3 Ways Marketers Can Measure Program Value in 2021
The pandemic has placed greater scrutiny on marketing programs and campaigns—especially those with a significant budget. As marketers prepare for 2021, it is more critical than ever to show the return on investment (ROI) and value of your marketing programs in order to justify continuous investment.
Historically, brands have reported standard channel-specific metrics for measurement and benchmarks based on past performance to evaluate the success of the programs. Often, these metrics can fall short in providing accurate business value in terms of revenue, customer lifetime value, or profit margin. In 2021, marketers should focus on the following three key areas when measuring the value generated by their programs.
1. Measure incrementality.
One of the greatest ways to show value is to measure the incremental lift on the primary performance indicators driven by the program or campaign. In conversations with marketing leaders over the past 10 years, I’ve found this is a metric that’s always in demand. It is a good practice to include a campaign-specific or universal holdout for every campaign or program to measure incrementality. As there is an opportunity cost associated with holdouts, continue to include them unless consistent incrementality has been shown in the past. Direct marketers typically include holdouts associated with acquisition or retention, as only a limited number of audiences are sent a direct mail piece. However, marketers who run digital campaigns in media or email often struggle due to challenges with ad exposure and closed-loop reporting, specifically with walled gardens like Google or Facebook. To overcome these challenges—at least directionally—it is important to show progress over perfection and continue to measure incrementality.
As an example, a national sales event can generate a 45 percent incremental sales conversion lift for the audiences who received CRM communications, compared to the holdout group. This showcases the importance of CRM programs in driving sales.
2. Align results to business outcomes.
Marketers are typically focused on channel-specific metrics, such as visits, clicks, actions, open rate, or click rate. While channel-optimization metrics are necessary to report, they fail to show the impact the program had on the greater business. It is equally important to examine metrics that can be tied to business outcomes, such as ROI, return on ad spend, net present value, or lifetime value. These measures will make it easier to justify program continuation—or even secure incremental budget for well-performing programs. These types of programs have shown to generate ROI that is more than 40x the spend.
The same mentality applies to a new program launch where the impact must be shown on business outcomes and dollar value in order to get approval. Underlying assumptions, coupled with a lack of historical data, can make it difficult to accurately report dollar value. But in conversations with decision makers, I’ve learned that it is still important to prove a program’s value to the organization by demonstrating its financial impact, as long as the assumptions are reasonable and within error boundaries.
3. Have a strong learning agenda and road map.
In addition to showing value, both in terms of incrementality and dollar impact, it is important to have a strong learning agenda and road map for the program, tied to business objectives and marketing priorities. This helps in delivering continuous improvement with measurable ROI and leverages market testing, market research, and analytic insights to answer critical marketing questions. The road map will help improve execution efficiency and ensure clear lines of communication. The learning agenda can be established yearly or quarterly, depending on the nature of the business. The team comes together to brainstorm potential strategic questions, develop approaches to answer the questions, prioritize the impact and level of effort, and, finally, schedule it into a calendar and continuously measure.
With today’s data deluge and the rise of audience platforms, marketers are focused on procuring copious amounts of data and buying platforms without using them to show meaningful value on the investment. Current programs are run in the usual ways, with standard measurement. However, without driving value and having a road map aligned to marketing priorities, the probability of programs surviving in the current economic climate is low. Heading further into 2021, marketers can showcase value by adopting new measurement methods.
Anto Inigo is a director in Merkle’s analytics practice, with more than 12 years of experience in solving business problems across automotive, financial services, retail, CPG, and technology industries. In his current role, he is responsible for customer experience transformation, through analytics and strategy, for his portfolio of clients. Inigo is proficient at campaign design, test and measurement, audience segmentation, and targeting across various marketing channels in both direct and digital campaigns, influencing strategy to drive business value.