Predicting Future Results … Or, “17 Marketing Measurement Reports You Should Have at Your Fingertips – Because the Best Predictor of the Future is What has Happened in the Past”

Published in Target Marketing

Conducting an analysis of your most recent direct marketing program may be the most productive task you should undertake today. Knowing what has happened in past marketing programs are typically the best predictors of what results you will achieve in your next marketing effort.

To analyze your marketing programs requires that you have several reports at your fingertips. A checklist of the types of reports you should have at your fingertips will get your started with what you need from your information services department. With time invested in developing the architecture of the reports — the layout, source of data, and mathematical formulas — you’ll be able to make better use of your time and resources.

Here’s a checklist of 17 items you should monitor and analyze with every direct marketing effort you develop and put into the marketplace:

 

1. Inquiries and Conversions by Media Source

What Is It? The number of people who “raised their hand” and responded to your offer and the number of those “raising their hand” who “reached into their pocket book.” Both of these numbers must be segmented by the individual media used (list, publication, etc.) to evaluate the effectiveness of the effort and media you used.

How You Use This Data. It permits a comparison of the number and percent response between lists, publications, etc. (Note: List response percentages should be compared with other lists, for example, and should not be compared to publication percentages.) It also permits comparison of response and conversion rates between sources to evaluate the best performing media used.

2. Response by Media by Month

What is It? The number of people who “raised their hand” and responded to your offer on a monthly basis as well as the number of inquiries who converted each month.

How You Use This Data. Permits comparison of response by month to arrive at the best season or months to offer your product. It allows you to plan future marketing promotions based on the months of the year which produce the best inquiries and/or conversions and reveals months which may have high inquiry response, but low conversion.

There is a caveat: The nature of your offer will impact results. A super “freebie” will raise the number of inquiries, but to be successful it must raise the number of conversions as well.

3. Cost per Acquired Lead and Converted Sale

What Is It? The cost for each lead generated. Simply, the total cost (production, media, and other related costs) divided by the number of leads. This report should also include the cost for each lead converted to a sale.

How You Use This Data. It permits a comparison of costs for each effort and allows you to know for future marketing plans whether the media was cost effective. Cost per inquiry is important to know, but the most important number is the cost per conversion. It’s possible for one media to have a low number of leads (with a high cost per lead), but a very high conversion rate bringing down the overall marketing cost per sale.

What’s most important is the lowest cost per inquiry and converted sale. It’s possible you may receive the lowest cost per inquiry or conversion, but it may have originated from the media with the highest cost per thousand.

4. Media and Production Cost By Source

What is It? The total of all costs associated with the marketing program. You have two ways to go: 1. Amoritize creative, agency fees, production time and all other expenses related to the preparation of the campaign; 2. Treat creative and production time as a one-time expense. This is probably the tidier accounting system, because if the ad or direct mail effort is a raging control that runs for years, trying to amortize the original creative costs over the life of the campaign becomes a nightmare in terms of accurate analysis.

How You Use This Data. By using cost per thousand, all comparisons are equal. It also reveals the true total cost of your efforts and allows you to compare the results of efforts by dividing the number of inquiries or conversions by the cost of the program to measure the program’s effectiveness.

5. Sales Force Disposition of Qualified Inquiries

What is It? Tracking how many inquiries were sent to the sales force or provided other fulfillment information. It tracks if the sales representative called upon the lead, or if telesales was used for lead follow-up.

How You Use This Data. Reveals what’s happening with the inquiry. Pinpoints good follow-up and reveals problem areas. A newly sold customer can be contacted to thank them, or be included in a survey for customer satisfaction. It also provides an early warning for customers who have had no follow-up by sales staff or other contact methods and allows measurement of back end marketing efforts. Note: Flow charts created before a campaign will ensure that no lead is overlooked or lost. See a related article, “The Art and Science of Back-End Marketing,” about how to construct and use flow charts.

6. Inquiries Receiving Fulfillment Packages and Their Sales History

What is It? Inquiries not forwarded to the sales force, but who were sent other fulfillment information.

How You Use This Data. Reveals what’s happening with the inquiry. Were they simply sent information with no additional follow-up? Graded for lead level of importance? Importantly, it provides an early warning for leads who have had no additional follow-up and the ability to track the elapsed time from when an inquiry was received until they converted into a customer.

Another use is that it enables measurement of the media source of the inquiry customer. It’s possible some media types will produce more “tire-kickers” than other media sources. Because follow-up timing is critical, elapsed time from the inquiry receipt until material is sent can be managed.

7. Inquiries Converted to Sales

What is It? The number of inquiries, by source, who have converted to sales.

How You Use This Data. Permits a comparison of inquiries converted to sales by source to determine cost per inquiry and cost per converted sale. Remember, it’s most important to search for the lowest cost per inquiry or lowest cost per sale, not necessarily where the most leads or conversions originated.

8. Customer Type

What is It? The consumer or business type of the core customer base. If this information does not exist on the customer file, demographic and lifestyle data, Standard Industrial Codes (SICs) can be appended, along with sales volume, number of employees, number of locations, and more.

How You Use This Data. Permits better targeting of lists and other media. You can maximize your marketing investment. It’s possible to append outside data to your list, and by profiling your best customers, you can discover who they are and where you can prospect for more of them.

9. Key Titles

What is It? In the business environment, knowing who inquires. Knowing who influences the purchase. Knowing who has the authority to purchase.

How You Use This Data. Usually there are several people inside a prospective customer company who has some influence in the purchase. Having titles, or functional responsibilities/job descriptions, permits you to target much better. Knowing “who” allows you to formulate creative strategy to appeal to the right target audience.

10. Sales Value of a Customer From the First Sale

What is It? The dollar value of the customer from the first sale. Provides the basis for future sales projections and media use.

How You Use This Data. Use it to track trends of future customer purchases. Are subsequent purchases always about the same size? Growing? Declining? It also reveals the benchmark for future media selection based on the value of customers. Some media may simply have prospects who have higher sales values. If you must base your allowable marketing costs on the first purchase, accumulating historical data will provide more accurate information.As you assemble historical data over time, you can see trends emerging about the value of new customer’s first purchases. Are new customers trending towards bigger sales? Smaller?

11. Number of Purchases and Sales Value from a New Customer During Their First Year

What is It? The number of times a new customer has purchased over a consecutive 12 month period from the date of their first purchase, the dollar value of each purchase, and the cumulative sales after the first 12 months as a new customer.

How You Use This Data. It’s essential to know the retention or persistence of customer purchases. New customers who purchase often and purchase high volume should be treated specially early on to solidify the relationship through targeted direct marketing. If a significant number of customers purchase once from you and don’t purchase again, you have the opportunity to learn why.

12. Projected Sales Value and Number of Purchases from an Average Customer After One Year

What is It? Unlike the sales and purchases from a new customer, this number is an average value of all customers after one year of purchase history. This will include every customer with one year or more of history.

How You Use This Data. You will be able to select the best performing media for future marketing efforts, since every customer should have a source code appended to it from now into perpetuity. It will also help you determine the long-time value of a customer and better evaluate how much money you can invest on marketing costs to acquire a new customer.

13. Quintile Analysis of Sales

What is It? The breakdown of sales in order of the largest customer sales dollars to the smallest customer sale. Customers are segmented into quintiles (five groups) with an equal number of customers in each group. If there are 100 customers and the sales are arranged from the highest to the lowest, the top 20 customers will represent the first quintile with the largest volume of sales dollars. Usually, sales from the largest 20% of customers represent 60% or more of sales volume.

How You Use This Data. You can target your best customers, or ensure they receive special treatment from your marketing efforts or sales force. You have the option of turning over your lowest 20% of customers to lower cost marketing contact cycles. Knowing the profile of your best customers will permit you to use media where more of those customer types can be found.

14. Customer Profile Analysis

What is It? The history of the customer, along with detailed data about their sales value (what they buy from us), demographics or psychographics, business type, geography, and more.

How You Use This Data. Permits more selective media choices and can be used for development of marketing strategy, including creative, offers, and media choices.

15. Allowable Marketing Cost

What is It? The amount of money remaining after COGS, fulfilling the product, overhead and profit objectives are subtracted from sales that can be used for marketing programs. Allowable marketing costs can be based on:

a. Cost to generate an inquiry
b. Cost to generate an inquiry with an assumed conversion rate
c. Cost to generate a sale
d. Cost to generate a sale with long-term value

How You Use This Data. Permits you to use marketing dollars where you have a history of response and conversion. If no response history exists, you have the knowledge of what you must generate before going into the campaign. Most importantly, it helps you establish objectives.

16. Profit and Return on Investment

What is It? The final score card. Reveals how much every dollar spent on marketing costs returned in profit.

How You Use This Data. It enables you to justify to yourself and management if the marketing program made sense. Many times, precise numbers regarding COGS, overhead, etc., are not available, so use your best estimate of percentages with input from co-workers who can provide a qualified estimate.

17. Key Learning, Indicated Actions, Recommendations

What is It? The direction and conclusions you will come to after completing the analysis.

Hints About How to Draw Your Own Conclusions: As ideas strike you while analyzing the data, jot down your thoughts so you can use them as you wrap-up an analysis. As you analyze and review data, additional ideas should come to mind about data you should examine. A word of caution: be careful to not let the data paralyze you into inaction ... the “analysis/paralysis” syndrome.

 

How You Use This Data. This becomes the road map you will follow. The best predictor of the future is what has happened in the past.