A MARKETER'S GUIDE TO REPORTS THAT MATTER

Transcription

1 A MARKETER'S GUIDE TO REPORTS THAT MATTER A SIMPLE STEP-BY-STEP GUIDE TO BUILDING A MEASUREMENT FRAMEWORK FOR EFFECTIVE REPORTING PAGE 1

2 INTRODUCTION TODAY S MARKETERS LIVE AND DIE BY THE NUMBERS. IT SHOULD BE SIMPLE, BUT IT S NOT. HOW OFTEN HAVE YOU RECEIVED A COMPLICATED EXCEL SPREADSHEET WHEN YOU ASKED HOW THE LATEST CAMPAIGN PERFORMED? OR, RECEIVED POWERPOINT SLIDES FILLED WITH CHARTS AND TABLES INSTEAD OF CLEAR ANSWERS TO CRITICAL BUSINESS QUESTIONS? DON T WORRY YOU RE NOT ALONE. Many companies are faced with the same issues that you are. It s very likely these companies have one or more of the following foundational problems: Reports lack critical business metrics benchmarked against program goals Reports don t align to marketing s needs, missing critical dimensions or views THE 6 STEPS FOR BETTER REPORTING Instead of diving right in and building another report, we're going to recommend that you take a step back to outline a measurement framework using the following steps: IDENTIFY BUSINESS OBJECTIVES DETERMINE KPIs Reports overload marketing leaders with pages of data and metrics that provide business insight or diagnose issues DO YOU NOTICE A THEME HERE? DEFINE KPI GOALS IDENTIFY SUPPORTING METRICS It boils down to a lack of planning in report development. The Big Data Revolution is well underway, but many companies are still unable to make sense of the data they acquire. Although, many of these companies may have large data warehouses with endless amounts of information, they often end up with numerous metric-heavy reports that don t answer any specific questions. This is great for keeping report developers busy, but it is terrible for driving the business forward based on actionable insights. This process will help to provide structure to actual answer your business questions. Using this framework as a base, you will have the ability to get actionable insights from your data DETERMINE REPORTING DIMENSIONS BUILD THE FRAMEWORK PAGE 2

3 01 IDENTIFY BUSINESS OBJECTIVES GREAT REPORTING STARTS WITH THE FOLLOWING QUESTION: WHAT BUSINESS GOALS ARE WE TRYING TO ACHIEVE? It sounds really simple, but this question is often overlooked and left unanswered. By asking this basic question upfront, you can better define the objectives and scope upon which the reporting will be built. LET S LOOK AT THE EXAMPLE of Acme Solutions, a company that wants to measure the effectiveness of marketing campaigns. Let s assume that Acme Solutions sends promotions to existing customers and prospects. Through conversations with project stakeholders, we find that the main goals are: 24% OF BUSINESSES SAY DETERMINING ANY KIND OF COST- BENEFIT ANALYSIS IS A CHALLENGE. (source: McKinsey) 1. Customer Acquisition (prospects) 2. Cross-Sell / Upsell (existing customers) 3. Loyalty Program Registrations (prospects and existing customers) CUSTOMER TYPE PROSPECTS EXISTING CUSTOMERS BUSINESS OBJECTIVE CUSTOMER ACQUISITION LOYALTY PROGRAM REGISTRATIONS CROSS-SELL / UP-SELL LOYALTY PROGRAM REGISTRATION S WE NOW KNOW that we are trying to reach the scope of our measurement framework. two customer segments and drive main Just as importantly, we can also define outcomes through our promotions. By taking the time to ask some basic questions and show the objective from a business context, we can better define what is out of scope and disregard metrics that do not tie back to these main objectives. Finally, we can start to organize the foundation of our reporting. P AGE 3

4 02 DETERMINE KPIs AFTER THE MAIN BUSINESS OBJECTIVES ARE DEFINED, WE NEED TO DETERMINE HOW TO MEASURE SUCCESS FOR EACH OBJECTIVE BY DEFINING KEY PERFORMANCE INDICATORS (KPIs) A KPI IS THE MOST IMPORTANT METRIC TO MEASURE FOR EACH OBJECTIVE. THEY ARE THE ULTIMATE MEASURE OF SUCCESS. The list should not be too long. Instead, it should consist of 1 OR 2 MAIN METRICS FOR EACH OBJECTIVE THAT WILL DEFINE SUCCESS. Your KPIs must be very specific and related to your business objectives. For the purpose of our example, let s assume that the KPIs are: Customer Acquisition: Number of new customers acquired and cost per acquisition (CPA) To determine your KPIs, you should inventory all of the metrics available in your data, as well as other metrics you may be able to derive or get externally. Cross-Sell / Upsell: Campaign conversion rate and average order value (AOV) for those conversions Going back to the example above, we want to come up with the most important metrics to help Loyalty: Customers and/or prospects that register for the program measure the effectiveness of each business objective. WE CAN NOW EXPAND OUR FRAMEWORK BELOW: CUSTOMER TYPE PROSPECTS EXISTING CUSTOMERS BUSINESS CUSTOMER LOYALTY PROGRAM CROSS-SELL / LOYALTY PROGRAM OBJECTIVE ACQUISITION REGISTRATIONS UP-SELL REGISTRATIONS KPIs # NEW CUSTOMERS COST PER # REGISTRATIONS CONVERSION RATE AVERAGE # REGISTRATIONS ACQUISITION ORDER VALUE IT S VERY TEMPTING TO CONTINUE TO ADD METRICS THAT MIGHT FURTHER DEFINE SUCCESS, BUT IN MANY CASES, THESE JUST ADD NOISE. FOCUS ON THE TOPLINE METRICS THAT DEFINE MARKETING SUCCESS FOR THE ENTERPRISE. PAGE 4

5 03 DEFINE KPI GOALS MARKETING PERFORMANCE SHOULD BE COMPARED TO CONCRETE TARGETS AND BENCHMARKS. Otherwise, results can be somewhat arbitrary. We previously worked with a company that understood the first two steps but skipped defining KPI goals. When it was time to report campaign results, it was easy for the marketing manager to cherry pick data that told a positive story regardless of the outcome. He would tell management that the company earned $100,000 in revenue from a promotion, without sharing that a similar campaign from the previous year earned $500,000, or that the campaign cost $1,000,000 in resources and discount expenses to run. The point is that marketing leaders need to evaluate results relative to targets to evaluate campaign and program performance. 86% OF COMPANIES CANNOT DELIVER THE RIGHT INFORMATION AT THE RIGHT TIME. (source: Gartner) GOALS FOR INDIVIDUAL KPIs SHOULD BE SERIOUSLY CONSIDERED PRIOR TO DEVELOPING REPORTING. These benchmarks should not be set in stone; they can change over time or vary for individual campaigns. The purpose of these goals is to put into context each KPI so that you can determine if performance is better or worse than the target. For our example company, the success A campaign to upsell existing customers should drive a much higher average order value if the offer is for $40 off $200 than it would if the offer is for $20 off $100. As such, remember to define success for each KPI and adjust as necessary. goals should change across campaigns. PA GE 5

6 04 IDENTIFY SUPPORTING METRICS KPIs provide topline numbers that should start and frame every discussion on marketing performance. However, they don t tell the full story. Additional information is usually required to understand why the results are what they are. After digesting the topline, every marketing leader wants to know why. This is where supporting metrics come in. At this stage, TAKE SOME TIME TO STRATEGICALLY DETERMINE THE SPECIFIC METRICS THAT SUPPORT EACH KPI. The supporting metrics must be related to the KPIs and should help answer the inevitable followup questions. It is important to think about what those questions would be for each KPI. The metrics that answer those questions are the ones that should be layered into the report. GOING BACK TO OUR EXAMPLE FROM THE PREVIOUS STEP, we had a campaign to upsell existing customers. For this campaign, one of our main KPIs was average order value (AOV). After our campaign was in market, we determined that the AOV across the campaign was $80, however our goal was $100. WE WANTED TO LOOK AT OTHER METRICS TO HELP PROVIDE MORE CONTEXT OR SUPPORT FOR OUR AOV KPI. In this case, we wanted to know the number of orders AOV was based on the weight we put upon the value would change greatly if the AOV was driven from one order than if it was driven from 10,000 orders. We also wanted to know the total revenue that the promotion drove. We CUSTOMER TYPE BUSINESS OBJECTIVE KPI EXISTING CUSTOMERS UPSELL AVERAGE ORDER VALUE $80 considered removing any promotion expenses to KPI GOAL $100 see the incremental margin that the promotion yielded. All of these metrics can help answer additional follow-up questions and provide more information to report. They may not be our main KPIs, but they help paint the complete picture and answer the tough follow-up questions. SUPPORTING METRICS SALES ORDERS COGS PROMOTION EXPENSE MARGIN PAGE 6

7 05 DETERMINE REPORTING DIMENSIONS We re almost there, but there s one more critical component. The last thing to do is view all of these metrics across dimensions. Dimensions can vary by the report being developed, but they are essentially the different ways you would want to slice and dice your data. Typical dimensions include, TIME PERIODS, CUSTOMER TYPES, GEOGRAPHICAL LOCATIONS, AND PRODUCT CATEGORIES. Dimensions can be particularly great in helping us understand really tough problems by allowing us to view all of our KPIs and metrics across individual segments. Let s revisit our example above one last time. We have a promotion with a goal of up-selling existing customers that yielded an average order value of $80, even though the goal was $100. We can help explain the components of the $80 by looking at the supporting metrics, but we can t fully explain which segments contribute to the gap relative to our goal unless we look at various dimensions. AFTER SOME REPORTING ACROSS SEGMENTS, LET S SAY WE SEE THE FOLLOWING VALUES: OVERALL SEGMENT A SEGMENT B SEGMENT C SEGMENT D KPI AVG. ORDER VALUE $80 AOV: $80 AOV: $100 AOV: $100 AOV: $200 AOV: $46 KPI GOAL $100 GOAL: $ SUPPORTING METRICS SALES ORDERS SALES: $28K ORDERS: 350 SALES: $10K ORDER: 100 SALES: $5K ORDERS: 50 SALES: $5K ORDERS: 25 SALES: $8K ORDERS: 175 IT LOOKS AS IF WE HIT OUR TARGET ACROSS CUSTOMER SEGMENTS A, B, AND C. SEGMENT C HAD A VERY HIGH AOV, YIELDING $200 PER ORDER. However, Customer Segment D only has an AOV of $46. This group is also responsible for 50% of all orders, more than offsetting the great performance of Segment C. By looking at the KPIs and supporting metrics across the segments, we are able to narrow down the problem to Segment D. We can now focus further investigation to understand why Segment D purchased less on an individual order. We can also drive followʼup action with the campaign managers on future promotions to target Segment D to better improve their AOV. Without a view of our reporting across these dimensions, we would not be able to quickly drill down to an answer. But now, we have a better visibility into the segments that contribute to the positive or negative KPI values. PAGE 7

8 03 BUILD THE FRAMEWORK AFTER LAYERING ON DIMENSIONS, IT S TIME TO ORGANIZE EVERYTHING TOGETHER INTO ONE FRAMEWORK: CUSTOMER TYPE PROSPECTS EXISTING CUSTOMERS BUSINESS OBJECTIVE CUSTOMER ACQUISITION LOYALTY PROGRAM REGISTRATIONS CROSS-SELL / UP-SELL LOYALTY PROGRAM REGISTRATIONS KPIs # NEW CUSTOMERS COST PER ACQUISITION # REGISTRATIONS CONVERSION RATE AVERAGE ORDER VALUE # REGISTRATIONS GOALS SET FOR EACH INDIVIDUAL KPI CIRCULATION SUPPORTING METRICS CIRCULATION CONVERSIONS CONVERSION RATE PROMOTION COST SALES MARGIN CIRCULATION CONVERSIONS CONVERSION RATE PROMOTION COST COST PER SIGNUP CONVERSIONS SALES ORDERS COGS PROMOTION EXPENSE MARGIN CIRCULATION CONVERSIONS CONVERSION RATE PROMOTION COST COST PER SIGNUP DIMENSIONS TIME PERIODS, CUSTOMER TYPES, GEOGRAPHIC LOCATIONS, PRODUCT CATEGORIES, ETC. TO BE APPLIED ACROSS ALL OBJECTIVES / KPIs AFTER LOOKING AT EVERYTHING TOGETHER, IT S CLEAR THAT THE BUILDING BLOCKS FOR OUR REPORTING ARE ESSENTIALLY FINISHED. PAGE 8

9 WE HIGHLIGHT OUR MAIN KPIs THAT TIE BACK TO SPECIFIC BUSINESS OBJECTIVES WE CAN PUT THOSE KPIs INTO THE APPROPRIATE CONTEXT BY COMPARING TO GOALS ALL THAT IS LEFT TAKING SOME TIME TO ORGANIZE THE FRAMEWORK WITHIN YOUR COMPANY S BI REPORTING SOLUTION CONCLUSION WE LAYER IN ADDITIONAL SUPPORTING METRICS THAT HELP EXPLAIN THE KPIS FINALLY, WE CAN MEASURE ALL OUR KPIs AND METRICS ACROSS VARIOUS LEVELS OF DIMENSIONALITY THE END RESULT WILL BE A GREAT REPORT THAT WILL BE READILY CONSUMED AND DRIVE ACTION The companies that use analytics 3x best are more likely to execute decisions as intended. (source: Bain & Company) Identify KPIs that define marketing success Define goals to contextualize the KPIs Add supporting metrics to help explain the KPIs View results across important business dimensions Organize information and create reports based on the framework THE END RESULT WILL BE A GREAT REPORT THAT WILL BE READILY CONSUMED AND DRIVE ACTION. Marketing leaders need effective reporting and measurement to succeed. A measurement framework is a critical tool to producing valuable reports. By tying your reporting components to specific business objectives and putting structure behind the design, you'll avoid data overload to get the your important questions answered. It can take a little time and effort, but we promise, the work pays off! Learn more: PAGE 9

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