Better Than Nothing

June 26, 2014 By Rick Shea Leave a Comment


Introduction

Perhaps it’s just human nature. We don’t always do the things we know are good for us, like eating oatmeal or measuring marketing. Those who don’t currently do either can be much further ahead, just by doing a little, which is certainly better than nothing.

If you don’t currently measure your marketing, please grab a bowl of oatmeal and read on for four reasons why you should start measuring!

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Last week, my sister Dianne emailed to share her discovery that Bob’s Red Mill makes a quick cooking steel cut oats. We’re both fans of steel cut oats but don’t love how long they take to cook, so this came as good news.

In my reply, I wondered whether they deliver the same health benefits as regular steel cut oats. I recalled reading something about how oats that take longer to cook also take longer to digest, which is somehow more beneficial to your health, although I’m not sure why.

When I raised this health related issue to my sister, her reply was “any steel cut oats is better than none…which is how much I’ve been having lately”. You see, Dianne has a young son who I’ve written about before, and he keeps her pretty busy. Quick, healthy breakfasts are a good thing!

I think Dianne is right. Any steel cut oats is better than none. If you don’t eat steel cut oats, you don’t get the health benefits. Marketing measurement is the same. If you don’t measure, you don’t learn anything that helps you to improve your marketing.

Like mothers of young children, marketers have a lot on their plates. They know measurement is good for them, but many don’t measure as much or as well as they would like. Many others don’t measure at all.

As much as they might like to measure, a full-on approach often isn’t practical, usually due to a shortage of some combination of time, resource and expertise. Still, they need to find a way to get something done, as the benefits of marketing measurement make it worthwhile.

If you don’t already measure your marketing, here are some reasons you should.

 

4 Reasons to Measure Marketing

1. You Will Learn Something Useful: The main problem with not doing any measurement is that you don’t get to learn anything that helps you to make better marketing decisions. If you could measure something, and learn something that helps improve your marketing, that would certainly be better than learning nothing.

2. You Will Set Clear Objectives: Measuring your marketing brings an additional layer of discipline to your marketing decision making. Committing to measurement requires that you to set clear and measurable objectives when planning your marketing programs. It will force you to ask the right questions about each proposed program. Those questions will help you filter out bad ideas and reduce ineffective spending of your limited marketing budget. That alone is worth the price of admission.

3. You Will Have Data: A manager with the responsibility for a marketing budget has two main organizational battles to fight. The first is to fight for budget to fund upcoming marketing programs. The second comes later when it’s time to prove that budget was well spent. If you measure marketing, you will have data with which to fight your battles. Having data is way better than having none and going into battle unarmed.

4. You Will Rank Your Programs by Results: However you choose to measure, make sure you apply one approach consistently across your diverse range of marketing programs. That consistency will give you the ability to rate, rank and compare programs according to their effectiveness at meeting their objectives. You will be able to identify the winners and losers, and you will have a basis on which to make decisions about which types of programs to run in the future.

My sister is right to focus on getting the health benefits from steel cut oats, and if it takes a bit of a short cut to get her there, than that is what she should do. Marketers who don’t measure also need to find a way to get there. I believe in a practical approach to a complex problem as a reasonable and effective way for time-starved marketers to get some measurement done and get the benefits of improved marketing health.

If you measure your marketing, you will learn what works and doesn’t work, so you can optimize your strategies and get better results. Measure… Learn… Optimize… In my books, that’s way better than nothing!

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About the Author: Rick Shea is President of Optiv8 Consulting, a marketing effectiveness consultancy with a focus on helping small to mid-sized organizations measure their marketing so they can stop wasting money.

Copyright ©2014 Optiv8 Consulting.  All rights reserved.

You may reproduce this article by including this copyright and, if reproducing electronically, including a link to:  http://www.optiv8.com/

Filed Under: Approach, Effectiveness Tagged With: Effectiveness, Management, marketing, Measure, measurement, measuring

Big Data, Small Data

March 30, 2014 By Rick Shea Leave a Comment


Introduction

Marketing measurement is a big problem, but the solution to the problem doesn’t also have to be big. In fact, it can be small.

This month’s post is about taking a small data approach to a big marketing problem.

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On Monday afternoon, I met my friend Reuben to get caught up over a coffee. I always enjoy our chats as they usually cover a wide range of interesting topics. Reuben also tends to ask great questions and make insightful comments. Monday was no exception.

While discussing how pervasive technology, analytics and big data are in marketing, we concluded that in contrast to all of that complexity and big data, I come at marketing measurement from a different angle; with something we might call a small data approach.

There is an emerging definition of small data as the few key pieces of meaningful, actionable information that we can uncover by analyzing big data. Those insights you extract from your big data become the last steps along the way to making better marketing decisions.

Actually, neither one of us had that definition of small data in mind during our discussion. Rather, we spoke of my “small data” approach to marketing measurement as small relative to other approaches and to the complexity of the problem.

My approach does align with the above definition of small data in the sense that I am very focused on organizing the chaos of all that data, uncovering insights and helping marketers to learn what they need to know so they can make better decisions. That is the reason to measure marketing and it needs to be the focus of any approach to measuring marketing.

Where my scorecard-based approach might also seem a bit contrarian is in its emphasis on measuring results vs. objectives and in not trying to calculate a financial return on investment (ROI). Although it would be ideal to accurately measure the financial ROI of marketing programs, as I have written about in the past, I think there are too many problems with doing financial ROI calculations for individual marketing programs.

I’ve always thought of my approach as a practical approach to a complex problem. As of Monday afternoon, I’m also starting to think about it as a small data approach to a big data problem. To explain what I mean by a small data approach, let me start with some thoughts on big data.

Big Data

Big data flows out of a set of circumstances that will tend to occur at bigger companies, and might include some combination of the following:

  • Big marketing budgets
  • Many marketing programs
  • Many products and/or services
  • Many communications channels
  • Many and diverse customers and customer segments
  • Many touch points on the customer path-to-purchase
  • Many transactions

These circumstances lead to a whole lot of data to analyze and understand which in turn leads to big data measurement solutions that will also tend to be big, complex, sophisticated and expensive.

With all the buzz around big data, it is easy for small and mid-sized companies to conclude that a high-science, big data solution must be the only legitimate way to approach marketing measurement. For many of these companies, a big, costly sophisticated approach isn’t needed or practical under their circumstances. A smaller, more practical approach can do the trick.

Small Data

Most small to mid-sized companies don’t operate under the same set of circumstances. Their budgets aren’t as big, their marketing activity is much less involved, their world is much less complex and they generate and collect a smaller amount of data. They also have fewer resources with which to take on the problem that all marketers must solve, which is to determine the best ways to invest their budgets.

A small data approach can be a great fit under these smaller circumstances. Yet, given the range of company size and marketing activity within the small to medium sized businesses segment, a one-size-fits-all approach doesn’t work. Any approach needs to have some built in flexibility so you can scale up or down to be appropriate for the size of the marketing budget being measured.

That’s really where I stand on marketing measurement. Right size your approach to your circumstances, and don’t overspend on measurement by bringing an over-sized solution to your problem.

Don’t over allocate resources to measuring something that you can’t measure perfectly, as the law of diminishing marginal returns will ensure you waste some of those precious resources. This is not about measuring perfectly; it’s about perfecting your marketing.

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About the Author: Rick Shea is President of Optiv8 Consulting, a marketing effectiveness consultancy with a focus on helping small to mid-sized organizations measure their marketing so they can stop wasting money.

Copyright ©2014 Optiv8 Consulting.  All rights reserved.

You may reproduce this article by including this copyright and, if reproducing electronically, including a link to:  http://www.optiv8.com/

Filed Under: Approach Tagged With: Big Data, Management, marketing, Measure, measurement, measuring, return on investment, ROI, scorecard

Sabermetrics & Moneyball

August 18, 2011 By Rick Shea Leave a Comment

While browsing the Sports section of the Toronto Star over breakfast one morning last week, I discovered a baseball statistic I had never heard of before.

Cathal Kelly’s article about the Toronto Blue Jays focused on General Manager Alex Anthopoulus’ fine work in transforming the Jays into a ballclub with great young players and a bright future. In Kelly’s analysis, he also pointed out that the Blue Jays “already have the best player in baseball”, José Bautista, who “leads all of baseball in wins above replacement rankings.”

I’ve followed baseball since I was a kid, but this was the first time I’d heard of “Wins Above Replacement”. Since José Bautista is considered one of the best players in baseball, I guessed it was some sort of composite score that rates a player’s overall performance. Still, I wondered “What the hell is Wins Above Replacement?”

In doing my research, I read up on Sabermetrics, an approach to statistical analysis in baseball that emerged in the 1990s. I read about Billy Beane, the General Manager of the Oakland A’s, who is a leading proponent of using statistical analysis to aid in making decisions about which players to draft, trade or acquire. Billy’s work in this area led to a book being written about him called ‘Moneyball”. I also learned that many teams now employ statistical analysts and Sabermetrics experts.

Sure enough, Wins Above Replacement turns out to be a Sabermetrics statistic that estimates how many more wins a player would give his team as compared to a replacement player of below average quality. While there appear to be a number of formulae used by different Sabermetrics proponents, the principles they follow align nicely with my scorecard approach to measuring marketing programs.

Any Wins Above Replacement formula takes into account a number of batting and fielding performance metrics, weights those metrics appropriately, and tallies everything up to provide one overall score to assess a player’s contribution to team wins. Similarly, a marketing scorecard uses a combination of company, brand, customer and program performance metrics, weighted appropriately, resulting in one overall score to asses a program’s impact on the business.

They both:

  • Have a limited budget (for players or marketing programs).
  • Need to get the most for their money (spending efficiency and effectiveness).
  • Need to get better results than their competitors (win games, make money).
  • Need a way to organize and make sense out of lots of diverse data about the performance of their players/programs and team/company (so they can improve their player/marketing decisions).

This last point is the most important one. A general manager trying to assess the performance of different players on different teams, playing in different ball parks under different conditions, needs a way to organize and then convert all that data into one metric or score that enables rating and ranking players relative to their peers. Wins Above Replacement does that. It may be calculated in different ways by different teams, but so long as each team does its own calculations consistently between players and over time, their comparisons will be meaningful.

The same is true with measuring marketing programs. As a manager with a marketing budget, you need to evaluate the performance of different programs, with different objectives, for different brands competing under different conditions. A well designed marketing scorecard will give you a way to organize, evaluate and convert that diverse data into the single common metric you need to rate and rank each program relative to the others.

Pretend that you’re the Billy Beane of marketing and you need a decision support tool that helps you to organize and make sense of diverse data about a variety of marketing programs. With a scorecard based approach and your considerable wisdom, instincts and experience, you’ll gain the insights you need to improve your marketing effectiveness!

Filed Under: Approach, Effectiveness Tagged With: Effectiveness, Management, marketing, measurement, measuring, scorecard

Return On Corona

November 18, 2010 By Rick Shea Leave a Comment

My friend Dan was in town recently.  Our friendship goes back to our university days at McGill, which is another way of saying we’ve known each other for a very long time.  Of course, we’ve both aged quite gracefully.  We get together when we can, and when Dan had to be in town for meetings a couple of weeks ago, we made plans for Saturday night.

Dan and I decided to get caught up while watching a rare live performance of their Paul McCartney tribute called ‘Getting Better’ by my musician friends, The Weber Brothers.  The guys delivered a great performance, as always, with a set list that included ‘Yesterday’, ‘Let It Be’ and ‘Maybe I’m Amazed‘.  I was also thankful that Ryan and Sam Weber chose not to perform ‘Silly Love Songs’.

Whenever we get together, Dan and I usually pass some of our time updating each other on our business endeavours.  I always enjoy hearing Dan’s perspective and he usually asks great questions that help me to focus on the right issues.

As we discussed my marketing measurement work, Dan questioned whether I measure Return On Investment (ROI), which is a natural question and one I’m commonly asked.  My answer went something like this.

As we sat at the bar, I looked down at the clear glass bottle in my right hand.  I said, “Let’s use my Corona as an example.  I don’t remember what marketing program caused me to try it years ago for the first time, I can’t tell you why it’s among the half dozen or so brands that I tend to order, and I don’t know what caused me to order it tonight.”

Corona

Let’s suppose Molson-Coors made $0.50 profit on the sale of my one bottle.  To calculate the ROI on their marketing for this transaction, they’d have to understand which marketing investments influenced my buying decision, and by how much.  Here are some thoughts on their marketing programs that I can recall:

  • I know I like watching their commercials
  • I’m sure I’ve seen several print ads, and the image of their clear glass bottle sparkling in the sun and a wedge of lime lingers in my mind
  • Not too long ago, I noticed a contest to win a bar fridge
  • I remember a great poolside bar promotion while vacationing at an all-inclusive a few years back that likely still influences my purchases.

Those are the ones I can recall, but I’m sure there are others I don’t remember that have influenced me.  Here’s where calculating ROI gets more complicated.

  • I have no idea which of these marketing investments influenced me most, or least, nor how much of the $0.50 profit to attribute to each.
  • I can’t begin to consider how to account for the combined impact of all those marketing investments that somehow accumulate within me over the years to influence my buying decisions.

The key point is, if I can’t do the profit allocation for my own buying decision, even if Molson-Coors could somehow get inside my head and have a good look around (it wouldn’t take long…) they wouldn’t figure it out either. To further complicate things, all their other customers each have their own influences and reasons for buying.

We humans each make our own very complex buying decisions, often influenced by factors outside the marketers’ control, in ways we may not consciously understand.  It’s extremely difficult and costly to isolate all the variables involved to truly and accurately measure financial return on investment of marketing spending. We end up having to make too many assumptions, or guesses at allocations.

However, this doesn’t mean we shouldn’t measure something.  Instead of ROI, I focus on measuring how effective marketing is at meeting objectives, using metrics that involve as few assumptions as possible.  Here are a few thoughts on metrics:

  • Rather than trying to focus on one killer metric, like ROI, select a group of metrics that together give you a balanced view of whether a specific marketing program drove value in your business.
  • Assemble your various metrics in a scorecard that allows you to evaluate each metric against its objectives.
  • Decide which metrics you want to use before you launch your marketing program in case you need to gather data while the program is in market.
  • Just because I’m letting you off the hook on measuring ROI, it doesn’t mean you should ignore financial metrics.  Your scorecard should definitely include financial metrics, such as revenue, and average transaction value, which tends to be a good indicator of profit.

I’m not comfortable making decisions or recommendations supported by numbers that are based on a lot of assumptions or guesses.  Build your marketing measurement process on as many facts and clean data as you can find.

Oh, and one more thought.  My Return On Corona (ROC) a couple of Saturdays ago was exceptional, given my objectives to hang out with a great friend and to be entertained by talented musicians!

Filed Under: Approach, Metrics Tagged With: Effectiveness, marketing, measuring, return on investment, ROI, scorecard