Measuring The Impact Of Gift Cards

  By using Mx3 Metrics, this client was able to prove the value of their gift card program on their bottom line

By using Mx3 Metrics, this client was able to prove the value of their gift card program on their bottom line

We encourage our clients to use Mx3 Metrics for all their channels, not just digital or social. An important channel that some of our clients rely on is gift card sales. Gift cards are explicitly measurable and proven to generate a high Return on Marketing Investment (ROMI). Gift cards can help with new customer acquisition, as they act as a defacto recommendation from the gift giver to the recipient, while also being popular among returning customers as well.

Gift cards are a multi-billion dollar business in Canada and the U.S., and their popularity is still on the rise. Gift cards are not only popular with consumers — businesses are adding them to their marketing mix, and for good reasons:

For consumers:

  • Gift cards make gift giving a lot easier. Just about every retailer — from clothing to coffee to high-end restaurants to books and electronics — offers gift cards. That means the person you’re buying the gift card for can purchase something you know they’ll like.
  • Gift cards are convenient. You can purchase gift cards pretty much anywhere — directly from your store or restaurant of choice or at gift card “malls” or “kiosks” at convenience stores and major retailers.
  • Gift cards make it easier to stick to a budget, especially during the holidays.
  • Most provinces have legislation in place to prohibit expiry dates on gift cards, which means your money won’t go to waste.

For retailers:

  • Gift cards provide an additional revenue stream for retailers, generating revenue in advance of sales.
  • Shoppers using gift cards are 2.5 times more likely to pay full price for the products they buy.
  • Many gift cards are not redeemed for their full value so that encourages repeat visits.
  • About 6% of gift cards end up unused.
  • Many people spend more than the value of the gift card. (72% of consumers will spend about 20% more than the value of the gift card)

From these statistics, it’s clear that for some businesses, gift cards can make a great addition to your marketing efforts.

Case In Point:
One of our restaurant clients, Japanese Village Edmonton, offers a discounted gift card through Costco stores in Edmonton. We were tasked with figuring out how to track the performance of these gift cards with our Mx3 system. Our client, Tenkai, sells these gift cards for his restaurant through Costco Edmonton's gift card “kiosks.”

The gift cards sell for $40 each: Tenkai keeps $35 and Costco gets $5.

Tenkai’s customers get $50 worth of food at his restaurant for $40.

We decided to treat these gift cards purchased through Costco as a separate funnel so we could get a good read on the revenue generated from them and Tenkai’s return on investment.

Costs:
Real costs include how much it costs Tenkai to produce the gift cards to sell in Costco. The average cost of design and printing plastic gift cards is $1 each.

It costs Tenkai $5 for every gift card purchased through Costco. The total cost is $6 per gift card.

Impressions:
An impression is created every time a customer walks by the gift card “kiosk” in Costco.

We did a rough calculation based on the fact that there are 3 million visitors to Costco every day. Divide that by 727 stores in North America and that means about 4000 customers visit each story every day.

Multiply that by 30 days and you have about 120,000 visitors a month. Not every one will walk by the gift card “kiosk” so let’s say that 10% do. That means about 12,000 impressions a month.

These impressions may lead to an explicit benefit: the immediate or future sale. This is the outcome Tenkai is striving for, but impressions also carry implicit benefits such as branding. Exposure to the brand will increase consumers’ brand awareness while the prestige of being sold in a Fortune 500 company like Costco will build brand equity.

Revenue:
Through Costco, Tenkai Sells around 300 cards a month, around 2.5% of our monthly impressions. This number fluctuates greatly, especially around the holidays, so we smoothed it out to a round monthly average.

At $35 a card, Tenkai’s revenue stream from Costco sales is approximately $10,500 any given month.

Return On Marketing Investment:
To figure out our ROMI for each individual unit, we divide our profit per unit by our unit cost. $29 A Card / $6 Cost Per Unit equates to an ROMI of $4.83. This figure demonstrates a very healthy return on Tenkai’s investment.

At $8,700, Tenkai’s monthly profit from the gift card program provides him with consistent clientele and an opportunity to generate business from first time customers. This figure is also lower than the actual impact, since customers generally spend about 20% more than the value of the card. Congratulations Tenkai!

As the example above proves, gift cards are a tool that can tell us a lot about our clientele. We can track and measure their impact on our bottom line, but they can also generate information about our audience. For instance, we can spread them across various stores around town, telling us a lot about who our customers are and where they are coming from. This information can inform marketing strategy going forward. This data, in tandem with Mx3 Metrics, may encourage us to invest in under-developed markets and grow essential elements of our business.

How to Attain Marketing Nirvana

Technology has forever changed the retail shopping experience. Most companies are investing in paid media advertising, (AdWords, display, social ads, SEO, email, etc.) to increase downloads, signups, sales, leads and customer acquisitions.

So much information can be gathered - but how does a company quantify the return on marketing investment? Which campaigns are the most effective? 

Investing in marketing is imperative therefore it is important for a company to know whether or not their marketing strategy is working to maximum Return on Marketing Investment. One method this article speaks about is attribution modeling which can be used as a method of assigning a value to user touch-points that contribute to the result of a conversion or purchase, and then assigns a value to each. With understanding of how your customers are interacting with your ads and different marketing channels, you can learn to optimize your marketing plan.

A simpler and faster method of quantifying your return on marketing investment is to call the experts at Mx3 Metrics. Our software quickly measures and computes your data into quantifying information any time you need it. And you can quickly create customizable reports!

Contact us anytime for a free consultation.

 

 

Top 8 Mistakes People Make with Marketing Automation

1. Being inorganic

Marketing automation programs that use templates and scheduled messaging are useful timesavers but make sure you don’t lose the personal touch of real human connection.

2. Flipping the wrong personal switches

The purpose of marketing messages it to create a meaningful bond between your company and your customers. It is important to see your communications from the customers point of view. The linked article includes some questions to ask yourself while designing your marketing plan.

3. Failing to plan

Balance between objectives (short and long term goals) is key to not losing direction or creativity or being able to gauge the effectiveness of your campaigns.

4. Getting the focus wrong

Successful marketing is not just about the number of people you reach. It is about reaching the RIGHT people. Know your audience to achieve the most effective marketing efforts.

5. Ticking boxes

Marketing automation in the business to business community has risen 11 fold in just 6 years. It is imperative to be educated in the industry best practices and understanding.

6. Ignoring buyer profiles

Tailoring your communications to buyer profiles results in a far more effective program for less cost and effort. Marketing automation can be great tool for saving time and success when used with customer understanding and buyer profiles which must be thought out ahead of time.

7. Inefficient use of tools and platforms

Because the right marketing automation platform can be a little expensive, it means taking a careful audit of your present or potential automation procedures. This article asks a few questions that can help.

8. Forgetting the data generation

Marketing automation endeavors are data generators. Each interaction with a prospect, each conversion to lead or each failure generates a set of data points that are highly useful in designing future strategies.

Mx3 Metrics software is the tool to use to bring all your marketing data and make sense of it. Now more than ever, a tool that tells you how your marketing plan is working - or not working - is a crucial time and money saver.

Call or email us any time to see if Mx3 Metrics is your solution to successful marketing!

 

Digital Marketing Trends and Predictions for 2017 with Doug Lacombe

Calgary Executives Association is pleased to have Doug Lacombe as our guest speaker for our Open House breakfast on Wednesday, February 15th. We invite you to join us.

Doug Lacombe is the founder and president of Communicatto and has over 20 years experience in media (newspapers), web publishing, software, telecom (wireless data and voice), and social media.

Are you curious about what the future holds for Digital Marketing?
What do you think the key trends will be?

  • Automation?

  • VR?

  • Blockchain?

  • Machine Learning?

  • AI?

Join us on February 15th to find out Doug's perspective. Register today! 

This event is open to anyone who is interested in learning more about the Calgary Executives Association.

Here is a teaser from Doug:

So Much Marketing Data. No Integration.

How do you determine if your marketing efforts are getting the results you’re after?

One of the fundamental issues with measuring the performance and results of marketing is understanding what is happening within each marketing channel. Each digital marketing platform has a method for collecting and reporting on the data generated by these platforms. Some of these systems include Google AdWords, Facebook Insights, Twitter Analytics, and LinkedIn Analytics, to name just a few.

But what is missing is integration. There are a few marketing reporting systems that pull together data from multiple sources but all of them are missing a segment of data that is critical to understanding what is happening. Google Analytics almost does this but to be truly integrated, a reporting system for marketing performance should collect data from three critical areas: marketing, sales and financial.

Marketing Data

Marketing includes every channel a company uses to reach its audiences including digital, social and traditional advertising. Data from these sources includes Impressions and Visits (to a website, social platform or physical location).

Sales Data

Sales includes the customer relationship management system that a company uses. This would include Prospects, Meetings, Free Trials, Offers (or Proposals) and number of sales units. To really understand where your marketing efforts should be directed, this information should be segmented by marketing channel, which in my experience is rarely documented.

Financial Data

Financial information includes all marketing costs (fixed and variable) and all information related to revenue, again segmented by marketing channel. Once more, this is infrequently done.

Integration

There are programs that integrate some of this data - Google Analytics is a good example - but most marketing reporting platforms are missing data from one area or another. Google Analytics, for example, has data at the point of visiting a website. Google has made some effort to integrate data from Google AdWords for Paid Search and Search Console for Organic search. As a result, we can see the Impressions generated by AdWords and Organic Search within the Google Analytics platform. This is excellent but there is no integration with any of the social media platforms like Facebook, Twitter and LinkedIn. In order to get Impressions from any social media platform or email program like MailChimp, or traditional advertising like TV, radio, print and trade shows, we have to go to the source.

Excel

Interestingly, Microsoft Excel offers a pretty good solution. Using Excel, we can add data from any source, create reports, develop charts and analyze trends. However, Excel requires at least intermediary skills to use the program and understanding of math and statistics. There are a few marketers who have these skills but many don't.

Our Solution: Mx3 Metrics System

The screenshot below is from our marketing metrics program, called Mx3 Metrics. On the right side, you can see that we have added the key levels of the marketing and sales funnel. Impressions is at the top and Outcomes is further down. Down the middle, you can see a partial list of marketing channels including Organic Search, Paid Search, Display ads and Print. There are more channels below but not captured in this screenshot. From the middle and out to the right you can see cells for Impressions for the various marketing channels by month.

Missing Metrics

The other issue with most marketing reporting systems available is the lack of metrics (which we define as a calculation between 2 measures). This is especially an issue with metrics related to financial performance but key conversion metrics are also conspicuously lacking. Examples of critical metrics are cost per visit (to a store or to a website), cost per lead, cost per sale, offer rate and take rate. Google AdWords is the only channel platform that calculates critical metrics such as click-through-rate, cost per click, conversion rate, and cost per conversion. The team developing AdWords gets it. But most companies use more marketing channels than AdWords and so they are stuck trying to figure out the measures and metrics that are critical for them to make decisions relate to marketing results and performance.

Mx3 Metrics: Channel Detail

In our system, we add all the measures that are critical for each marketing channel and each level of the Customer Acquisition Funnel. Our software then calculates the relevant conversion metrics and cost per level metrics. See screenshot below.

Demo

If you would like more information or a demo, contact Jeff Nelson at jeff@anduro.com, 403-703-2247 or @mx3metrics.

eNewsletters are Still a Strong Way to Connect with Prospects and Customers

Recently, I recommended to a client of ours that she send out a monthly newsletter. Her reply was, "Why?" I sent her the list of reasons outlined below.

What do you think? Are eNewsletters still relevant or are they a waste of time?

1. Staying In-Touch

Email newsletters are still a very strong way to stay in-touch with current, past and some potential customers. There are very few ways to deliver information from your company right into someone's mailbox (physical or electronic). 

2. Staying Relevant

One objective of marketing is to keep your brand relevant. eNewsletters are an effective way to keep your brand in front of people who know who you are and "support" your company. They may contact you again and/or they may refer others. Even if someone deletes the eNewsletter without opening, they are still seeing your email address, your company name and the subject. This is an "Impression" which has value. Maybe they are too busy to open this month's newsletter but they will open a newsletter that you send at sometime in the future.

3. They Are Asking for It

Everyone on the eNewsletter list has opted-in which means that they want information from you. If they don't want the information from your company, they can unsubscribe.

4. Obligated (to some degree)

This is just my opinion, but I feel companies have some degree of obligation to inform and educate their "audience" of issues, trends, solutions, and new developments.

5. Easy to Measure

eNewsletters are easy to track. We know the number of subscribers, the open rate, and the click rate. These are all great measures and metrics that we evaluate the response to information we are sending to our "audience".

6. Inexpensive

eNewsletters is cheap to prepare and to deliver. Compared to costs like Google AdWords, eNewsletters are very cheap. This is especially true if you are reusing existing information from blogs and social media.

7. Results

Typically, the open rate for eNewsletters is about 30%. Click through rates back to the website are about 7%. If you have 1,000 people on your list then that is 300 people who at least opened the eNewsletter and about 70 people who clicked back to your website.

Accrual Accounting and Allocating Marketing Expenses

Allocadia has written an excellent article on accrual accounting and how it relates to marketing expenses.

See: Accrual World: What is Accrual Accounting and Why Does It Matter to Marketers? on January 22, 2015 by Katherine Berry

In the article, Katherine Berry asks and answers some very good questions on this topic:

  • What is accrual accounting?
  • Who uses accrual accounting?
  • How can marketing teams use accrual accounting?

As she explains, when "using accrual accounting, expenses are recorded when an obligation is incurred — regardless of when the cash is paid out." And she has some excellent examples.

Our software, www.Mx3Metrics.com, makes it easy for marketers to allocate expenses like trade shows to the month of the event, as opposed to the time when the expenses is paid which can me many months previously.