Channel optimization can be a tricky business for marketers. It’s easy to get stuck in a rut with a channel that has worked historically (but may be running its course). And it’s easy to become dazzled by the newest digital widget that makes an appearance.
But wait. How about choosing channels based on what customers signal they want and are therefore the most effective?
The idea is pretty simple – determine the optimal (usually meaning most profitable) allocation of marketing resources across available channels. But the data feeding channel optimization can be deceiving unless the process can be carried out to completion.
Consider a prospect, John, who shows up on a list rented by an outdoor-gear retailer. John looks like a potentially high-value customer for the retailer, so it sends him a catalog. John receives the catalog and, three days later, makes a purchase from the retailer’s online store. Which business unit gets credit for the sale: the catalog division or the web division?
In this case, it’s the catalog. Yes, the online store took the order, but John arrived there because he received the catalog. He entered the URL directly, and made his purchase. However, the retailer may assume that the catalog had no role in this sale – and thousands of others – and consider phasing out what may be an integral part of the sales process.
This distinction is a critical one, and underscores the importance of collecting and assessing data in order to channel-optimize your marketing. In a recent article in Chief Marketer, I lay out the steps for marketers to create a capture mechanism that collects hidden data in order to understand which channels are delivering the revenue, including:
Look at the big picture. Evaluate data about individual channel results through a lens that allows you to understand the true costs, true response/purchase rates and calculation of the transaction value.
Un-silo the data from various divisions within your organization. Creating a single source of truth for the data will show how customers are being acquired and grown, and help determine which channel gets credit for it.
Track costs and revenue by channel. Is the new customer hitting your site from a QR code in a magazine or from a refer-a-friend-campaign email link? Each channel program delivers revenue at a different rate.
When calculating ROI, consider the lifetime value of a customer. That first purchase alone might not justify the cost to acquire the customer.
A data-driven approach can act as an extremely effective – and ROI-focused – roadmap for channel optimization.