Brand vs. Direct: Who Gets the New Metrics?
What are the latest metrics that will help marketers build the next generation of models, and why do general advertisers seem more willing to embrace them than direct marketers?
That subject was recently addressed by Don Neal, president of Echelon Marketing Group; Peter Harvey, president and CEO of Intellidyn; and Donald P. Hinman, executive vice president and senior principal of The Allant Group. The setting was an executive briefing moderated by Craig Wood, CEO of The Clarity Group.
Neal: If you look at traditional media, the general agencies are eclipsing what the direct agencies are doing. We talk about the things the direct industry can do to measure, report, and provide addressable media and differentiable treatment to different customers based on their value, but I see very little evidence of metrics like share of wallet, lifetime value and individual customer ROI models being used. And until we change the metrics, the use of analytics will stumble along. We’re about to get our lunches eaten by an industry we used to criticize for being focused on recency and frequency, and we're really not understanding what’s happening on the ground level.
Harvey: There is still a large percentage of individuals who are doing the “Lets mosh hundreds of millions of records together at an 80% dupe rate to come out with a net number [of targets] for a client who will, at the end, say, 'You didn’t give me enough volume at the rate I needed to go perform well'" thing. The level of transaction data out there has changed dramatically in the last 10 years, and the technology to leverage that data is here. So you scratch your head as to why 80% of us are doing it the same old way. I don’t know that it is anything more than it is tough to change old habits, tough to get people to take a risk. A very simple risk might be for companies that have traditionally pulled together response-type lists to take experiential data, build a basic set of models, and go out to market.
Wood: Don Hinman, you've been preaching the gospel of derived data for a long time, what do you think should be done?
Hinman: I think we’ve gotten enamored with data for the sake of data. I used to think if I could get all this data, I could do most anything with it. The problem is that we are still using data to determine who to push stuff to. I think we’ve got to turn that around, to start using data to help the consumer make the choice to pick us. And it means asking people what they think. I heard a statistic: Marketers who send out e-mails to existing customers and ask them what they would like to have are getting 70% response rates in some cases. People want to say, “This is what I want. If you ask me, I’ll tell you.” We have to start realizing that the consumer has a choice. Let’s empower them to make a better choice.
Neal: The metrics are owned by the CFO, and they grew up in a different environment and don't really think about customer-specific ROI models. That’s not the way accountants and finance people tend to view it. As marketers we have to define what those metrics should be, collectively. Work with the CFO and say, what if we try [consumer-focused] metrics, see how we can influence behavior, [and use that to] allocate message and media dollars. It’s in our hands. It’s not going to happen from the finance community.
Harvey: Of 160 some-odd clients, we only have one that has taken the position of rather than looking at the result of their stimulating the marketplace, [they] sit back and look at how the consumer elects to talk with them across all the channels. Then they take that experience and break it down by the patterns of which are the most profitable, which are the least. All toward the end of replicating the behavior they exhibited to those that are most profitable. [But people are still moshing together lists] and saying response and conversion rates are going down.
Hinman: They are going down because we are measuring it based on what benefits the marketer, and not what benefits the consumer.
Neal: For the last 10 years we’ve been talking about the same issues. Consumers are onto the hype; CRM systems aren’t working; we’re not getting a 360 view of the customer. The same basic rhetoric. I want to stick a fork in my eye when I go to another session and they talk about these same issues. The real question is, why does this continue? Go back to the metrics. The metrics are not driving the kinds of decisions, the kind of systems integration and the kind of data sources required to move the needle on share of wallet. Wall Street does not care about share of wallet. The analysts do not care about lifetime value. There is not an annual report you can pick up that talks about individual customer ROI. It’s just not happening.
Hinman: Our industry must get the metrics right. It’s not going to get results until we start to do it ourselves and then force Wall Street and the analysts to ask for it.
