Multichannel Marketing Metrics
with Akin

One of the many ways that we (know-it-all) consultants recommend measuring online to offline conversion rates (and vice versa) is to do so with the help of coupons. For example, site visitors can be offered a coupon while they are online to be redeemed at any store. When the coupon is redeemed it will have a key code that reveals to what source the business is to be attributed.

But , come on! Coupons? Who uses coupons any way?

Well, Scarborough Research has asked that question and published some of their research results last month. They provide the percentage of households using coupons broken down by channel (e.g. online, newspaper, etc) and geo locations within the US.

Among Scarborough’s findings is that the Internet coupon usage is up 83% in 2007 compared to 2005. You may remember seeing this in news headlines.

Wow.

But if you read further you will learn that only 11% of households usually obtain their coupons online. (More than 50% obtain them from the Sunday paper.)

Plus, the report isn’t actually saying what I thought I was hearing when I first read it, namely that “11% of households that are online were using coupons.” Upon second reading, the report is saying that “of households using coupons, 11% obtain them online among other places”.

So what about that former question though? It is top of mind for retailers that wish to use coupons online for

1. Pushing prospects that are on the fence over the edge towards a purchase
2. Make it more likely that prospects that are doing their research online and then evaluate/purchase offline will actually go to the same company’s brick & mortar store instead of going to whatever competitor’s store happens to be nearby to them.
3. Along the way, use coupon key codes to measure the multichannel conversion rates from online to offline.

Well, Scarborough’s research does list the % of households using grocery store coupons for the top 75 markets (DMA) in the US. For example, 33% of households in New York were found to be using grocery store coupons. (the public part of the research says nothing about frequency, who was surveyed, for this finding, etc.)

So if 11% of 33% of households are going online for their grocery store coupons, that would mean that a maximum of 3.6% ( 0.11 * 33 = 3.6) of households in New York are estimated to be using grocery store coupons online. (note: maybe even less than that because the 11% figure in the research results doesn’t seem to be grocery store coupons if I see that right.)

So, no more than 3.6% of NY households used grocery store coupons in 2007 up from 2% in 2005. Not sure about coupons in general besides grocery stores.

Is that kind of percentage large enough to help multichannel retailers with their goals #1 – #3 stated above? The answer to that is probably:

• On average across industries, coupon users seem to be too small a group to be representative.
• From a measurement perspective, it is not clear without further research whether coupon clippers’ behavior is representative of non coupon users’ behavior. So one can probably not extrapolate from this subset to others.
• But for specific promotions or products the percentage of coupon users can be much higher and worthwhile. It will just depend on the value of the offer and how prominently it is presented.
• Even more promising may be the delivery of personalized coupons based on past purchase and online browsing behavior. See for example one shoppers experience who accidentally received her own and her neighbor’s personalized coupons in the mail.

No easy answers.

But as always with marketing today, marketers need to go an extra mile to make their work relevant to their audience. Customer decisioning using multichannel behaviroal data as input can be that extra mile. But it requires know how. May I recommend a good book

P.S.: I must admit I didn’t even know you could clip grocery store coupons online. But you can. See for example http://shortcuts.com for generic grocery store coupons.

P.P.S:  Never mind the question whether it is more wise for marketers to use discount coupons or instead invest that money into brand building which may have a more lasting effect on business.  

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Good news for friends of integrated marketing across online and offline channels. For the first time ever, the eMetrics Marketing Optimization Summit in San Francisco this week included a whole track on Integrated Marketing!

On this agenda, the conference delivered a roster of wonderful speakers that brought their expertise from broader marketing disciplines to the web analytics community.

My favorites included:

[Read more →]

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I was driving through San Francisco, yesterday, to the offices of Wiley who just published the Multichannel Marketing book. On the way back, near the onramp to the Bay Bridge, a number of beggars were working the traffic lights. Same as every day, they were carrying signs made out of cardboard with a written request for a few bucks. They carried their signs through the line of cars waiting at the red light.

One of my beggars’ signs read: “I am too ugly to get …, so I need …”, and the rest I should probably not post here.

Now, what’s to say that this message is the best at getting drivers to fork over a few bucks?

A/B Testing 

It is plenty easy for the beggar to answer that question. All it takes, is a few more pieces of cardboard and a few different signs with other pitches written on them. At every 3 minute interval of green and red lights he can try out a different message. Before the hour is over he will know which one works best.

Well, in direct marketing we do champion-challenger testing. In web analytics we do A/B testing or even multivariate testing. That is old news to the beggars in San Francisco.

Segmentation and Demographic Targeting

Surely, that sign wouldn’t work so well for persuading female drivers (if you can imagine the rest of the message?) I have to wonder whether the beggar turns the cardboard around to its other side when the lot of cars waiting at the red light is more heavily weighted towards women in the driver’s seat.

Well, if so, that would be what we do in direct marketing in terms of targeting by demographic segments. You could even argue that there is some behavioral targeting going on when beggars stay silent until they find someone that acts shy or makes eye contact.

But wait for this.

As it was a sunny day my windows were rolled down. The beggar started walking down the line. Shoot I thought. Now I am going to be on the hook with my windows open. He will make me feel too bad to leave without providing a few bucks.

But to my surprise that isn’t what happened.

The beggar simply wished a good day and continued walking down the line. Huh? I guess he knows that the cars at the highway ramp during commute hours are often by the same people every single day. Each of the beggars is there almost every day. So if I won’t pay a buck today, I might do so tomorrow. Rather than burning bridges, he built rapport for the future.

Who knew that the beggar was a relationship marketer! He is more interested in maximizing the life time value of his customers than extorting a quick buck. Some online marketers still have much to copy there.

Hats off to these street artists! I couldn’t do what they do every day.

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Other than on this blog, I also write regularly on CustomerThink.com. This is Bob Thompson’s forum for customer centric thought leadership. 

Bob had invited me a while back specifically for writing about web analytics on his forum. Let me connect the blogs by linking to some of my posts from that site such as the most recent one: A good web analyst is hard to find.

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Everybody knows Kevin. His name is becoming synonymous with multichannel marketing. Almost anybody who fancies themselves a connoisseur of integrated marketing is reading Kevin’s blog at MineThatData.com.

Kevin is the author of Hillstrom’s Multichannel Forensics and Hillstrom’s Database Marketing. He is a veteran in the database marketing industry having worked at such companies as Nordstrom, Eddie Bauer, and Land’s End.

Everybody loves Kevin’s work. I certainly do.

His Multichannel Forensics method plows through data on customer transactions, channel by channel to shed clarity on trends of cross-channel behavior. Instead of stopping at short term sales analysis of campaigns (e.g. catalogs or website), Multichannel Forensics projects the multi-year impact of one channel on others.

Why?

Because, Multichannel Forensics provides clarity without getting sucked into what is probably the most dangerous quicksand in multichannel analytics. Namely, the impact of multiple touch points from various channels over time. Customers zig zag across channels, read a marketing message here, ignore it there, research on one channel, and buy on another. Hillstrom explicitly calls out his conviction that assessing the incremental impact of any one touch point is really difficult in today’s world.

So Multichannel Forensics produces a top-down view from bottom-up data on customer behavior. It creates a map that shows where customers are headed to answer questions such as:

• Should you reallocate $x from one channel to another?
• What is the contribution of marketing through one channel on purchases from another?
• What would happen if you closed down the catalog division?

But there are many more reasons why we love Kevin’s blog:

• He is a blogger with attitude. You can’t help but notice. His writing commands attention. (Everybody who has actually met him in person though says the nicest things about his character.)
• Kevin is controversial. The only thing he seems to like better than to shoot down commonly held (but shaky) perceptions is to call out when technology vendors or consultants (“the pundits”) have no clothes on.
• Kevin is blunt. He calls foul when shortsighted practitioners are kidding themselves, for example by neglecting to use controlled testing when measuring marketing results.

He instills trust by speaking as a practitioner rather than coming from a technology vendor’s background.

Timeless Hillstrom moments are some of the following blog posts:

• Multichannel customers are not the most profitable
• The Matchback Mistake, i.e. matchback algorithms overstate the influence of one channel (when not analyzed with holdout groups)
• How Multichannel Marketing Is a Lot Like the County Fair

I was trying to relocate many more older blog posts that were highly memorable. Yet neither the search box on the blog nor Google volunteered them back to me no matter what keywords I tried. Take bookmarks next time! Oh yeah, did I mention how prolific Kevin is?

Tags: Business Metrics, Direct Marketing, Marketing Disciplines, multichannel marketing, Multichannel Marketing Measurement, Multichannel marketing metrics, targeting, Uncategorized by akin
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