The Missing Element from Marketing Measurement

Overview

• Marketing-mix models have been a critical tool for helping marketers understand and quantify marketing effectiveness.

• Nevertheless, something significant has been missing from these equations. That missing element has been the “voice of the customer” or a metric reflecting customers’ every-day experience with individual brands.

Overview

• Michael Wolfe, of Bottom-Line Analytics, illustrates the importance of this issue and omission here.

• His approach derives a customer-experience metric for various brands by converting textual experiential comments from social media into a metric. Called the Social Engagement Index or SEI, this metric converts these text into a time based metric using a set of linguistics and language rules, scoring emotions and persona-lization while accounting for special subject-matter context

Overview

• The SEI as a metric has proven to be a strong predictor. In its application over a dozen categories and 18 brands, it has shown an average statistical correlation to sales of 75 percent!

• When employed within comprehensive marketing mix models, the SEI has shown to be the largest single driver of brand sales. Within the context that this metric truly is a measure of the customers’ brand experiences, this should be no surprise. Providing a positive day-to-day experience at every usage touch point is, indeed, a most important driver of brand performance and sales!

The correlation* to sales over time shows the SEI™ has Predictive Power

5

SEI validation: four categories. Stronglinkages and correlations of SEI to sales

Correlation = 86%

Correlation = 84%

Correlation = 81%

Correlation = 83%Correlation = 83%

*Lead lag analysis has confirmed that causation is only one way – the SEI™ to a large degree is able to drive hard commercial metrics.

Recent Marketing-Mix Model cases show the customer experience (SEI earned media) as the

largest sales driver

44.9%

9.1%4.0%2.2%1.8%2.3%5.9%

29.8%

Brand Gamma Decomposition of Sales

Baseline

TV

Print

Radio

Owned Digital SEO

Paid Digital Mobile

Paid Digital Search

Customer ExperienceEarned Digital SocialSEI

54.1%

5.5%1.5%4.4%2.1%2.8%

5.9%

23.7%

Brand Beta Decomposition of SalesBaseline

TV

Print

Radio

Owned Digital SEO

Paid Digital Mobile

Paid Digital Search

Customer ExperienceEarned Digital SocialSEI

60.4%4.5%

2.1%3.3%1.1%2.1%5.3%

21.2%

Brand Alpha Decomposition of Sales Baseline

TV

Print

Radio

Owned Digital SEO

Paid Digital Mobile

Paid Digital Search

Customer ExperienceEarned Digital SocialSEI

64.8%1.5%0.2%0.3%3.6%0.1%1.8%

27.8%

Brand Omega Decomposition of Sales Baseline

TV

Print

Radio

Owned Digital SEO

Paid Digital Mobile

Paid Digital Search

Customer ExperienceEarned Digital SocialSEI

Summary & Conclusion

• This document makes a case that there is an important and critical missing factor from today’s marketing measurement and that is a measure of the customer experience. This is a day-to-day measurement of a customer’s brand usage and experience.

• By leveraging a highly linked social media metric representing this customer experience, Michael Wolfe illustrates the size and important role that the voice of the customer plays in driving brand performance. By measuring and monetizing this via a classical marketing mix model, it illustrates a whole new path of insights possible from this recurring exercise and also opens an opportunity to better understand the “whys” behind brand performance directly from the “voice of the customer”.