MMM + CRM = ROI

Image credit: ChatGPT

There is a class of marketer whose business model gives them a distinct advantage. The group includes banks, telcos, publishers, ecommerce sites, some companies in travel and health. Their difference? They know their customers directly; they can transact and communicate without going through intermediaries.  In recent years these businesses have been joined by new hybrid models, for example, retailers whose loyalty programs allows them to see individual customer behavior, not just sales baskets and aggregate unit volumes.

When it comes to building a marketing mix model for these brands, there are significant opportunities to improve returns on investment by combining an understanding of the impact of public facing media (eg TV, Print or OOH), as well as personal, (eg 1:1, CRM media such as email.

To achieve this, the data design needs to embrace all CRM media along with above-the-line media into the MMM (and all other forms of marketing communication!), so that you can understand the total business dynamic more coherently.  The model can then incorporate the effects of efforts aimed at cross-sell, up-sell, retention, and winback.

Whether you see this as an exciting opportunity probably depends on whether you're a marketer who sees things as glass half full, or glass half empty.

The good news is this kind of integration offers the opportunity to increase the incremental effect of all efforts....CRM, brand building, etc...by double digit percentages.  On the CRM side, contact frequency, channel choice and customer prioritization all benefit from this broader view of what impacts buying.  

For the MMM view of marketing effect, we can meaningfully distinguish effect on current customers from effectiveness in converting prospects to customers.  We can also take advantage of segmentation data on the customer database to better understand how all forms of marketing communication affects customers from those segments.  For example, what marketing mix best supports the relationship with the minority of customers who generate the majority of profits?

The bad news is that by NOT doing this your budget is almost certainly wasting money on poor attribution, inappropriate allocation, and misleading evaluation of effect. And yet, many marketers make that same mistake.

Why does this happen?

·       Data and Decision Silos

o   In some companies CRM planning and decision-making are located in a different part of the company from media planning

o   There should be a point of integration of the two, but sometimes this is not the case or if there is, the processes function poorly

·       Attribution Bias

o   Thinking of attribution as analysis of only digital data or of MMM as only mass media blinds analysts and decision makers

·       Analytical Complexity

o   There is no doubt that this integration increases the complexity of both CRM and MMM modeling

o   In some organizations the perceived complexity is enough to turn marketing leadership away from the effort

·       Bad Incentive Design

o   Media teams may focus on MMM and only for media as their responsibility; same with CRM teams. 

o   Synergy between the two won’t happen unless they both support it, along with the CMO

How to overcome these barriers?

Consider what a double digit percentage improvement in incremental sales would mean to your company and your brand.  Compared to that, realigning incentives, improving analytical work and creating bridges between marketing teams is far less costly. 

So let’s say the glass is half full, and get to work on filling it to the brim.

Looking for help in making MMM + CRM = ROI work for you?  Contact me at davidbeaton@craterlakeandcompany.com