Podcast

Marketing data: How to know what matters and what doesn’t

Callahan Agency | May 21, 2018

We can see who clicked an ad, how many times and, where they were, but what happened after the click? Did we drive customers through the door? Did we drive repeat business?

Marketing data that matters is data that impacts business. Marketers learn when to question the metrics and focus on the business first.

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Welcome to Callahan’s Uncovering Aha! podcast. We talk about a range of topics for marketing decision-makers, with a special focus on how to uncover insights in data to drive brand strategy and inspire creativity. Featuring Jan-Eric Anderson and Zack Pike.

Jan-Eric:
I’m Jan-Eric Anderson, Vice President and Chief Strategy Officer at the Callahan Agency.

Zack:
I’m Zack Pike, Callahan’s Vice President of Data Strategy and Marketing Analytics.

Jan-Eric:
In this edition of the podcast, we’re talking about marketing data that matters. Zack, let’s maybe put a fence around marketing data and just try to define it a little bit. How would you think about marketing data? How would you define marketing data?

Zack:
I might have a little bit different of opinion than a lot of other people in the marketing analytics space. I think that in marketing we’re trying to drive business results. We’re trying to drive revenue or foot traffic or product volume. To me, marketing data is anything that influences that objective. That could be my click through rates and email sends and budget around paid search, but it could also be store sales information. It could be customer repeat buying information. It could be really anything that a CMO, a VP of Marketing, a Marketing Manager’s going to use to make marketing more effective in that effort.

Jan-Eric:
You’ve talked a little bit about how with your background, you’re an analytics guy but you’re also schooled in business, you’ve got an MBA, so you come from a perspective of business matters first. We’re ultimately trying to drive business. We’re not trying to drive a marketing metric. We’re not trying to solve to make a click through rate better necessarily. We’re trying to sell more stuff. You kind of come in with that bias, right? About trying to impact business ultimately?

Zack:
Yeah. Yeah. It’s easy to get wrapped up in the  wealth of data that’s available in the marketing space, especially as digital continues to get more budget, as social continues to get more budget, there’s no limit to the amount of data that we can collect and gather around those spaces. On the other side, on the business side, there are limits to the data, because we only have so many things we can measure and there’s only so deep you can go into the performance of a store, the performance of a customer. It feels better to be on that digital marketing side because I know everything. I know who clicked that ad, how many times they clicked, where they were when they clicked. What often gets forgotten is what happened after the click. Right? Did someone actually buy? If they didn’t, did the click actually matter?

Jan-Eric:
Yeah. It doesn’t matter.

Zack:
It didn’t matter.

Jan-Eric:
That kind of gets into the “that matters” part of it, right? Marketing data that matters would be data that somehow ties back to impacting business. That’s the matters piece of it if it’s ultimately tying back to impacting the business.

Zack:
Exactly. I think that depending on where you’re at in the organization, what matters is different. Someone leading the entire marketing program for a big CPG company is worried about different data than the paid search execution person who is responsible for making the adwards campaign as efficient as possible. Those are two very different objectives. They require different data to achieve those objectives. I think, when we’re talking about what matters, you have to start at, “What am I doing in the beginning? What’s my job? How am I compensated on this job, and then what matters to getting me towards that ultimate objective?”

Jan-Eric:
That’s an interesting angle then too, because as marketing tactics, advertising tactics, if they are ultimately designed really to drive business impact, it seems like it’s a good barometer to have or have your focus on impacting business because agencies seem like they tend to be and can come across being self-serving by talking about the effectiveness of their campaigns. Let’s pick on digital for a second. They can talk about the effectiveness of a campaign by referencing a click through rate. As an agency, you can walk in beating your chest to the CMO saying, “Hey, our click through rates are 10 times the industry average,” and the agency therefore looks good, but when sales are slacking or there’s a slump or they are trending down, click through rate may not be … I’m just picking on click through rate. There are other ones we can pick on certainly. Click through rate may not really be a lead indicator to what’s really driving business.

Maybe this is the better thing for a CMO to be looking for is an analytics approach looking at marketing data that matters. Marketing data that’s looking at the impact of business rather than just looking at how specific tactics are performing within metrics that can be measured within those channels.

Zack:
Exactly. Exactly. To this point, I have this saying that I use a lot. I never want a CMO or a person at an agency who’s responsible for communicating the effectiveness of a campaign to walk into a board meeting or an executive meeting with their leading indicator score card, and everything is pointing up into the right, and the marketing campaign is doing everything it should, and then the CFO in the room, or the financial analyst, holds up their leading indicator scorecard which tells a different story. That should be a clear indication that what I am measuring today does not matter in this discussion. Those types of metrics matter when I am the paid search person or the display media person driving that type of message to make the campaign as efficient as it can be, which is a bit separated from business results. It’s hard to make that tie in.

Jan-Eric:
Can certainly be awkward for an agency to walk in when lead indicators are good, but the business metrics are bad. That can make for an awkward situation for the agency but even more frustrating probably for the CMO, who ultimately isn’t trying to buy clicks or impressions. They’re trying to buy business. Go ahead.

Zack:
It should all start at that key objective for the business. Are we trying to drive customers through the door? Are we trying to drive repeat business? What is the focus of the product or the campaign or whatever’s happening in the business? Then everything ladders down from there. We’ve got to start at that top line objective. We also have to be honest about where the breaks are in that equation, right? We can’t always tie everything to sales. You just can’t do it. Some of the efficiency metrics you use to make a campaign efficient, contrary to what some people will say, you cannot tie a lot of that stuff to sales. You just have to honest with yourself and the business about where those breaks are.

Jan-Eric:
Let’s say that one of our listeners is totally on board with this, gets it, head nodding, “Yeah I get it,” but maybe is at a little bit of a loss of, “How do I get started? Where do I start? I feel like I’m sitting on a ton of data, but I don’t really know which data to pull, what to grab.” Talk about where to start. What data is useful? Maybe what data is not useful? How do you look at categorizing data, and how does someone get started in this?

Zack:
Again, back to the objective. Once I understand the objective I’m trying to communication with that data, the answer to that question gets clearer. When we start a new engagement with a client or a new project to evaluate a campaign, typically what I’m looking for are to understand the business as a whole. What are the key levers in the business? Is it people walking into the store? Is it the product being the best product in the industry? Is it sales in certain regions of the country? What are those levers that are really important? That’s where I start with data that matters.

For example, we’ve done some work with clients where they have a what looks to be a national presence across the country. I’ve got a lot of locations spread all over the country. Maybe 2,000 locations or 2,000 distribution points. When you lay that stuff out on a map, you see very clearly that it’s not actually a national footprint. Even just starting at that point to say, “Oh, geez. I have huge areas of the country where I have no product distribution. I probably need to be thinking about the full analytics package in some type of geographically disbursed manner.” Maybe look at Texas by itself or California by itself and start there. Once you understand those levers, then we get into the marketing specific metrics that can ladder up to us evaluating how those are impacting those levers.

If we stay on that geographic disbursement example, I might want to know my impressions in each of those areas. I might want to know the population of my target audience in each of those areas and how well I’m doing at penetrating into that population with the messaging and the different channels that I’m using.

That’s where I start. It’s always at the business which, oddly enough, is opposite of where many people in the marketing industry start, which is impressions and clicks and how much is being spent on every channel.

Jan-Eric:
That may be an attribution model or something like that becomes the thing that is the marketing analytics and the marketing data that matters most is all that channels specific stuff.

Zack:
Yeah. The other thing that I’ve found beneficial to that way of thinking is it helps you reverse engineer the measurement mechanism you need to be able to get to that type of measurement. By starting at the lowest level, it negates some of the technologies that have to be place or some of the methods that have to be in place to even collect the right data in the first place. We have a very interesting bent to wanting to evaluate a campaign after the campaign is finished. Oftentimes what we didn’t do was think about all the things we could’ve done from a measurement perspective during the campaign or before it started. If you start by looking at the business before the campaign starts, it will tell you how you need to measure the campaign throughout its duration.

Jan-Eric:
There’s also kind of this fine line, too, of needing to balance what you already know is important about what drives your business but also allowing some open-mindedness to things that perhaps are important and are impacting your business that may not be obvious right now or a connection you haven’t made. We’ve worked together on clients where we have asked for gobs of data, and they had it. It wasn’t a big deal, but the client was at times scratching their head saying, “I don’t know if this is really going to be that useful.” We find through curiosity and through exploration you can discover connections in data that start to reveal a story. The aha moment starts to happen there where, “Wait, maybe I’m gaining a new lens or perspective on this that takes us down a path that was completely unexpected.”

There’s a fine line, it seems, that, on the client side, they need to be open-minded to the idea that maybe the sacred cows of success metrics that they’ve had and the key data endpoints, while they’ll play a role, may not be giving them the entire picture and open to the idea that those may connect to other data points that can have significant implications on marketing strategy moving forward.

Zack:
A really good example of that is, and this is across every business, are week over week or month over month comparables. That is a good way to evaluate the week to week or month to month or year to year success of a business is how well did I do over that same time period the prior year. Trying to normalize for seasonality and holidays and all the stuff that you would typically normalize for, which is not bad, but it is easy to get, to your point, closed-minded, on other ways we could be looking at the business.

One of the issues with year over year comps is that it is very hard to understand how much potential is in that comp. We deal with clients who, maybe last year, had a break out year. It was a record biggest year company has ever had, and then the next year we go into year over year comps again without the context of, “Oh, geez. We are comping over an enormous year.” That can create an issue. To the point of the ahas, taking a different lens into the business information before you get down into the channel metrics can help uncover some stuff maybe that would make you smarter.

For example, if I’m trying to understand the potential of a restaurant business, say we’ve got 1,000 locations across the country, I can take the size of each of those locations from a square footage perspective. Essentially, how much room do I have to shove customers through that place? How many seats do I have? How many tables? There’s lots of ways you could look at it. The locations will probably be different. Some will have a lot of seats, and some will have fewer seats. That is a proxy to how much potential that location has.

Jan-Eric:
An indication of capacity for sales.

Zack:
Exactly. Exactly. Then I want to know, “Okay, who are my restaurants that are running at max capacity? There’s probably none, but who are the ones that are up there?”

Jan-Eric:
Who’s closest?

Zack:
Right. Who’s close. Who are the ones that are on the bottom? I might think about how I measure those buckets, just those two segments. I might measure them differently. I might use different channel metrics to understand the impact on those businesses. A business that I’m trying to drive customer counts up is a different story than a business where I’m trying just to retain the base that I have already flowing through that restaurant. I might be trying to find ways to make them more efficient. How to get them in and out faster. How to get them to do takeout more often. There’s lots of ways to kind of think of them differently.

If you walk into a meeting with a board, and you’ve broken apart the business and said, “Okay, well here’s the metrics that I’m evaluating segment A because I’m max capacity these restaurants, I don’t have room to push more customers in, I’m driving takeout. I’m driving upsell of my current people. Whereas segment B, I’m worried about traffic growth. This is a different marketing approach. These are different metrics that I’m looking at. Potentially different customers I’m going after for that type of group.”

Even just that simple example there kind of should help you understand there’s different things that matter in those two equations.

Jan-Eric:
Certainly. As we’re getting close to wrapping up, is there anything else you haven’t touched on that you’d want to add before we wrap up?

Zack:
Yeah. I think just focusing on the business first is critical. Then don’t be afraid to question some of the metrics that don’t make sense. Even think about flipping them. An example that I throw out often is in display media it is very prevalent for people to focus on click through rate for display media. The click through rate on display media is usually under one percent. If I’m trying to drive an efficient display media campaign, you’ll see some agencies call success if I grow from a .25% click through rate to a .75% click through rate. If you just flip that math, so you’ve now said 99.25% of my base, of my people who potentially saw the ad, did not click versus 99.5%, in any other world where we’re talking about numbers that large, you would just say, “No one is clicking it.”

Don’t be afraid to question those types of metrics. When your agency or your people internally bring those types of metrics, don’t be afraid to have them change them. To look at different things or say, “That doesn’t matter. Let’s throw it out. Let’s focus on something else. Reach or just raw impressions or let’s get fancy and run some testing against these types of channels to really understand the value.”

Jan-Eric:
That’s great. Thanks for your time Zack. He’s Zack Pike. Thanks for joining us, and we’ll hopefully speak with you again on “Uncovering Aha”.

 

Thanks for listening to our Uncovering Aha Podcast. Callahan provides data savvy strategy, and inspired creativity for national consumer brands. Visit us at Callahan.Agency to learn more.