Despite their level of sophistication, many database marketers still face difficulties that limit their ability to measure and improve ROI, according to a Forrester Research report released last month.
In the report “Database Marketers Evolve Their ROI Measurement,” lack of qualified staff, deficient technology infrastructure and timely access to data top the list of challenges marketers face in measuring and improving ROI.
Fifty-three percent of respondents said it's a head count problem—they simply lack the staff—while just 23% said they lack employees with specific marketing analytics expertise.
“You can have all the data in the world, but you can't do much with the data without the people,” said Suresh Vittal, a senior analyst at Forrester and author of the report.
Staffing issues are problematic at USG Corp., a manufacturer of building and construction materials. “We're pretty lean,” said Richard Long, manager of database and interactive marketing. Long said he does not have a dedicated employee exclusively focused on measurement and ROI. That is a shared responsibility at USG, where measuring ROI is still in its infancy.
“We are a laggard in terms of measuring our ROI,” he said. “That's a reflection of our maturity level—of where we are right now—with database marketing. We just went live with our first marketing database ever in May 2007.”
The staffing issue is “quickly followed up by the lack of data and technology infrastructure,” Vittal said. Often data are not clean, are siloed in different places across the organization or there are no processes and feedback loops in place to make sure they're collecting the right data from the right consumers, he said.
“Let's say I'm exposing customers to 15 different mail programs,” Vittal said. “To fully understand which program was most successful, I need the right customer data as well as a way to define value. It requires more than just the data. The organization also needs to put in place the business rules and the standards to enable me to correctly attribute” the level of success of each program.
“Unfortunately, we're no longer in a simple world,” he added. Customers are exposed to multiple messages all the time, so response attribution is imperative.
Vittal defined response attribution as the process of assigning value or level of influence that a specific program has in converting a customer or meeting a business objective.
Long said, in his case, a lack of accurate data is also a major challenge. He said he grapples with incomplete and inaccurate campaign response data, marketing spend data and sales data.
He added that he is beginning to overhaul the processes for capturing data used at USG.
Another marketer, Cisco Systems, is more advanced in terms of its ability to track ROI.
“We measure everything that moves,” said Theresa Kushner, director of customer intelligence at Cisco. That includes measuring demand generation and branding programs. But Kushner said her biggest challenge is the inability to measure specific campaigns, citing the increase in commercial messages people receive daily through a growing number of media channels. A second challenge is her lack of control over partners.
“The hardest problem is a large part of everything we do goes to partners,” she said. “We can look at what the ultimate revenue is, but we can't always trace which program it came from. If so many messages hit the customer, how can you tell which of them made a difference?”
Vittal said that companies considered leaders in terms of measuring ROI use a variety of metrics and are tracking types of metrics that specifically help them understand a customer's value over time, like incremental revenue lift, customer lifetime value and customer profitability.
Kushner said she and her team have looked at “how much customer loyalty contributes to our revenue, and does it move the needle. We've shown statistically that it does.”
Long, on the other hand, said those metrics will come in time, but right now “we're only focused on operational metrics.” Those include campaign response rates, number of leads generated and number of new customers acquired.
“As we go down our maturity path, we'll be able to get more sophisticated with our metrics to measure things like customer lifetime value, customer profitability and RFM [recency/frequency/monetary] measurements. That's a goal of mine.”
Vittal said many goals for achieving better measurement can be met through the use of marketing automation technology.
“The enterprise marketing platforms are the core infrastructures that help marketers get smarter and more efficient at what they do.”
While he advised investing in technology, he said marketers initially need to come up with a technology strategy that takes into account which features are most important. Those might include campaign management, optimization, marketing resource management and Web analytics.
“There's so much data and so many communication channels—and so much variation in how your customers behave—that you need a technology infrastructure,” Vittal said. “There's isn't enough staff out there to solve the analysis of data and channels that organizations have today. There's [always] more data that needs to be analyzed, tracked, modeled and organized.”