Relevant data and metrics can be a seriously effective tool for marketers to gain management buy-in. But how do we know which data sets are most relevant and truly align with business objectives? Tom Evans and James McDonald outline the three questions that marketers need to ask their data to get persuasive results.
It’s very easy to fall down a rabbit hole chasing a campaign metric or a data point that won’t actually lead you anywhere useful. It can be difficult to know which data sets are the most relevant. But do not be tempted by a measurable bit of information just because you feel you’ll be able to make a difference by showing you moved it from point A to point B. And don’t let your agency do that either.
Ask the right questions, use the right data.
Presented with the very latest in dashboard widgets, it’s all too easy to lose sight of what matters and where, as marketers, we can really make a difference.
Selecting the right data gets easier once you decide what you’re trying to accomplish and when it’s an objective that really matters to the business. If you ask the right questions, not only can you figure out what data sets are relevant so you can get the campaigns right, but you can design campaign measurement that can be directly linked to business value.
Here are three questions every marketer should be asking:
Question one: What drives profit in your business?
You need to understand what is important to your company and its management team. This question leads to other questions. What is the company trying to accomplish and by when? How is success measured? How does each profit driver work – what role does each one play, how are they prioritised and how are they tracked? The answers will help you determine the metrics around which you should build specific campaigns.
When it comes to designing campaigns to impact profit drivers, you need access to metrics owned by the finance and sales sides of the business. How many widgets can we sell? What are the sales KPIs? How many do we need to sell to reach what objectives? What is the price point and do they want to change it? Does the business care about selling more to existing customers or about selling to more new customers?
Understand what drives profit in your business and you will understand the data you need to look for. I can promise you that nine times out of ten, many of these metrics aren’t currently on a marketing department’s campaign performance dashboard.
Question two: Where is the data that I need to measure my contribution to profitability, and how do I get it?
Marketing data is made up of leading indicators like cost per acquisition, conversions on a website, number of phone calls coming through to sales and number of forms filled out. These are indicative of potential purchases.
Often any resulting impact on sales is not known to the marketing department until the end of the month, the end of a seasonal sales drive or the end of a long sales cycle. That data is ‘lagging indicator data’.
If you could have real-time access to sales, SKU, customer and other such typically ‘lagging’ data, you could show the connection between what you are doing and the underlying profit drivers. Your internal and agency data experts could use that evidence to build models, adjust campaigns in play, design next steps in alignment with business objectives and eventually begin to predict costs and outcomes.
Another type of lagging indicator data is that which is housed on third party platforms that often provide services to the business, such as a ticketing platform, an appointment booking service or call centre. One of our clients was using sales data provided by its ticketing platform at the end of each reporting period, to help get a better understanding of its customers. Although it is housed on a third party platform, it is actually our client’s first-party data. We worked with the supplier to gain real-time access and added another data collection marker for better, faster and more useful information.
The idea is to ensure that information about how the business is measuring sales and market performance is easily available and connected to marketing activities. We recommend creating a technology tunnel between marketing data, sales and other business financial data, so these data sets can be joined. Then you can do things like append marketing measurement to business performance, or append a marketing ID for a customer to the sales ID for that same customer. In many companies, these systems tend not to ‘talk’ to one another without a technical assist.
Depending on your organisation and its silos and culture, it may seem like quite the undertaking for marketing to push for this kind of technology change and sharing of data sets. Armed with an evidence-based advertising approach squarely aimed at improving the bottom line and driving shareholder value, will put you in a great position to gain management buy-in. You’ll also begin to create a more common language across the business, as you have to communicate your data needs to the IT team, and any external suppliers hosting your data.
Question three: What don’t I need to know? What data can I live without?
To focus on what really matters, it can be a good idea to audit the data that has historically been used to make marketing and advertising decisions.
For example, presented with the very latest in website stats, it’s all too easy to ask, ‘How can I reduce bounce rate?’ or ‘How can I increase dwell time?’ These feel like achievable objectives that will be positive for the business. But it depends where visitors dwell and why. Some sites have high dwell time because they are confusing and information is hard to find. A lower bounce rate won’t matter unless it leads to conversions and sales.
A more deliberate objective tied to business value would be to encourage more people to complete their purchases rather than leaving the site with items still in the cart. That may also give you a lower bounce rate or higher dwell time, but the metric that matters is sales.
Lots of companies ask, ‘How can we improve our Net Promoter Score (NPS)?’ Intention to recommend is not the right metric for every brand. Besides, intention doesn’t necessarily result in an actual recommendation. There are many types of products or services that a person just doesn’t refer to often enough, to spontaneously recommend them to a friend or family member. Where would improving this score get this brand? What is it really telling them?
There is often no shortage of data, just a shortage of insight. So, determining the data that you don’t need is as valuable as finding the data you need.
Tom Evans is the managing director at Audience Group.
James McDonald director at Audience Group.