Marketing departments have traditionally struggled to determine accurate returns on their programs. These struggles are rooted in many beliefs, ranging from the philosophical -- “measurement makes too much of a science of an art and hinders creativity” -- to the practical -- “measurement takes too much time, effort and money”.

The result? Marketing programs, and often the marketers who manage them, that can’t demonstrate clear ROI are among the first to be cut during an economic downturn. Without a doubt, the ability for marketers to justify their actions and prove their value is becoming increasingly important.

The plain truth is that marketers must first measure their programs in order to understand, and to optimize, their marketing efforts. Consistent and reliable measurement is the foundation of any successful marketing initiative. Measuring the return on marketing dollars is more important than ever, but not only for justifying budgets and vying for available funds. Aligning marketing and business objectives in the best way possible allows programs to be constantly refined to provide better results… and, in turn, justify more resources.

Challenges

Most marketers have not yet mastered single-channel measurement, and yet are now somehow expected to determine the return on multichannel strategies. To make matters more complicated, interactive marketing programs are not just multichannel, but multi-event. Interactive marketing programs typically have a response sequence and not just a “discreet response”, which is a single response such as the redemption of a coupon by a single contact.

For example, consumers open to click, click to log in, log in to transact, and so on. In this example, different tactics are designed to elicit the different responses in the sequence. Marketers must now attribute results across channels, determine channel and tactical “incrementality”, or the attribution of specific results to a specific marketing effort or channel, and determine the most relevant controls, or baselines. This can be a daunting task.

From our most recent View from the Inbox™ study, which surveyed about 2,500 email users, we learned that consumers remain relatively unaware of multichannel campaigns. In fact, only 5% reported that they had seen them with any regularity -- and this is a 1% decrease since 2004. This means that multichannel campaigns could still be stand-alone, or simply not noticed by recipients.

The distinction between sales, service, marketing and promotional campaigns is also becoming increasingly blurred. Marketing or promotional emails are not perceived by many consumers as separate from service emails. The distinction is one made primarily by companies in most industry verticals. That raises another question: Where can a marketer attribute results if the consumer makes this type of arbitrary distinction?

Customers research, browse, explore, transact, etc., in idiosyncratic ways. Companies will lose customers by not facilitating this behavior and listening to their customers’ individual preferences. In fact, this scenario is becoming increasingly complex as the adoption of mobile devices and other means of digital communication continues to increase. The implication for email marketers is that relevance and timeliness will become even more critical as consumers are wired, anywhere and at anytime.

What are the benefits of tackling this challenge? When done right, your multichannel customers are many times more valuable – no matter what your company’s industry vertical. But what is cause and what is effect? Does engagement with the brand drive the multichannel behavior, or does multichannel behavior increase engagement? And are there practical implications for designing marketing programs based on the answer?

Recommendations

When you integrate the reach and frequency of mass media with the interactivity and targeting of online media, how do you measure the combined or relative return of each medium? And do so without unduly weighing down the process, becoming too esoteric, stifling creativity, increasing costs, staying timely, and so on?

There are two requirements essential to any successful measurement program: data and objectives. If your marketing and business objectives are well-defined, and your data is integrated across channels, measurement becomes much easier. However, objectives are still multiple and complex –- a function of the channel, the stage in the purchase process, the behaviors targeted, and a variety of other factors.

Four keys to effective multichannel measurement

• Seek data nirvana: You need data to know each one of your customers and remain relevant to each customer. Data must be integrated across channels, products, and segments. Your must-have data should be gathered across channels, product lines, and customer segments, as well as gathered over time and across multiple campaigns. Consumers tend to respond a certain way, so you can anticipate their actions. Your data must also be integrated to create a single view of your customer and data must be accessible so that you can build models and develop rules of behavior that represent how consumers typically respond. You will then be able to capitalize on those behaviors.

• “Operationalize” your objectives: This process entails translating what you are trying to accomplish into measurable, quantitative terms. If you cannot map a tactic –- whether an offer, a channel, timing, etc. – to a desired consumer behavior, ask yourself if you should use it. Questions to ask include: Is the program designed to increase awareness? Elicit an overt action? Keep your company top-of-mind for retention or possible cross-sell opportunities? Improve customer satisfaction?

• Cooperate across channels:Since multichannel consumers contribute exponentially higher revenues to your company, you must figure out ways to add channels, to coordinate the use of these channels, and optimize the impact of these channels. But you must first understand and identify the specific behaviors that you would like to elicit from your customers, because that will determine the appropriate channel. For example, mass media creates awareness, while email marketing establishes a dynamic, one-to-one relationship. Then, you will need to determine the micro-level tactics to use within each channel, such as couponing or a Flash media presentation, which will lead the consumer down a specific “path” or elicit a certain behavior. Your customers’ needs, from awareness to conversion, must be reflected in channels and content. Therefore, your channels must be complementary and integrate in a logical way.

• Be creative in your analytical approaches. Today’s is not a traditional marketing world, and traditional approaches to measurement and analysis may not be appropriate or can be difficult -- if not impossible -- to apply. Don’t be afraid to “mix it up” -– data sources, analysis techniques, etc. Also, think “directionally” or in terms of relatives –- not always in terms of absolutes. Traditional approaches foster an “us versus them” mentality, and reward those channels or approaches that seem to have the greatest impact, even though the impacts may be due to the combined or integrated effect. To discover these interactions, marketers must have data, concrete objectives, and test, test, test approaches to discover what works best!

Summary

Successful program measurement will allow you to stay relevant to each of your customers with your content and timing, and to optimize your channels. Budget “justification” and ROI will become a by-product of your efforts, with the focus shifting to the most effective allocation of resources and program enhancements. But to be effective, you must first have integrated data and concrete objectives.

Traditional learning studies have taught us that the greater the number of input modalities, or teaching methods involving verbal, visual and tactile information, the greater the learning and retention. The same applies for channels –- you will realize exponential benefits when different channels are coordinated. Remember, since multichannel customers are more valuable – whether more channels cause engagement or engagement creates channel opt-in -- it makes sense to convert single-channel customers to multichannel.

The customer is in control, with more power and choices than have ever been available. To meet their needs, marketers must shift from a “push” mentality in which they promote what they want to promote, to one in which they understand exactly what the consumer wants on an individual level and then promote in keeping with those customers’ stated and inferred preferences. It’s up to marketers to retain customers by offering convenience and staying top-of-mind. Personalized, relevant marketing can be done, and consumers are now expecting it. Consumers are becoming savvier, and less patient with “intrusions” or faux pas. The key to capitalizing on the opportunities and avoiding the pitfalls inherent in this “brave new world” of marketing is effective data management and analysis.

Katie Cole, PhD, serves as Vice President of Analytics and Research for Merkle|Quris. For over 20 years, she has actively worked and consulted on data mining, primary research methodology, predictive modeling and statistical analysis for a variety of industries including travel, telecommunications, cable and broadband, retail, and financial services. Almost from the launch of the Internet as a sales medium, Cole's analytical focus shifted to include the study of consumer behavior as it applies to online marketing trends. Throughout her career, Cole has developed a unique set of marketing and technical skills that facilitate the translation of business requirements into database and analytical solutions. She is a much sought-after speaker at industry conferences sponsored by the Direct Marketing Association (DMA), the Institute for International Research (IIR), Cable and Telecommunications Association for Marketing (CTAM), and many others. Cole came to the business world from academia, where she taught graduate and undergraduate courses in business statistics and market research. She holds degrees from the University of North Carolina-Chapel Hill and the University of Southern California. Merkle|Quris