Measuring CRM Impact
Measuring CRM Impact v.1.0 Nick Metcalfe CRM benefits from the unenviable fact of being able to track individual behaviors and activities from direct communications. To attribute specific direct messaging impact on constituents, we create a hold-out group who does not receive any direct marketing messages. This hold out group must be similar and representative of the target constituents. If the database is large enough a 1% hold out count will typically suffice. Challenge – Accepting a “hold-out” group as your control to measure your direct marketing efforts over time.
CRM Metrics in a nutshell 1.
What type of metrics can be measured with CRM? • There are a variety of metrics/ KPIs (key performance indicators) available for CRM within your ecosystem. You can measure the growth and size of your database, level of information captured, your predictive accuracies when building response/upsell/risk assessment or attrition models, your campaign performance of emails, direct mail, telephony and social media. Any direct response method to an individual/household should have a detailed list of metrics which you should forecast in advance of the initiative. For Development, ultimately what is CRM’s contribution (in dollars) for our activities and spend.
2.
Do you mean the universal hold out group never receives a communication from us? • Not directly, correct. The 1% universal hold out group enables us to measure the incremental impact of CRM and the dollars raised by CRM initiatives alone. • This group is still exposed to the awareness campaigns and other marketing efforts, just not direct.
3.
Why do we care about measurement, we should just target everyone? • In CRM it is important to measure “incremental” impact. If you have no hold out group, you have nothing to compare against. Using “year-ago” or historical as a measure is not statistically accurate.
4.
What is LTV, CLV? • Life Time Value, or Customer Lifetime Value are measures of an individuals contribution to you over time. Even though the term suggests “life time”, the measure can be used over set time periods, such as 1 year, 5 years, 10 years, 30 years and all increments in between.
Questions? [email protected]
7/1/2013
Graphic example of members marketed to (red line), versus the hold out (purple, lower line)
CRM Metrics in a nutshell 1.
What type of metrics can be measured with CRM? • There are a variety of metrics/ KPIs (key performance indicators) available for CRM within your ecosystem. You can measure the growth and size of your database, level of information captured, your predictive accuracies when building response/upsell/risk assessment or attrition models, your campaign performance of emails, direct mail, telephony and social media. Any direct response method to an individual/household should have a detailed list of metrics which you should forecast in advance of the initiative. For Development, ultimately what is CRM’s contribution (in dollars) for our activities and spend.
2.
Do you mean the universal hold out group never receives a communication from us? • Not directly, correct. The 1% universal hold out group enables us to measure the incremental impact of CRM and the dollars raised by CRM initiatives alone. • This group is still exposed to the awareness campaigns and other marketing efforts, just not direct.
3.
Why do we care about measurement, we should just target everyone? • In CRM it is important to measure “incremental” impact. If you have no hold out group, you have nothing to compare against. Using “year-ago” or historical as a measure is not statistically accurate.
4.
What is LTV, CLV? • Life Time Value, or Customer Lifetime Value are measures of an individuals contribution to you over time. Even though the term suggests “life time”, the measure can be used over set time periods, such as 1 year, 5 years, 10 years, 30 years and all increments in between.
Questions? [email protected]
7/1/2013
Graphic example of members marketed to (red line), versus the hold out (purple, lower line)
