The good news is that you can measure CRM Marketing ROI, the bad news is that it isn’t always straightforward or quick to do. This blog outlines some of the areas you need to look at and pitfalls you need to avoid when measuring CRM Marketing.
Measure At A Customer Level
We often have conversations with clients where they are measuring at a CRM Marketing campaign level and not a customer level. Measuring CRM Marketing campaigns are important as far as understanding engagement rates are concerned and you can track campaign revenue but you can’t work out the impact at a customer level over time as different customers receive and respond to different campaigns.
Measure Customers Over A Longer Period Of Time
You will need to track customer performance over a period of time, normally 12 months. This can be additionally tracked as you go by looking at results on a quarterly basis but the real impact will be best observed over the course of a whole year.
Create A Master CRM Marketing Control Cell
To measure at a customer level over a longer time period you will need to create a master control cell and hold them out from all CRM communications. This will need to a random control cell that is reflective of the entire customer base but it also needs to be as small as is statistically viable. Remember, every customer held in a control cell is potentially a customer that you are not able to grow revenue for from your CRM Marketing . However, without a customer level control cell you won’t be able to measure CRM Marketing .
Work Out What You Are Measuring
You will want to understand how much more revenue your CRM Marketing activity recipients are generating compared to your control cell over the year. In addition, you will want to look at variations with the control cell in terms of purchase frequency, average order value, recency of purchase, levels of cross-sell, retention rates etc. If you have a RFV (Recency, Frequency, Value) model you will want to see how your customers have moved around the model compared to the control cell. If you don’t have a RFV model you should look to build one.
Don’t Forget The Softer Measures
In addition to transactional measures, you should also look to track at a customer level things like brand perception, NPS (Net Promoter Score) or intention to purchase. If your company already tracks these you might want to see if you can piggyback onto existing research.
Be Wary Of Attribution Models
Generally speaking, attribution models do not measure CRM very well. They tend to measure at a campaign level and not a customer level and they struggle if your CRM Marketing activity is always on. Attribution models needs peaks and troughs in activity to be able to measure effectiveness.
Remember All Customers Are Not The Same
Just to add some extra complexity you may want to look at customer types in addition to tracking the CRM Marketing performance of all customers, For example how well did CRM Marketing perform for your most valuable customers or how well did your CRM Marketing perform by different customer segments or key demographics.
Create A CRM Marketing Performance Dashboard
It is important that your longer term customer level CRM Marketing measurements are understood and imbedded into the organisation. Most of the other departments in the marketing department may be just reporting at a campaign level and so it is vital that CRM Marketing communicates its metrics loudly and proudly.