Adventures in Data Analysis

by Marita Greenidge

If you’ve been reading this blog for a while, you probably figured out that I’m a strong proponent of ‘marketing performance measurement and management’. Yes, that’s a mouthful, but I believe that companies need to pay close attention to marketing performance so that they maximize the return on their marketing investment.

To develop a performance driven organization you need 3 three things – data, analytics, and metrics. However, in my experience working with entrepreneurs, I’ve noticed that one thing is glaringly missing – data! How are you have a lean marketing performance machine when you have no idea how customers are responding to any of your marketing efforts? Well it’s simple; you can’t! Unless you are very very very lucky.

Entrepreneurs need to get the right marketing systems in place from the get go. They need to think about marketing the way they think about accounting. Everyone recommends getting an accounting software package to track all your income and expenses. I agree; the accounting package is important. However, just as important is tracking how well your efforts at acquiring and retaining customers are working. After all, every business wants to acquire and retain profitable customers as well as increase the amount gained from loyals. Every business hopefully wants to do this at the lowest possible cost.

At Simon, I was trained to manipulate data, but the big assumption here was that I already had the data available. How does someone who likes data analysis deal with the absence of data when trying to develop a performance driven company? You have to encourage entrepreneurs to put the right data collection systems in place.

For me it begins with figuring out what you want to measure. I was reading Marketing Metrics in Action, by Laura Patterson, and she said that at any moment in time a marketer should know:

• The average purchase per customer
• Upgrade conversion ratio (no. of upgrades per acquired customer)
• Cross-sell conversion ratio (no. of cross-sells per acquired customer)
• Customer lifetime value (the present value of the cash flows received from a customer)
• Average customer acquisition rate
• Average customer retention rate and cost
• The market share in each market segment
• Geographical division of sales
• Rate of new product acceptance

After you know what you want to measure, you put the right system in place to help you collect the data needed for calculations. For example, to calculate the average purchase per customer you need to record what customers are buying and the price at which they are buying the items/services. For acquisition rate you need to record the time and date customers purchased.

Of course some of these performance indicators may be difficult to apply to your business (for example with little data available in the Caribbean it’s difficult to calculate market share on anything). However these metrics are a great place to start. Also they aren’t written in stone so you may find that you need to add to the list or remove.  With the data and metrics (performance indicators) out of the way, you are then ready to analyze the information. Is the customer acquisition rate going up or down? If so why? This brings us to another set of data you must ensure you collect – data on the performance of your marketing tactics. I mentioned this in an earlier post– for each suggested tactic such as a banner ad, a radio ad etc., you should have a plan in place to monitor the response. This helps you understand why you’re seeing changes in the above-mentioned metrics.

I call this an adventure because this is my approach to helping our entrepreneurs here in Barbados focus more on marketing performance. The adventure certainly isn’t over so stay tuned to this blog for further updates.