In pursuit of our effort always to bring you the highest quality guidance and insights on CRM, we have changed the publication schedule of eCRM Advisor to quarterly. We hope you continue to enjoy the articles.

Measurement and metrics are fundamental to how we interact, survive, learn, and grow. Consider the multitude of things we measure in a single day and it becomes apparent that functioning without the resulting information would be quite impossible: how much gas is in the tank, the temperature outside, the Dow, your blood pressure, and on and on. Similarly, the value and importance of measurement and metrics to the enterprise is something every marketer keenly appreciates and understands. Without them the organization can't function, let alone advance and grow.

Challenges and difficulties often arise not in the lack of metrics — we certainly have enough of them — but in ensuring we are taking a broad enough view in the measurements we use and rely upon to navigate the business. This month's issue focuses on the measurement and metrics that matter to relationship marketers, and takes a look at some of the tools, tactics, considerations, and challenges in obtaining them.

Integrated Customer Engagement, Web Analytics, Media Tracking and Measurement
By Jamie Schissler, Strategy Director

Display media, search, and acquisition metrics like cost-per-click, cost-per-conversion, advertising-to-sales, view-throughs and other cookie-based measurements have been firmly rooted in marketing methodology since the dot com boom. And for good reason. They are essential to providing a scalable source of new customers at the lowest possible cost. Indeed, the influence and importance of acquisition in digital marketing is such that it sometimes overshadows other critical marketing strategies, metrics, and efforts.

Of course every business needs a steady supply of new customers. Every business also needs to maximize the value of existing customers. This is not an either/or decision, but rather two sides of the marketing coin. When the cost to acquire a new customer is 6 to 7 times more than retaining an existing one and conversion rates for active customers are 10 to 20 times greater than consumers who have no relationship with the brand, the focus on acquisition at the expense of retention will have consequences on the bottom line. While marketers understand this, it's important that tracking and measurement strategies are aligned with the dual objectives of acquisition and relationship marketing.

Web analytics such as Omniture, Core Metrics, and Google Analytics are great for tracking site-side behavior of anonymous consumers, while media tags like those enabled by Atlas and Doubleclick can aid both in conversion reporting and media attribution. Relationship marketers have access to a treasure trove of specific and identifiable behaviors (with mature customer data integration): they know what discrete consumers purchase, their purchase frequency, preferences, sizes, taste, average order value, perhaps the consumer's risk or potential risk for defection, the last email message they opened, Lifetime Value, the last text message they were sent, their tenure on file, and so forth. At any time the relationship marketer can run a query on any one or several of those variables and send a timely, contextually relevant offer through email, mobile, or social channels.

Too often, however, each of these disciplines – web analytics, media, and relationship marketing – devise separate tracking and measurement strategies and as a result obtain a fragmented view of customer behavior and marketing performance. Only by integrating the three does the true "single" view emerge. For example, by linking media tags to customer records, we can begin trending the profitability of customers by acquisition source. This data can then be used for optimizing media strategy to target the most profitable consumers. Similarly, analysis of consumer-level data linked to media tracking can also aid in driving creative treatment based on known preferences or demographic commonality. For example, if we know that a retailer's customers who converted on site A demonstrate a distinct purchase preference for kitchenware, that of course is going to influence the media imagery and creative placed on that site. There are numerous opportunities and variations for integrating tracking and measurement paths, but they all need to lead to sustainable customer engagements.

POV: Issues, Challenges and Tactical Solutions of Tracking
By Gabe Joynt, Strategy Director

Email is a highly measurable marketing channel, but often the basic performance metrics are poorly understood, and the opportunities to tie email performance to overall business impact aren't even discussed. Getting the most from your email program means mastering the basics of response metrics, and driving methodologies to measure how email is impacting the overall business and contributing to the marketing mix.

TECHNICAL CORNER
MCRM Analytics and Technology — Uncovering the Real Question
By Whitney Hutchinson, Group Strategy Director

Two measurements often used in CRM are LTV – Lifetime Value and RFM – Recency/Frequency/Monetary Value. They both describe ways of building and defining customer segmentation and value – but how easy are they to actually execute? And what technology infrastructure is needed to enable this level of analysis? For the answer to this question I went to our leading voices at Razorfish on the subject: Jason Leigh, VP of Analytics and John Zell, VP of CRM Technology.

WH: What are the technology prerequisites (i.e. platforms and systems) for being able to calculate RFM and or LTV?

JL: "There aren't any minimum prerequisites. It depends largely on how comprehensive you'd like that calculation to be across your customer base. Ideally, you've got a customer database system that captures all of a customer's interactions, and this data is readily accessible. Even off-the-shelf analytics tools like MS EXCEL can accomplish the data manipulation and math required to calculate RFM and LTV, if the consumer and transaction sample size is small enough. The real question to ask is: why are these measures being calculated, and what actions will the business take once these measures are available?"

JZ: "I would completely agree with Jason, that the technology is the least important priority for an organization interested in measuring and calculating either RFM or LTV. The most important initial factor is the ability to assess, collect and manage the sources of consumer data that will be needed to perform the analysis. The purpose of the assessment would be to examine the consumer data currently available and assess that data for quality and marketing relevance. The end result is an evaluation of the usefulness and completeness of that data and an identification of the gaps between it and any other data that ideally should be available to achieve the analysis.

Then, as Jason stated, the real question becomes – why are these measures being calculated, and what actions will the business take once these measures are available?

To expand on that point, once an organization decides to apply these models they should also:

Estimate Relative Effectiveness Between Effort

• Timing and Seasonality
• Offer Changes
• Competition
• Macro-economic Conditions

• Short Term v. Long Term Profit
• Reactivation Value

• Choose Time Period
• Estimate Time Period Contributions – e.g. Product, service or segment contribution
• Determine Customer Movements
• Apply Cost of Capital

ABOUT US

Razorfish CRM Solutions is a dedicated solutions group in the Razorfish Network, built to support the evolving needs of our clients in building best-in-class marketing programs. The team is a comprehensive set of experts in email marketing and relationship marketing that supports all forms of strategic services, including strategic planning, communication roadmaps, email delivery and technology, campaign management and optimization with an emphasis on experience and analytical optimization.