Tracking the Success of a Flyer

My brother sent me an email today asking on behalf of one of his customers, "How do you track the effectiveness of flyers?"

This is a common question. I often get asked this question or a similar one when discussing marketing strategies. The heart of the question boils down to the return that companies achieve for different types of advertising. Usually, this is in the context of figuring out the success of a marketing campaign.

Ideally, marketers should know the Return on Marketing Investment (ROMI). Our formula for this metric is Revenue minus Investment divided by the Investment. In this case the "Investment" is the cost of the advertising campaign. I say "ideally" because many marketers don't seem to track ROMI. This is shameful. Every marketer should not only track the performance of all their ads, they should also have quick answers to questions like, "How successful was that flyer campaign?"

Getting back to the question of tracking the success of a flyer campaign... For me the answer is less about how and more about the effort involved to track performance and results. Every method for tracking success takes effort and most marketers don't seem to want to put in the effort. But let's start with how.

Here are a number of techniques:

  • Underprice an item for sale with a unique price like $99.97 (instead of $99.99)
  • Add a tracking code that is required to get a discount or unique produce
  • Add a unique phone number; these can be quite cheap now-a-days
  • Point people to a microsite with a unique catchy URL
  • Similarly, point people to a unique landing page
  • Use an unique email address for people to use
  • Offer the promotion at a unique location e.g. to the flyers in one area of the city that has a location close by
  • Suggest that the prospect contact a specific person
  • Implement an in-store survey that is triggered when someone enters the store and ask: "How did you hear about us?"
  • Similarly, add a drop-down field on the website and ask: "How did you hear about us?"
  • Monitor Google Analytics and/or store visits and look for an obvious increase in traffic
  • Include a form in the ad that must be completed to get a promotion
  • Only do one unique promotion at a time; e.g. flyers for one month and nothing else
  • Add a QR code, although I don't see QR codes anymore, they seem to be out of fashion

As you can imagine each of these techniques takes effort to implement. You have to think ahead and figure out what people will do. In fact, you have to do more than that; you have to guide them and direct the audience to do what you want them to do. Click here. Phone this person. Fill in this form. Remember this number. Visit there. Etc. It isn't easy; and people don't always do what you want them to do. The key, however, it to anticipating how people will respond and helping them do what you want them to do.

Ultimately, the best course of action is to do something. Anything. Start by trying a least one method to track the performance of an ad or a marketing campaign.

And here is the secret: it isn't as hard as it sounds. Just try it!

Finding and Exporting Impressions from Facebook

Impressions is one of the measures that we suggest that our clients using Mx3 Metrics collect and track. For programs like Google AdWords this is easy. The measure is easy to find, copy and paste. But for Facebook finding Impressions is a little more difficult because it isn't available on a standard report. However, Impressions are available using the Export feature under Insights.

Have a look at the following video tutorial which outlines this process.

My Favorite Report in Google Analytics

As digital marketing becomes the standard way to market and sell products the importance of tools like Google Analytics will become increasingly more important.

Using and understanding Google Analytics is a fundamental part of what we do at Anduro Marketing. Some days it seems that we eat, sleep and breath numbers, tables, charts and ratios. 

One area that many of our clients struggle is setting up and understanding Goals. It is actually easy: Go to the Admin section, click on Goals and set up a goal. You can even turn on Value to track the dollar value of a specific action that happens on your website. There are advance features that are tricky but to track the performance of a specific page is quite simple.

A common example, is to count up the number of times a visitor fills out a form such as the form on a Contact Us page. It is easy, at the end of the month, to look at the Conversions section of Google Analytics and count up how many times the form was completed. In addition, you can look at Source / Medium and determine which marketing channel is doing the heavy lifting and bringing in the most inquiries. 

Using this area of Google Analytics to determine the marketing channel is less than optimum because there is too much information - there are too many Sources. A better way is to click on Acquisition > All Traffic > Channels. This report looks like this:

This is one of the most useful reports in Google Analytics. On one screen you can see all of the following by Marketing Channel:

  • Sessions
  • New Users
  • Bounce Rate
  • Pages/ Session
  • Avg Session Duration
  • AND Conversions

That is my favorite report in Google Analytics.

In my next post, I'll look at some complications between Goals, Pageviews and Segmenting Data.

Marketing Channel or Marketing Campaign: What's the Difference?

A few years ago I spent a few days in Amsterdam when flying between Rome, Italy and Calgary, Canada. I had been to Amsterdam before and I loved it - the art, the canals and the people. It is a wonderful place to visit. Don't miss it if you are ever traveling to Europe.

Amsterdam has many ways for getting around including cars, walking, bicycles, trolleys, and boats. Not every city uses boats as a mode of transportation but Amsterdam has lots of canals and water channels. I took the picture above on a boat tour down one of the many canals. As you can see, the water comes right up to the doors of the houses. In Amsterdam this is called "convenience". In Calgary, we call this a "flood" - as we had in June 2013.

This brings me to the topic of differentiating between a marketing channel and a marketing campaign. Most likely the idea of comparing a channel from a campaign is elementary for most marketers. However, not everyone is familiar with all the terms that we sling around in marketing meetings. So I thought I would elaborate....

A marketing channel is a method or path that a marketer chooses to reach a target audience. In Amsterdam, a person can choose to bike, ride the trolley or take a boat. Each mode of transportation uses a different channel to get from A to B. Similarly, a marketing campaign is the vehicle that contains the message - similar to a boat that goes down the canal or channel of water. Another way of looking at this is that a channel continually flows; it keeps on moving whether or not you are using the channel. A campaign, on the other hand, has a start and a finish. A marketer may plan campaigns in the Spring and in the Summer but the channels they choose may be different or the same each time. 

Marketers often talk about using different types of channels to deliver a campaign for a specific message. Broadly, there are two groups of channels: traditional and digital. Traditional marketing channels include print, radio, TV, out-of-home (billboards), and trade shows. Examples of digital channels are listed in the image below. Google Analytics typically shows eight digital marketing channels, assuming all are used in a given time frame.

A "campaign" often involves the creative side of marketing and advertising. The objective of a campaign is to develop an attractive, engaging message that captures the attention and participation of the target audience.

Since we are a digital marketing agency, many of our clients engage our services to run campaigns on a variety of channels. We may do a product promotion on AdWords (Paid Search). Or use search engine optimization techniques to increase the profile of a company on Organic Search. Or we may increase the awareness of an event or improve customer engagement by using various campaigns on Facebook, Twitter and YouTube (Social).

17 Essential Marketing Metrics for Customer Acquisition

One of the difficulties when developing a customer acquisition strategy is the overwhelming number and often confusing definitions of marketing metrics that can be used to measure success.

In this post, I will review a list of 17 measures and metrics that are essential for tracking the success of any marketing campaign focusing on the acquisition of new customers. As a reminder from a previous post, our definition of a "measure" is a number that is derived from taking a measurement and a "metric" is a calculation between two measures. 

In the marketing metrics model that Joanne O'Connell and I developed, we differentiate between "acquisition" and "retention". Acquisition involves marketing and advertising activities that find new customers. Retention, in contrast, involves marketing activities that keep existing customers. It is our experience that many companies and most marketers know this difference but often they don't separate marketing metrics into these two categories. We think the distinction is important. Of course, with most marketing campaigns there is overlap but for simplicity we will ignore this aspect.

In this post, we will focus on the Customer Acquisition Funnel. A simple image search on Google gives hundreds of results for "marketing funnel". All of them have value and are trying to make a point. But for the measures and the metrics that we were looking to develop we couldn't find a funnel that illustrated the concepts that we wanted to capture. So we made our own marketing funnel. Obviously, this funnel will need to be modified to suit the specifics of your company.

You can read about our Acquisition Funnel in more detail in this post. Our funnel is a combination of a marketing funnel (Impressions and Visits) and a sales funnel (Prospects, Offers and Outcomes).

This funnel gives us our first 5 measures. The number of Impressions, Visits, Prospects, Offers and Outcomes. If you recall from a previous post, our definition of an Outcome is: "The desired behavior of the members of the target market influenced by the marketing investment and effort."  

The first 4 metrics (calculations from measures) are related to the conversions from one level of the funnel to the next. Each of the conversions is explained below. 

Visit Rate
This is the number of visitors that come to a location, website or social media property from one of the marketing channels. Using language made popular by Google AdWords this would be the Click Through Rate (CTR). The calculation is the ratio of Visits to Impressions. In other words, if there was 100,000 impressions and 1,000 people clicked through to a website, then the Visit Rate or CTR is 1%. 

Prospect Rate
The Prospect (or Lead) Rate is the number of Prospects that are developed as a result of the Visits to the website (or event or physical location). For example, if 100 people expressed an interested in a product from the 1,000 visits, then the Lead Rate is 10%. Note that in some situations like an ecommerce website where there may not be any Prospects. Our requirement for a Prospect is that we need to have enough information from them to be able to communicate with them. We need an email address, Twitter handle, LinkedIn connection or a phone number. If a company doesn't have any Prospects, then the solution is drop this level of the funnel and just use 4 levels in the Customer Acquisition Funnel.

Offer Rate
If we divide the number of Offers by the number of Prospects we have the Offer Rate. In our example, of 100 Prospects, we might persuade 30 to accept an Offer. In this case, the Offer Rate is 30%. As mentioned earlier, an Offer has to include a price. A web page with a price can be an "Offer". There are some unique situations where an Offer can be made without a true Prospect. An advertisement to a consumer target market that includes a price would be an example. In this case, there is not a Prospect as per our definition.

One unique version of an Offer is a Test Drive. This is actually a “Bonus Metric” and not part of the essential 17 metrics because not all companies can offer a “test drive”. There are a variety of things that can be considered for a "test drive" including test driving a car, downloading software as a trial, tasting a sample of food or liquor, or getting a tiny bottle of new shampoo in your mailbox. To calculate this metric you need to know the number of "test drives" or samples given and the number of Prospects. If we have 100 Prospects and 40 take a Test Drive, then the Test Drive rate is 40%. We can also calculate a second bonus metric by calculating the Test Drive Conversion rate. If 30 of the 40 drivers actually buy the product as a result of the experience then the conversion rate is 75%.

Take Rate
Take Rate is the number of Sales as a ratio of the number of Offers. This is often called “The Conversion Rate” but we are avoiding this nomenclature because of the confusion in many different systems, most notably Google AdWords.

An example of the Take Rate would be if we made 30 Offers and 15 were accepted then the Take Rate is 50%. For some companies this would be exceptional, yet for other companies this rate would be dismal and a note for concern.

The next series of metrics are the average cost for each level of the Customer Acquisition Funnel. But in order to calculate these metrics we need to add a sixth Measure: the cost of marketing, or what we like to call Marketing Investment. This is specifically the investment made in marketing over the time period that we are reviewing (day, week, month, quarter or year). Although marketing and advertising show up on an income statement as an "expense", marketing and advertising can be considered an "investment" because shareholders and managers expected that there will be a "return" as a result of the expenditure.

If we know the cost (i.e. the Investment) related to marketing, then we can calculate the average cost for each level of the Funnel.

For each of these metrics the calculation is to divide the cost by the number of Impressions, Visits... or Sales. In theory, these ratios are easy to calculate. However, in our experience, the difficulty is in getting accurate measures (data) out of the various systems and databases in a company.

Once we know how much we have invested into marketing we can calculate the average cost for each level of the acquisition funnel.

At this point we have 6 measures and 9 metrics for a total of 15; 2 more to go.

The ultimate marketing metric that we are aiming for is Return On Marketing Investment (ROMI). See my previous post on ROI vs ROMI for more detail. However, in order to calculate ROMI we need one final measure, Revenue. Once we have that we can calculate ROMI as (Revenue - Marketing Investment) / Marketing Investment. 

In total we now have 7 measures and 10 metrics for a total of 17 essential marketing measures and metrics for customer acquisition. We can illustrate these as a diagram:

Or as a table:

The key to collecting the 17 Essential Marketing Metrics for Customer Acquisition is to have a system in place. As outlined at the beginning of this post, part of the system will be based on the structure of your Customer Acquisition Funnel. Once you have defined the levels of your funnel you can start collecting the measures for each level. If you are using all 5 levels of the funnel, you will have the first 5 measures. Calculating the first 4 metrics for conversions should be easy.

Next you will be able to calculate the 5 metrics related to the average cost for each level of your customer acquisition funnel. But these calculations require you to know how much you invested in marketing. Once you have that these metrics should be simple.

The final measure, revenue, is required to calculate ROMI. Most companies know this measure but you may have to segment new incremental revenue from total revenue to determine the true return on marketing investment for newly acquired customers.

The 17 essential marketing metrics for customer acquisition as presented will give managers an idea of ROMI. An alternative approach is to segment the measures and metrics by marketing channel. Obviously, this adds a level of complexity but the value is tremendous. Give it a try or give us a call and we will help you out.

Moneyball: Overcoming Resistance

I recently finished teaching two sections of Management Information Systems (MGIS 317) at the Haskayne School of Business here in Calgary, Alberta. One of the topics that we covered was Change Management. As a professor, I like to have classes that are educational and interesting. With this in mind, I thought for the topic of change management I would review the movie Moneyball from a management perspective. Since the lecture was well received by the students I thought I would write a post on this topic.

The movie came out in 2011 starring Brad Pitt as Billy Beane the general manager of the Oakland Athletics, Jonah Hill as Peter Brand the stats analyst, Philip Seymour Hoffmann as Art Howe the manager, Robin Wright as Sharon, Billy Beane's ex-wife, Chris Pratt as Scott Hatteberg the first baseman and Robert Kotick as Stephen Schott one of the A's owners. The book, Moneyball written by Michael Lewis was published in 2003. I have read the book twice and seen the movie a least 3 times. The book is interesting but a bit dry at times. From an entertainment point of view, the movie is better. 

When we look at the movie from a management perspective the movie is about Billy Beane (one of Brad Pitt's best acting roles) overcoming various constraints and formidable obstacles.

First, we start with a severe constraint. In one of the opening scenes Beane meets with the owner Stephen Schott to ask for more money to hire better players. Schott refuses and tells Beane that he has to live within the existing budget.

This initial constraint of "no more money" sets the tone for the entire movie. Anyone in business knows that this is a common constraint. Most owners impose budget constraints. What is interesting is Beane's response. He decides to live with the constraint (willingly as opposed to grudgingly) but has to shift his entire way of thinking and his method for managing the Oakland A's. He reacts by hiring Peter Brand (a fictional character of the real assistant GM, Paul DePodesta) from the Cleveland Indians. Brand (played brilliantly by Johan Hill) plays a sophisticated analyst using sabermetrics. Sabermetrics, a term coined by Bill James (mentioned extensively in the book), is the empirical analysis of in-game baseball statistics. 

Beane and Brand come up with a list of players that they would like to hire but immediately face resistance from the existing squad of traditional scouts.

The scenes in the movie are exaggerated but overcoming this second obstacle - team resistance - makes for good drama. Although Beane tries to use his skills of persuasion, none of the scouts are able to switch from traditional methods of scouting to making decisions based on data and numbers. This is highlighted when they insist on replacing a player poached by another team with a high priced player instead of hiring a few cheaper players based on replacing the "on-base percentage" statistics. "On-base Percentage" (OBP) is a key metric for determining who can get a team on base. If a team can get on base they can score runs. And if they score runs they have a chance to win games. By reversing this logic, a low OBP by a team means that the team has less of chance to score runs and win games.

Ultimately, Beane and Brand hire the players are cheap and have the right statistical mix. They think they are set-up well to win games only to find out that the manager, Art Howe (a small role but well played by Philip Seymour Hoffman), won't play these players and instead favors players that he prefers. This is the third obstacle - mid-manager resistance. 

Encountering resistance from managers is an experience that I have had all too frequently. And expected. Often people don't like change. And often people are looking out for themselves more than the company they are working for. In the case of Beane and Brand, their solution is to trade away all the players that Howe likes and leave him with just the players that they want to be played.

This tactic, although drastic, works well. Howe starts to play the right players.  But then Beane and Brand experience the fourth level of resistance - from the players. They aren't taking the game and their part in it seriously. 

Employees get paid to do a job. However, sometimes when you ask them to change they resist. This happens all the time and that is what managers are for - to manage people and processes. In this case, Billy Beane reacts by getting mad and calling their behavior into question. Anger isn't always the right response to resistance and inappropriate behavior but sometimes it works. A good manager or leader knows when to show anger and when to use other skills in their arsenal.

The movie plays out the drama and ultimately the Oakland A's win 20 straight games. In this century, this is the highest number of straight wins by a MLB team. 

Start-ups and existing businesses will experience constraints and resistance - often excessive amounts of each. But all is not lost because of a few obstacles - success will happen. In fact, many start-ups develop into a great companies because of obstacles that the founders experienced early on.  Examples include Dell focusing on getting orders before shipping computers. Microsoft facing unprecedented challenges in recent years.

Many of the obstacles that companies encounter will be similar to what Billy Beane and the Oakland A's experienced:

  • Constraints imposed by Owners
  • Team members who won't change the systems they use
  • Managers who won't use resources assigned to them
  • And employees who aren't serious about helping the company 

Solutions to these challenges aren't simple but often a solution can be found. Often the solution is changing the system, changing the team, changing managers and changing the reason why people are employed.

If you get a chance, watch Moneyball again. Look at the movie from the point of view of a manager and see if you see the same obstacles that I did. Enjoy.

ROI and ROMI are Different. Seriously!

I hear these words all the time: "What is the ROI for that campaign?" The discussion could be for AdWords, SEO, content marketing, display, social media or whatever marketing campaign we are discussing. But when this person uses the phrase ROI in the context of marketing, they almost always mean ROMI. Let me explain the difference.

ROMI is Return on Marketing Investment. Some marketers may use the acronym ROAS (Return on Advertising Spend). Essentially, both are the same thing. One is metric for the return on marketing and the other focuses on just advertising. The formula for both is the basically the same.

First you subtract out the costs of marketing and then you divide by the costs of marketing. For example, an AdWords campaign cost $12,000 and generates $300,000 in Revenue then the formula is [$300,000 - $12,000] / $12,000. The result can be expressed as a percent but often the number of digits is quite high and therefore difficult to comprehend (2400%). As a result, we often express the result (the quotient) in dollars. In this example we would express the result as a multiple: 24. We read this as such, "For every dollar spent we generated $24 in Revenue."

From a marketing point of view, this makes sense. As marketers we invest in marketing (and advertising) in order to generate Revenue. In other words, we buy Impressions which ultimately lead to Sales and Revenue. Of course, there are many other variables like price, creative, channels, distribution, and promotions but most marketers focus on driving up Revenue, not increasing Profit. Profit is a business concern with broader implications than strictly in the marketing domain. With this in mind, the formula for ROI is:

As we saw in the formula for ROMI, the R is for "Revenue". However, with the formula for ROI the R is for "Return", not Revenue. Return is really a calculation for Profit. This is a key difference between the two metrics. Note: COGS is Cost of Goods Sold.

Typically, ROI is expressed as a percentage. Adding to the same example, Revenue is $300,000, COGS is $200,000, Overhead is $70,000 and Marketing Costs are $12,000. The formula becomes [$300,000 - $200,000 - $70,000 - $12,000] / [$200,000 - $70,000 - $12,000] * 100. The result is 15% which is a healthy level of profit.

So which metric should marketers be using? My answer is that all marketers should know the difference between the 2 metrics but most likely they should be using ROMI, expressed as a multiple.