Marketing effectiveness – measuring the long-term impact of direct mail and other channels

In our previous blog post on return on marketing investment (ROMI) and seeing the bigger picture in terms of measuring the effectiveness of all marketing channels together, we explained why it is important to not only calculate return, but also track it over time.

The question is: what do you do if a marketing channel shows a declining trend, or if its ROI is less than other channels?

Pulling customers through the sales funnel

The temptation is to pull back tactically on that particular channel in favour of less expensive, and arguably more effective, channels. Moving the marketing budget to maximise effectiveness can happen frequently – however, most marketers know intuitively that channels can and should work together to pull customers through the sales funnel. This is often difficult to prove because media reporting is usually ‘last click’ only and/or is not granular or complete enough across all channels.

Some channels are more effective at influencing and raising awareness, others are better at converting and some work best in combination to keep the customer in the sales mindset. So, how do you prove this to a board of directors who may be looking for marketing budget cuts and who perhaps only see a sizable difference in cost of sale and ROMI between channels? And how do you know the longer-term impact of pulling back on some channels in favour of others that seem to be more effective?

Direct mail resurgence

Direct mail is a good example of a channel that, on the face of it, can be rather expensive and may be at the top of the list in terms of budget cuts. However, direct mail has seen a resurgence during the global pandemic period and, although it is still seen as expensive, it has some very interesting marketing characteristics.

Interestingly, in our recent blog post on measuring the carbon footprint of various marketing activities, Kg CO2 per sale for email was shown to be higher than for printed direct mail.

At UniFida, we have been studying direct mail results using our unique marketing attribution solution, which provides detailed ROMI over time for different channels. It also shows where in the sales funnel each channel is most effective with particular types of customers – i.e. existing customers, or those new to a brand.

Retail example

One of our retail clients is seeing some interesting results. In the graph below, direct mail in the form of catalogues is seen as most likely to impact sales in combination with another media channel and, by contrast, Search Engine is most likely to act on its own.

marketing channels working together graph

As this client expected, the ROMI for direct mail is lower than a number of other channels, but it is having the strongest influence at the start of the sales funnel – meaning that it is creating awareness, leading to new sales through encouraging steps, such as searching online and creating sales that otherwise would not have happened.

This is illustrated in the chart example below where the strength of direct mail activity is at the Initiator stage (the start of the sales funnel) against other channels. By comparison, for this company email has a stronger influence in the sales Closer stage.

Media influence in the sales funnel graphWhen we looked at the impact of media in converting new customers, the % influence of direct mail (catalogues) at the start of the sales funnel was even more pronounced, but email was less of a Closer and its influence on new sales was more evenly split across the sales funnel.

Quite often companies have individual contact details and permissions for direct mail and not for email, as customers find the former less intrusive. ‘Cold’ direct mail is also an option, with quality data providers offering targeted individuals with permissions to mail.

Speak directly to a targeted audience

Direct mail can work well for even the most complex propositions and, with third-party cookies being phased out, it represents an opportunity to speak directly to new, highly targeted audiences. It is also easy to test – however, it’s important to ensure that your measurement looks at the bigger picture in terms of ROMI.

Direct mail may also be adding to the effectiveness of the entire sales process, so you need to evaluate how it is bringing in more valuable customers than would otherwise be difficult to reach.

So, when looking at your marketing results, the challenge is to step back and examine the long-term impact of the marketing mix. For every channel you should consider the balance between individual channel ROMI, the interactions between channels and the role each is playing in funnelling sales.

Proof of concept

UniFida can deliver the required expertise and technology ‘out of the box’ to help you automate ROMI evaluation. We can start with a low-cost proof of concept to demonstrate how ROMI can be calculated for your business.

For more information email [email protected] or call + 44 203 9606472.


UniFida logo

UniFida is the trading name of Marketing Planning Services Ltd, a London based technology and data science company set up in 2014. Our overall aim is to help organisations build more customer value at less marketing cost.

Our technology focus has been to develop UniFida. Data science business comes both from existing users of UniFida, and from clients looking to us to solve their more complex data related marketing questions.

Marketing is changing at an explosive speed. Our ambition is to help our clients stay empowered and ahead in this challenging environment.


Return on marketing investment – the importance of seeing the bigger picture

To use a couple of sporting analogies, every marketer wants to score the equivalent of a bullseye or a hole in one. In other words, achieve a high score with the minimum effort. But just as in sport, it’s not always an easy task – however marketers can hit their targets by relying more on expertise and data, rather than just chance.

It starts with accurate media reports measuring the effectiveness of marketing efforts and investments. A lot of companies make do with media reports that are either not holistic – i.e. they focus on one channel and don’t take into account the existence and impact of other channels – or they are just a ‘snapshot in time’.

In other words, we need to look at the ‘bigger picture’ in terms of measuring the effectiveness of all marketing channels together, as well as any seasonal variations.

Be strategic

This approach should be strategic rather than tactical; companies need to look at marketing metrics in the longer term, rather than take the short-term view. Not looking out beyond the immediate horizon can result in:

  • missing a steady decline, or increase, in a channel’s performance
  • a lack of insight into the performance of each marketing channel at different times of the year, so not understanding seasonal impacts
  • not determining the ability for one channel to boost the performance of another when it is switched on
  • not recognising the impact of budget reductions in one channel on another.

It seems that few companies are stepping back and looking at trends over time, with all the channels measured together. Econometrics studies go some way towards helping to achieve this which, although useful, can be time-consuming and expensive. Also, they don’t provide a clear view of the effects of seasonal marketing activities.

More importantly the outputs don’t have the level of detail – such as campaigns and keywords – typically needed to optimise digital channels and direct marketing.

Optimise channels’ ROMI over time

What is needed is an attribution solution that provides detailed Return on Marketing Investment (ROMI) data over time, measuring digital and direct channels alongside each other, with the ability to drill down forensically into campaign detail.

Such a solution can even indicate at what stage of the sales funnel each channel and campaign are most effective and with which type(s)of customers – i.e. existing customers or those new to the brand. The ability to easily see such trends in marketing performance over the long term reveals a number of key truths, such as:

  • an overall decline or increase in the efficiency of all channels
  • natural variation in ROMI due to seasonality, and
  • the interaction (dependence or cannibalism) across different channels.

An attribution solution with built-in ROMI measurement over time enables marketing teams to step back and take a fresh look at their marketing budget and media mix. It empowers them to make well-informed, multi-channel decisions about how to drive more sales from the right types of customers and deploy the whole marketing budget more effectively.


UniFida logo

UniFida is the trading name of Marketing Planning Services Ltd, a London based technology and data science company set up in 2014. Our overall aim is to help organisations build more customer value at less marketing cost.

Our technology focus has been to develop UniFida. Data science business comes both from existing users of UniFida, and from clients looking to us to solve their more complex data related marketing questions.

Marketing is changing at an explosive speed. Our ambition is to help our clients stay empowered and ahead in this challenging environment.


Cutting marketing budgets

Wielding the axe on marketing budgets – how can you cut creatively?

In today’s challenging times, many organisations are looking to reduce their marketing budgets while minimising the overall impact on sales.

Of the £20 billion+ spent per annum on marketing in the UK, the challenge is to identify which parts of a marketing budget are actually wasted. If you Google ‘How to cut my marketing budget’ you will find yourself flooded with generic advice, but no specific guidance on how or where to wield the axe.

So, you need to be creative. Here are some specific questions you need to ask when assessing your marketing budget allocation:

1. Which customer segments should we focus our marketing budget on?

This question should always be asked at the start of a budget reduction exercise – and the answer may not be what you expected. For instance, at UniFida we recently discovered that for an insurance client of ours their least affluent customers were providing the highest longer-term value per sale.

As well as investigating specific market segments, you should look at splitting your investigation between the impact of marketing to recruit new customers compared with spend on existing customers. Both will respond in very different ways to similar campaigns.

2. Should you start your investigations at a channel or a campaign level first?

The problem with starting at a campaign level is that you are very quickly swimming in the weeds. You may find that there are literally hundreds of campaigns when you look across all your channels and by axing individual ones you are ignoring what their cumulative effect is, as well a potentially stopping, say, the worst ten emails, when in fact they perform better that some of your AdWords campaigns.

We suggest you start at the channel level and aim to get to the same marginal ROMI (Return on Marketing Investment) for each one. If you can achieve this then you will have a perfect channel level budget distribution. The marginal ROMI can be described as the return from making a small increase or decrease in the spend for any channel.

To measure marginal channel level ROMI you will need some quite specific tools, a description of which comes later.

3. Having fixed your channel level budget allocation, how do you progress with campaign pruning?

An initial risk is that some campaigns do not need to be axed – they may just need better targeting, or revised content. Clearly these problems need to be dealt with before any cuts are undertaken.

Then, turning to the individual campaigns, you must regard each one as part of an overall marketing ecosystem that, working in combination, encourages customers to undertake customer journeys that may or may not end in a sale.

steps in customer journey diagram

So, you will need to judge the effectiveness of the campaign in terms of how much it contributes overall towards the journeys that lead to a sale, but you may also be interested in the role it plays in initiating, holding, or closing sales.

To achieve both of these you need to know where events created by the campaign crop up in your customers’ journeys and what impact they have. As an example, a social media campaign may be very good at getting new customers to visit your website, but it may need some PPC support to get them to actually purchase.

What specialist tools do you need to achieve all this?

All this will only become achievable when you start examining your marketing effectiveness at the granular level, i.e. each step in a customer journey. A step may be receiving a catalogue, opening an email or a visit to your website from a referrer.

In combination, and ignoring indirect channels like press or TV for a moment, these steps in your customers’ journeys are what marketing delivers. On average there are around three steps preceding each sale, but some journeys will consist of one step, or others twenty.

 

The right tools for the job

With this in mind, you need a tool that gives a value to each step based on its contribution towards a sale and allows you to aggregate these steps up to all those created by a campaign, and then up again to all campaigns that take place in a channel. (Interestingly there are many questions around timing in this as well because campaigns can have long tails).

This requires technology to link online and offline customer journey steps and then give to each step a weighting based on the contribution it makes to the overall journey.

Alternatively, if you are looking at indirect channels like press and TV, then you need to introduce an entirely different technique, ’econometrics’, which will also determine the value they contribute towards your overall sales. Econometrics works in a very different way by examining the impact of changes in the spend in any channel over time on the overall level of sales.

How UniFida can help

UniFida provides a one-stop shop for delivering the tools and services for both of these approaches – customer journey attribution for direct channels’ ROMI and econometrics for indirect channels. We can also help with a proof of concept to demonstrate just how effective these approaches are.

For more information email [email protected] or call + 44 203 9606472.


UniFida logo

UniFida is the trading name of Marketing Planning Services Ltd, a London based technology and data science company set up in 2014. Our overall aim is to help organisations build more customer value at less marketing cost.

Our technology focus has been to develop UniFida. Data science business comes both from existing users of UniFida, and from clients looking to us to solve their more complex data related marketing questions.

Marketing is changing at an explosive speed. Our ambition is to help our clients stay empowered and ahead in this challenging environment.