Metrics: The kaleidoscope of value measurement at customer, campaign, function or enterprise level
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Keywords: marketing, metrics, lifetime value, segmentation, IT
Metrics: The kaleidoscope of value measurement at customer, campaign, function or enterprise level Nigel Magson Received (in revised form): 1 June 2001
Abstract Many different organisations have built databases which house marketing information about individual customers or organisations. Obtaining and understanding the value that these individuals have represented and continue to represent is key to ensuring that marketing activity is effectively directed. Many organisations still see the database as supporting direct marketing activity only, and fail to use its potential to link back to their business-planning processes. So while measures are calculated at a macro level, these are rarely converted to the end customer base. This paper is based on practical experience in building and producing value analysis and metrics within different sectors, and aims to reveal a workable approach to creating different metrics.
Introduction
This paper explores a number of areas: Ð de®ning and creating value metrics: the de®nition of different measures Ð building measures: the practical applications and some of the pitfalls in building measures Ð an IT methodology of building information suites that will allow metric creation for different applications within the organisation. This is done in the context of organisations covering different market sectors, such as FMCG, holiday, retailing, utility, charitable and ®nancial services sectors.
Metric de®nition Nigel Magson Talking Numbers Data based Solutions Ltd., Lorraine House, Market Place, Cirencester GL7 2NW, UK Tel: +44 (0)1285 644220; E-mail: [email protected]
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It is rare that a single metric alone is used when describing marketing activity. The days of response rates being quoted as an evaluation of a campaign, without the consideration of ROI (return on investment), appear long gone. While a combination of metrics appear to be used in most industries, they can vary at different organisational levels. Metrics have been developed to describe a particular aspect of the business and the description carries a particular perspective Ð for example,
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Metrics: The kaleidoscope of value measurement recruitment metrics viewed by the new business function can ignore calculations about ongoing worth. The adoption of CRM (customer relationship management) within many organisations would suggest that these organisations are now better placed to have an overview of how different metrics integrate and can be used to describe their business activities. Stone and Mason consider the organisational issues of metric development as part of the use of customer relationship management in a major UK insurance company.1 When considering developing an existing metric or adding a new metric, the following questions can be posed: Ð Ð Ð Ð Ð
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