Marketing was once a simple proposition concept, it was required to create advertising campaigns for “brand-building”, which generated leads, and then it drove sales and their job was done. However, with changing times and digital evolution, the concept of marketing has also evolved. In this era of digital technology, consumer behaviour has changed and customers expect fulfilling, personalized shopping experiences. Hence, to ensure market sustainability, retailers must focus on seamless offerings across channels.
The development of better analytical tools and approaches in recent years has given significant new decision-making power to Business Leaders. Yet, while advanced analytics helps in increasing growth and marketing return on investment (MROI), the number of choices available makes organizations seem almost paralyzed. Finding the right marketing activity is a challenge as few initiatives work for some companies, while it may not give results to others. One of the possible approaches would be to measure the marketing proposals based on their strategic return, economic value, payback window, and other such scores. For example, one home appliance company used to spend a large portion of its marketing budget on television, print, and display advertising to get the attention of its target customers. Data Analytics showed that most people looking for home appliances browsed retailers’ websites rather than depending on television, print, and other outbound advertising and fewer than 9 percent visited the appliance manufacturer’s website. This shows the power of using Insights for decision making process as through insights we can choose an option that either reduces marketing costs without sacrificing the effectiveness of the strategy or increases the revenue, as either of it may result in increased RoI.
Data-driven marketing and its effect on RoI
In today’s date, as the world is getting digitalized, data has got huge importance and has its role in all fields. Marketing has always been said to be an Art but Data has shown its importance even in this field as well. So, there are three simple steps through which we can leverage data to increase Marketing ROI (MROI).
- Identify the right analytical approaches
To identify the right marketing mix, organizations should evaluate the pros and cons of each of the available tools and methods to determine which best supports their strategy. The choices include the following:
- Marketing-mix modeling (MMM)
MMM leverages data to link marketing investments to drivers of sales and also includes external variables such as seasonality and competitor and promotional activities. It can be used for long-term as well as short-term purposes. Limitations of MMM are: it requires huge data on sales and spending of multiple years, it cannot measure activities that do not change much over time, and does not measure the long-term effects of investing in any one touchpoint, such as a new mobile app or social media feed.
- Reach, Cost, Quality (RCQ)
RCQ focuses on improving three measures which is Reach, cost and quality. It is a quantitave approach and evaluates- the number of target consumers, cost per touch, the quality of the engagement, etc. using both data and judgment. It is preferably used when MMM is not suitable to be used, such as when there is limited data. RCQ brings all touchpoints back to the common unit of measurement, which makes comparison easy. The limitation of RCQ is, it cannot account for network or interaction effects and is dependent on the assumptions.
- Attribution Modelling
Attribution modeling is an emerging approach, which helps in identifying the value of different channels on marketing activity. By assigning value for a pre-arranged advertising interaction to one or more publishers, attribution modeling tells, which channels is most benefiticial to their marketing campaign. The limitation of this model is, for input it is dependent on cookie data, which limits the richness of the dataset.
- Integrate capabilities to generate insights
Some companies rely on just one analytical technique, the greatest returns come when MROI tools are used together. An integrated approach, which includes pulling in data(responses) and insights. The data and insights helps in indicating what the customers are most likely to be interested in. Data allows the business to understand its customers’ needs and why they need them. This allows a business to craft products that will resonate with customer needs, which the existing product line-up is unable to meet. Insights drive financial performance with financial accountability. Insight-driven marketing increases sales with smarter fund allocation by providing evidence for marketing strategies. So, insights and KPIs provide business leaders with activities that produce amazing results for their product launch. For example, Netflix subscribers got tripled between 2011 and 2015, by doing advanced analysis of subscribers’ and generating insights related to their past viewing behavior, which helped them create hit shows such as House of Cards.
- Put the analytical approach at the heart of the organization
Outsourcing analysis is an uncommon practice as, the internal teams feel reluctant to implement them because they don’t fully understand or trust the numbers. To solve the problem, marketers must work closely with data scientists, marketing researchers, and digital analysts to question assumptions, formulate hypotheses, and fine-tune the data. Companies also need to train “Consultants,” individuals who both understand the analytics and speak the language of business. For instance, if a company sets up a team within its marketing function to bring the creative and analytical halves of the department together, then this will help analysts understand the business goals, which further help the company to improve their marketing programs as well as RoI.
Business leaders are responsible to demonstrate Return on Investment (RoI) from a diverse portfolio of marketing programs and this puts immense pressure on them. The data helps in making smarter decisions, as are the analytical tools. So, taking an integrated analytics approach is the key to uncover meaningful insights and drive above-market growth.
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