Chapter 15

Marketing accountability and promotional Insight

Being marketing accountable!

Marketing accountability is best carried out by a marketer defining the ­promotion success and setting the KPI, with someone else carrying out the measuring and recording of the KPI (use finance – then it will be believed!). The marketer then compares the figures with the success definition, and an evaluation is produced. Simple, but sadly rarely implemented.

So what can be done?

Marketing accountability: How to define success, set KPIs and measure and evaluate promotions

Promotions cost money and are undertaken to achieve specific promotional objectives, which are normally part of a campaign to achieve a marketing objective. So it is absolutely critical that promotions prove to be value for money.

• Define the success criteria of your promotion.

• Setting KPIs by which to measure success – as you define it.

• Measure – make someone responsible for measuring the KPIs.

• Evaluate to see if you have achieved success. The lessons learnt can be borne in mind for the next cycle of promotion (see Figure 12.1).

The reasons for not measuring are various:

• Individual promotions seldom have the budgets that justify an additional amount for marketing accountability.

• Promotions can, in many respects, be measured by sales results.

• There is often not the time to define success, set a KPI and measure and evaluate market accountability before the next promotion is due.

The point is made in the book Value for Money Marketing (by Roddy Mullin, published by Kogan Page, 2001) that marketing accountability has to become part of company culture before it is routinely applied.

However, those who do evaluate their promotions know the benefits it brings short and long term. Evaluation of promotions justifies budgets to accounting persons. It is suggested that the marketing budget is split into two – the first part for ‘maintenance’, that is, to retaining the existing market share level (sustaining and building the engram, relationship and social media support, local promotion); and the second part for revenue expenditure (to achieve growth and the launch of new products etc., and to add excitement, fun and contingency promotions). You will only know of the maintenance figure if you have records of marketing expenditure and market share over the years. You will only know, if you record it, what promotions really work for the future.

The purpose of marketing accountability

Like a lamp-post, marketing accountability should be used to shed light, not to lean on. Once a culture of marketing accountability is part of a company’s culture, there will be records of what works and what does not. Marketing accountability is an iterative process that will very rapidly save you money. There are three main stages of promotional marketing accountability:

1 Think accountability. Thinking accountability and planning for marketing accountability are excellent inputs into strategic questions such as how to split your marketing promotion (communication) budget between advertising, promotional offers, direct marketing and publicity. It has the added benefit of providing evidence and facts to put in front of finance directors to demonstrate the effectiveness of marketing and show value-for-money marketing. It does assume that a culture of marketing accountability exists and that all other marketing activities are also accountable in order to make the budget allocations. Promotions will, of course, be on to a real winner if it is the only accountable activity.

2 Measure. You can do this in a test stage to identify the particular promotional concepts that will meet the objectives you have, or monitor throughout a promotion, or just collate the collected measurements at the end. Be aware if you are measuring a change in behaviour or attitude that you may have to measure the KPIs before your promotional activity as well, so you can record the change resulting.

3 Evaluate. Compare the effect and impact of promotions you have undertaken with your definition of success and feed this evaluation into the planning of future promotions.

A good evaluation system, used by all those in the organisation who run promotions, is consistently applied, makes the results available to everyone who needs to know them now and ensures that feedback is available in the future. It is key to collective learning in any company or agency and, over time, becomes a valuable asset.

How to set a KPI

Think through your promotional brief. What is the promotional objective?

Keeping evaluation knowledge

The challenge in setting up an in-house evaluation knowledge system is knowing what you need to record and what you can reasonably discard. The challenge in operating it is finding the time to do the recording while the evidence is still available and knowing what to circulate, what to put on your database and what to keep in manual files (samples of print, merchandise, etc.). Make the system too complicated and you run the risk that it will not be used. Make it too simple and you will not have the information you need next time round.

In promotions, this challenge is tougher than it is in many other areas of business because promotions are so varied and so often conducted by staff who move on to other jobs. Many agencies have built a spreadsheet of response rates to different coupons, free mail-ins and other offers. These are invaluable, but are at the pinnacle of a good system. The place to start is recording the basic data for each promotion you run.

How an evaluation knowledge system works

The most practical approach is to produce a document wallet containing all the key information about a promotion. You can organise your data under the following four headings. Under the first three, you can either write an appropriate paragraph or include a piece of paper in your file. The last one requires you to stand back from the evidence and think.

Background and objectives

List here the products on which the promotion ran, the quantities involved and the name of the promotion. Also record the three key points that led you to undertake the promotion: the marketing objective, the promotional objectives and the answer you gave to the question ‘Who do I want to do what?’ Including the reason why the objective was set (‘We faced a major challenge from a new competitor’) locates the promotion in a context that may be forgotten in a year’s time.

Description

This is a detailed description of what the promotion involved. You may be able to include your operational marketing plan – but, before you file it, make sure you update it to show what actually happened, not what you planned to happen. Make sure you include:

• the offer made to the consumer;

• the mechanic (including detailed rules and entry requirements);

• the operational structure (who did what, agencies and suppliers used);

• communication materials (type and quantity);

• media support;

• timings;

• trade/intermediary support;

• sales force activity (if relevant);

• the KPI used for measurement

• copies of all relevant printed or video material;

• suppliers and contacts.

What happened

There are three primary measures of the results of a promotion, and they relate, respectively, to promotional response, sales and finance. In many cases, it is simplest to include the evidence in your document wallet rather than to spend time entering it into another document. For example, if your handling house gives you an analysis of applications for a free mail-in, simply include that piece of paper. Make sure you cover:

• Marketing accountability: how success of the promotion was defined, whether the KPI set was reasonable, and a record of the KPI measurement, evaluation and analysis of the result against the success criterion. You should note whether the result met, nearly met or did not meet the success criterion you set.

• Promotional response: consumer uptake of the promotion; trade participation; the results of any market research or surveys undertaken; any feedback from Insight (social media etc.); and a note of any consumer, trade or sales force comments. Did the press comment or journalists report?

• Sales: sales figures for the periods before, during and after the promotion; the results of any continuous surveys of market share, distribution and penetration; and relevant figures for competitors’ products.

• Finance: the cost of all material produced for the promotion; any trade discounts, fees and other costs; and any calculations that you make about the profit contribution the promotion made.

Sales and finance data will, in most cases, be information generated by other parts of the company. Make sure you include information that helps in promotional evaluation; do not include information just because it is there.

Analysis

Did the promotion work? How you answer this question depends on the culture of the company. To listen to some brand managers and agency personnel, there’s never been a promotion that didn’t transform the fortunes of the promoted product. For the analysis to be useful, however, you must be as honest as possible. You should refer back to the promotional objective, the brief and the success criterion and the KPI you set.

You should include statistics – how the promotion performed against quantitative objectives set for participation, sales, penetration and market share and how it performed against the operational marketing plan you set, the budget and the timings. You should also include comments – an assessment of the lessons learnt from it, particularly what you would do differently next time, and the experience it has given you of suppliers, trade partners and internal departments. Sometimes stock during a promotion is not replaced on the shelf or a delay is caused in restocking. Such occurrences affect the result.

The analysis section is not just a matter of reporting that sales increased by 11 per cent against a target of 10 per cent. If a major competitor suffered a production blip at the same time, you need to record it. Analysis is about why a promotion performed as it did.

The answers are not always easy to find, but repeated and honest analysis makes the process easier.

What to look out for

Putting a promotion finally to bed with a document wallet containing the information and analysis listed above is the basic building block of a marketing accountability system. Before you put it away, though, you need to make sure that:

• the wallet is indexed and accessible, so others can find it;

• any basic data that can be held on a central database – for example, response levels – are transferred;

• there is a debrief meeting so that experience is shared.

The point of a good evaluation is in the preliminary briefing for the next job when the wallet for the last one should be examined and the analysis taken on board.

Taking these steps would, in most companies, transform the quality of promotional evaluation. It would even give you the information you need to enter your promotions for, and maybe win, an IPM award.

For a promotion, marketing accountability can be used to address the following type of questions:

• Did the promotion achieve the objective?

• What was the cost to achieve the objective of that promotion?

• Was the promotion value for money?

• How did the promotion compare in value-for-money terms with other marketing activities or promotions we have used to achieve the same objective?

• Was the KPI used the most appropriate, and was it effective?

The answers enable better planning next time.

Promotional Insight

Research is useful to support decisions on the use of promotions in general and choosing one in particular. It is important to draw out something useful rather than have a load of statistics – Insight is actionable. This is in-depth analysis and overcomes the marketer who thinks they know it all. It is dangerous to rely on a hunch or ‘gut feel’. Do the research.

Questions market research answers about attitudes to promotions in general

• How do particular groups of intermediaries and potential customers respond to promotional offers?

• What kind of promotional offer do they find most compelling?

• What other products and services would they link your own product or service to for the purposes of joint promotions?

• How do they react to different kinds of charity offer?

• What frequency of purchase is it sensible to aim at in constructing proof-of-purchase requirements?

• What was the impact of a promotion on brand values and on the reaction to the promotion by those who did and those who did not take up your offer?

There are various ways in which you can go about doing promotional research:

• Doing it yourself . This is the only way to undertake factual desk research on sales patterns and evaluate it yourself, as only you will have access to the data. Because resources are normally limited, the more you can do the other types of research yourself the more likely they are to be done.

• Using specialist researchers. Most market research companies will undertake promotional research, and a number have developed specialist methodologies in the field.

• Including it in an agency brief . Promotion agencies now have longer-term relationships with clients and often have in-house resources in market research. It can make sense to build both a marketing accountability and a research element into every brief if you use an agency.

The greatest advances in this area have been made in promotions to children and young people, where changing fashions have made it critical to understand the issues that motivate them. On a larger scale, it is too much for one brand. There is immense scope in alliances such as those between Cadbury Schweppes, Bass, Kimberly-Clark and Unilever to pool research and database information.

These questions are answered by a mix of field research (where you actually ask people or pay market researchers to ask the questions) and desk research (where you find out and use the field research of others). A useful book is Why We Buy by Paco Underhill.

Questions market research answers to decide which promotion to use

The following have a bearing on the selection of a particular promotional concept over others:

• the level of response you can expect from a particular offer with particular entry requirements;

• the effect on response rates of changing a particular element in the promotion, for example the number of proofs of purchase required or the nature of the premium item;

• the clarity of communication in the particular way the offer is themed and expressed;

• the effect on the image and value of your product or service made by a particular promotional offer;

• the level of spontaneous interest in, and therefore the attractiveness of, different promotional concepts.

The most sensitive issue is always the response rate. For a free mail-in, this can vary from 3 to 15 per cent or more. On-pack coupons can be redeemed at rates of anything between 5 and 25 per cent. This variance has enormous implications for your budget, so reducing the area of uncertainty is crucial. It is important to be clear about which of these questions actually have a bearing on your choice between a number of competing promotional concepts. In many cases, all the concepts will have a similar effect on the image and value of your product or service and it will be pointless to explore the matter further.

The questions are best answered by desk research for data held by you from previous sales promotions or from studying the data of others.

Evaluative research

The straightforward in-house part of evaluative research is collecting together all the factual data on response rates, sales patterns, consumer complaints and other readily measurable variables. This type of evaluation should be standard operating practice and is covered in the ‘Market testing’ section of this chapter.

All mail-in promotions produce a list of people who took up the offer. This forms an excellent basis for running a simple postal questionnaire. Getting to those who did not take up your offer requires rather more effort in list building, but it is important to obtain proper comparisons. More in-depth research into consumer reaction to promotions can be obtained via group discussions.

Desk research

Desk research has the major advantage that it can be done by yourself, at your desk and at nil or low cost. If you can answer the questions – or at least narrow the amount of uncertainty – by means of desk research, it is always best to do so.

There are three main data sources for desk research, and they can be built up over time to provide you with the material you need to evaluate competing promotional concepts.

• Your own promotions. Details of your own past promotions are the best and the first form of research data. An evaluation system is recommended in the section ‘Keeping evaluation knowledge’ (see above) which should be used after every promotion. Using these data for research purposes means identifying similarities and differences between past promotions and your promotional concepts, and intelligently estimating from there. The data can also be used to identify the promotions that will work with particular target groups and to achieve particular objectives.

• Competitors’ promotions. It is possible to build up a fair amount of market intelligence about the promotions run by your competitors, their likely cost and their likely effectiveness.

○ It should be standard practice to buy every promotional pack and collect every promotional leaflet issued by your main competitors. From these you can list the nature of the offer, the entry requirements and the theme used.

○ Rather more detective work is required to gain an estimate of costs, response rates and effectiveness:

• For a prize promotion, simply cost the prizes on offer. For a premium promotion, obtain and cost the premium on offer. Make an estimate of the quantity of leaflets and other support material, and cost these too. This should give a rough indication of budget.

• Use your own sales data, and continuous market research data if you subscribe to them, to establish whether or not any discernible sales effect has been achieved by your competitors’ promotions. Other tracking studies can measure their impact on awareness, distribution and other variables.

• Make your own subjective assessment of the clarity of communication of the offer, and its impact on brand values, awareness and other less quantifiable measures.

None of this is an exact science, but the information will provide you with the best available guide to what your competitors have found effective.

Wider promotional activity

There are various sources of information about promotions in a wider sense. These include:

• trade magazines (mainly online) – see Further Information;

• regular features on promotions carried in the weekly advertising and marketing press, in particular Marketing, Marketing Week and Campaign;

• publications (online) from the IPM and, in particular, the annual brochure describing winning promotions entered for the IPM awards;

• occasional research reports published by a variety of business information and research organisations, including Internet Retailing, Mobile Marketer and Mintel;

• conferences on promotional issues, normally in London, at which leading practitioners describe and discuss promotions they have undertaken and trends in the industry.

Those few companies that employ an in-house promotion manager benefit from the build-up of expertise in this area, and it is also a particular strength of promotion agencies. However, anyone spending any significant sum on promotions should make it their business to monitor and evaluate wider promotional activity and learn from it.

Field research

Field research involves collecting information directly from the market by way of a sample designed to be representative of your target market. There are five main methods that can be used for promotional research:

1 Street interviews, which provide quantitative responses to a relatively simple set of questions. As a means of testing the response to promotions immediately after purchase, interviews outside super-stores can be particularly effective.

2 Hall tests (where consumers are invited into a nearby church hall or similar venue), which also provide quantitative responses but allow more opportunity for detail. This can extend to creating a simulated buying situation and comparing consumer behaviour.

3 Group discussions or focus groups, which provide considerable ­qualitative information on consumer attitudes and are often used before quantitative testing.

4 Analysis of social media . Of all the methods, this is most likely to provide individual and social feedback on promotional ideas.

5 Postal, internet (e-mail) and telephone questionnaires, which have major cost savings over face-to-face interviews. Because of the need to see promotional offers, their use in promotional research is really restricted to planning and evaluative research.

The use of all these types of field research is a science in itself and, as such, is outside the scope of this book. Many are now advocating greater use of the analysis of social media. The reason for this relates to the gap between what people say they do and what they actually do. It is well known that consumers understate their expenditure on socially disapproved activities such as smoking and drinking. In the same way, they understate their enthusiasm for promotional offers. Field research can be misleading if it takes at face value what people say rather than what they do. Paco Underhill’s book Why We Buy is invaluable here, as it is all based on what people do. See also Shoppernomics by Roddy Mullin and Colin Harper.

Market testing

Market testing overcomes the gap between what people say they do and what they actually do: it measures actual behaviours in the marketplace.

This technique is prohibitively expensive for most applications of market research because it involves placing a product or service out in the market and producing it in uneconomic production runs. However, for promotional research, it is much more feasible. It is often quite possible to sticker a small quantity of a production run with a particular offer and use it as a door-drop sample. For service companies, the exercise is even simpler – just produce a short run of the leaflets or other material communicating the offer and try it out in one part of your market.

Clearly, there are logistical and planning aspects to take into account, of which the most important is the time required to organise and evaluate the test. Some promoters believe that the danger of good ideas being seen and adopted by competitors makes field testing impossible. Others believe that lack of field testing means that really innovative ideas are held back, as promoters do not have the faith to take a risk. Back in the 1960s, it was standard practice for Procter & Gamble to field-test promotions and develop innovative concepts (see Case study 62). One of the major advantages of a strategic approach to promotions is that the time for proper market testing can be built in.

Other measurements

Big data analytics

There is now a huge amount of data available, and plenty of reports to be generated from it.

EPOS data will determine what is bought and when, and which items were on promotion. Store cards will place that with customers. Analysis by date and time of day and day of the week may also show when it is best to offer promotions.

The key findings from websites will include:

• engagement rate: the number of prospects that engaged with your business/marketing channels;

• lead rate: the number of prospects that converted to a lead;

• conversion rate: the number of leads that converted to a sale;

• closed business: the total revenue generated;

• pipeline: the number of leads that end up on the forecast.

With enabling marketing software, it’s also possible to determine what the most popular/successful communication channels/tools were. For B2B, was a particular White Paper downloaded many times? How many comments did a recent blog post receive?

By taking an overview of the latest customers’ journeys through the sales funnel, patterns and trends can be identified such as conversion points, media consumption, frequency of interactions and sales tipping points. By understanding these data, it is possible to continuously update the marketing channels and messages to send out to shopper/buyers.

Web audits

Another aspect of market accountability is how your website is performing. You need your website to work for you, to make the most of the content you produce (and existing content too). On-page content remains a major factor for achieving top search rankings. As such, you should undertake a website audit. Put your technical hat on.

Now replace your hat for another marked ‘Content’. Audit/benchmark your existing content. See which content templates and formats have been performing well. Take a look at your SEO goals to see how you’re doing, and target areas for improvement (via the production of new content, and the optimisation of existing content).

Finally, you should definitely spend some time benchmarking the competition. This is mainly about the content they produce (and how it is distributed), but should extend to SEO and social. What’s working for them? How frequently are they updating their content, their distribution channels and their social networks? Can you correlate a competitor’s content marketing campaign with its performance (e.g. website metrics, social metrics and trading performance, where available)?

Delivery costs

A major factor is delivery costs, set to cost retailers £6 billion in abandoned baskets in 2014 (Internet Retailing). The latest eCustomerServiceIndex from eDigitalResearch and IMRG questioned 2,000 online shoppers and found that 77 per cent of them had abandoned an ecommerce shopping basket in the last year. When asked why, some 53 per cent of them said delivery costs were too high, while 26 per cent put something in an online basket ‘just to check’ delivery costs and 18 per cent decided not to buy because the estimated delivery date was too long. Other reasons came from the 44 per cent who said they’d changed their mind about making the purchase, while 39 per cent wanted longer to think about it. Some 65 per cent of those who abandoned the checkout because they felt delivery costs were unreasonable then went on to search online to find similar goods elsewhere. One in five made no purchase at all, while 8 per cent went to a store to buy.

Investment in better parcel tracking, timed delivery slots and other innovations has gone some way to improving customer satisfaction with overall customer experience, but these results clearly show that issues surrounding delivery are still a massive barrier to purchase for a large chunk of online shoppers. Linked findings showed that most shoppers would prefer not to pay more than £5 for small or medium-sized goods to be sent to them, with most expecting not to pay at all. Reasons cited for checkout abandonment also included out of stock (21 per cent), limited information with which to make a purchase decision (12 per cent), security concerns, limited payment options and unclear returns policies (both 8 per cent).

The same assessment can be extended to promotions to discover if abandonment of a purchase of a product was with or without a promotion.

Summary

Proper marketing accountability, defining success, setting KPIs and measuring and evaluation make sure that you are getting your money’s worth from your promotional expenditure and that you are spending it on the right things. There is no excuse for failing to evaluate every promotion, or for failing to do the basic desk research beforehand. This should be planned into every piece of promotional activity.

Use of field research and market testing depends on your budgets, but can only help to reduce uncertainty. In the end, research cannot make the decisions for you, particularly in such a fluid and fast-moving field as sales promotion. However, in order to help you plan in the future and compete for budget with your finance director, marketing accountability is essential. Marketing no longer has the luxury of not delivering value for money.

Self-study questions

1 What is the process of obtaining marketing accountability?

2 What must you record for effective evaluation?

3 What are the main types of research you can use in sales promotion?

4 Why do you think so little research goes on into sales promotion?