ROI Centric Marketers

As mentioned in last week’s newsletter, I am grateful to the community that has signed up to this newsletter. We have exceeded the 500 people mark and given the distinction of those signed up, I am excited to continue sharing my thoughts on the marketing tech domain.

The title of this newsletter will no doubt invoke a reaction from two groups. Those very creative individuals will have an aversion of “ROI” preceding the marketing term and a smaller subset of finance invidiauls on this list will have an inclination to a thought “it is about bloody time we got some ROI from that soft and fuzzy area”

As I learnt in my early exposure to customer experience and human decision making, all decisions are emotional (by virtue of the structure of the brain) and as humans we are wired to analytically justify our emotional decisions through logic (we very good at creating analytical stories)!

This perspective opens a unique opportunity. If all decisions are emotional and decisions drive behaviour, then it should be possible to tap into the emotion of an individual to drive outcomes. The outcomes that most businesses want is that of more revenue which is the manifestation of more sales or customers that are retained for longer that hopefully buy more.

Traditional marketers are inclined to being creative, story telling, generating great visuals and responding to people’s emotion. They really are incredible. One of the many examples is Steve Job’s launch of the Ipod Nano :

This is his story of 1000 songs in your pocket. The results was, as we know, the start of the revolution of Apple. The ROI definitely flowed from Job’s masterful marketing capabilities.

There is a merit in the argument that in the past, marketing needed genius combined with blockbuster events which leads to incredible profits. However, today that market is not dominated by single products. Taking a complete switch and looking at the Android phones released for 2023, there were 38 different phones and 23 unique products in 2024 (so far). For many in telcos, insurance, financial services, hospitality, entertainment, retail, your product offerings look a lot more like the Android releases that the Apple Blockbuster approach (even Apple has 28 unique differentiated products in 2024).

The question then is how to market your offering to a customer segment and determine exactly the right combination of message, channel and engagement and target market that leads to success. The marketing media options are proliferating faster than the product mentioned above. Even at the most summary level, you have the choice of physical media, television, radio, digital, broadcast (above the line) or highly personalized (below the line). Each of those categories in turn can be broken down even further into multiple products and multiple product options.

If we look at our marketing and consider the small subset of channel we use:

• Paid marketing
• Social marketing (through to multiple channels)
• Direct personalised communications (across channels)
• Webinars
• Digital video (Youtube)
• Website (desktop and mobile)
• Chat commerce through messaging
• Personal networking
• Referrals from existing customer (inside and outside their company)

The key question that our CFO asks of us is “which element of your marketing is resulting in the sales”. As we explained, the world is way too complex to attribute sales to any one form of marketing. It is well known that a multi touch approach is the only path to success.

So far, I probably am echoing largely what you do anyway. If however, I start to ask questions such as:

• What is the cost of marketing broken down by marketing media option, per sale? ; or
• Can you attribute the different forms of marketing to new sales or upsells? ; or
• How does a great experience drive retention and referral selling? ; or
• If you had to cut elements of your marketing, where would you cut? ; or
• If you were to invest further how would you change your marketing mix? ; or
• Should you forego promotion and focus entirely on offering great experiences and rely on referrals?

Then I suspect there will be a much smaller set of individuals that truly could answer the questions above. In the absence of answering those questions, you have a limited ability to optimise your marketing.

The marketing industry has established two dominant methodologies to attempt to answer the questions above – one is MMM and the other is MTA!

MMM (Media Mix Modelling) is a statistical method used to measure the impact of marketing and advertising campaigns. MMM reveals how the 4Ps of the marketing mix — product, price, place, and promotion — are contributing to a particular goal.

It can, for example, show you how elements like pricing, customer demographics, media spend, and external factors are affecting your sales volume, and predict what would happen if you made certain changes. MMM helps you identify which elements of your mobile marketing strategy are working and which aren’t, so you can optimize your campaigns.

A challenge of MMM is the lack of real-time and agile capabilities. MMM builds predictive models of business outcomes based on past data and many assumptions, which makes it difficult to immediately adapt to rapidly changing market trends and changes in consumer behaviour, and it is not well suited to speedy analysis such as real-time data analysis used in MTA.

Multi-touch attribution (MTA) is a method of marketing measurement that accounts for all the touchpoints on the customer journey and designates a certain amount of credit to each channel so that marketers can see the value that each touchpoint has on driving a conversion.

As an example, let’s take the scenario of a customer that is considering purchasing a new pair of shoes. After doing some research, they are targeted by ads from Nike. First, they see a display ad, which they ignore. Next, they see a native ad on their Instagram feed that catches their attention and drives them back to the Nike site. Finally, they get a promotional offer via email with a discount code that causes them to purchase.

While both approaches (MMM and MTA) have their strengths, we prefer MTA as we have the unique ability to measure the experience in real time and to adjust marketing based on feedback.

We like to add another unique element to MTA which is to understand the impact of the marketing actions on the customer as they navigate the journey to and react emotionally to the marketing nudges along the way. A key differentiator in the bidirectional nature of these engagements – it is a conversation, not a broadcast.

The result of our approach is the ability to determine the customer profitability of customers as they navigate the customer journey, truly bringing ROI to the marketer and the ability to understand the emotional impact on the customer. The result is shown in our profitability dashboard outlined below:

Customer Journey Profitability Reporting

We are very excited about the work we are doing to bring the world of emotion and creativity together in a very unique way to measure ROI.

We can engage dynamically within the customer journey nudging customers with the right message at the right time and the results are truly differentiated (something we can prove due our very strong ROI tracking):