% Resp 1st Yr 2nd Yr 3rd Yr
Customers 2,820 Retention Rate Orders per Year Avg Order Size Total Revenue $200,000 $90,000 $47,000 COGS (%) 27% 27% 27%Cost of Sales $53,400 $24,030 $12,549 Marketing Costs $186,000 $12,650 $8,800 Total Costs $239,400 $36,680 $21,349 Gross Profit ($39,400) $53,320 $25,651 Discount Rate 1 1 1Net Present Value ($39,400) $53,320 $25,651 Cume Gross Profit ($39,400) $13,920 $39,571 Cume Customer LTV ($14) $5 $14
Contribution (Cost) $ 139.91 $ (8.56) $ (18.65) $ (6.87) $ (7.58)
Classic Testing
Communication
TEXT
Answers
Testing
Creating Value
A NEW VIEW OF TESTING
Take-Aways
Not Seen BeforePredicting – How Long Can You Count On It?
Monday AMDefine a Value for an Ongoing Project
ValueHow Will You Communicate Value
When Is Data Most Effective?
As an ONGOING process !
1
2 4 6 8
3 5 7
Capture & Normalize Data
Query Environment DISCOVERY ACTION
PROCESS IN
“Fish out answers to important business questions” Harvard Business Review
The Future Value of Analytics is Discovery
Take-Aways
Not Seen BeforeValue = Discovery
Monday AMChange Your Perspective
ValueProcess rather than static reporting
Predictions?
"640K ought to be enough for anybody.”
"640K ought to be enough for anybody.” -- Bill Gates (1955-), in 1981
WHAT DOES ON PREDICTION PROCESS LOOK LIKE TODAY ?
•Business case•Testing •When•Where•What Value
Planningmeeting
RegularCycle
•Daily •Monthly•Quartely
REVIEW
Statistical Confidence
Retest
QUERY
ANSWERSA PROCESS
HOW OFTEN
Daily, monthly, quarterly, annually?
Date increment
HOW LONG DO ANSWERS LAST?
Retest, what things changed, new variables now necessary……..
Case Study - What Process
Should Look Like
Query
Summary• Why - Data metrics are the building blocks for creating value
• What - Data metrics create value • How - To create value with data metrics
• When - Are data metrics most effective in creating value
• Case Study
Q & A