Marketing Analytics

Stephan Sorger
www.StephanSorger.com

Disclaimer:
• All images such as logos, photos, etc. used in this presentation are the property of their respective copyright owners and are used
here for educational purposes only
• Some material adapted from: Sorger, Stephan. “Marketing Analytics: Strategic Models and Metrics. Admiral Press. 2013.

© Stephan Sorger 2016; www.StephanSorger.com; Marketing Analytics: Cover Page

 Chapter 1.
Introduction

Disclaimer:
• All images such as logos, photos, etc. used in this presentation are the property of their respective copyright owners and are used
here for educational purposes only
• Some material adapted from: Sorger, Stephan. “Marketing Analytics: Strategic Models and Metrics. Admiral Press. 2013.

© Stephan Sorger 2016; www.StephanSorger.com; Marketing Analytics: Introduction 1

Outline/ Learning Objectives

Topic Description
Definitions
Styles and Forms
Metrics

© Stephan Sorger 2016; www.StephanSorger.com; Marketing Analytics: Introduction 1

Marketing Analytics: Models, Metrics & Measurements
Topic Description
Definition (Broad) Broad definition (but too vague):
Data analysis for marketing purposes,
from data gathering to analysis to reporting
Definition (Applied) Techniques and tools to provide actionable insight
- Models - Metrics
Models Decision tools, such as spreadsheets
Metrics Key performance indicators to monitor business

Models: Metrics:
Decision tools, KPIs to monitor business,
like spreadsheets like charts and graphs
Example: Bass Forecasting Example: Sales/ Channel
© Stephan Sorger 2016 www.StephanSorger.com; Marketing Analytics: Introduction 2
Models and Metrics

Metrics = Gauges: Models = GPS:

- Monitor situation - Representation of Reality
- Diagnose problems - Decide on course of action

© Stephan Sorger 2016 www.StephanSorger.com; Marketing Analytics: Introduction 3

Metrics Gone Wrong
Military leaders in World War II used metrics regarding airplane damage incorrectly
“Reinforce damaged areas”
Abraham Wald, a statistician skilled in analytics, said: Right Metrics, Wrong Conclusion
“Reinforce non-damaged areas” (fixing selection bias from studying only airplances that returned)

© Stephan Sorger 2016 www.StephanSorger.com; Marketing Analytics: Introduction 4

Trends Driving Marketing Analytics Adoption
Accountability Online Data Availability
Improve productivity Marketing Cloud-based data storage
Reduce costs Online = speed
“What gets measured gets done” Analytics Online = convenience
Adoption
Data-Driven Presentations Reduced Resources
Data to back up proposals Do more with less
Predict success of plans
Massive Data Scrutinized budgets
Marketers must show outcomes
Initiatives to capture customer information
What to do with all that data?

Before: Now:
Huge budgets Tiny budgets

© Stephan Sorger 2016 www.StephanSorger.com; Marketing Analytics: Introduction 5

Marketing Analytics Advantages
Drive Revenue
Marketing as cost center
Marketing as profit center
Correlation between spending and results
Advantages
Save Money
Old way: Execute campaign  guess outcome
No longer tolerate such an approach
New way: Predict outcome
Persuade Executives
Marketing Focus on revenue impact from marketing
Correlation between spending & results
Analytics
Side-step Politics
Some CEOs do not appreciate marketing
Show impact of efforts with metrics

Encourage Experimentation
Test multiple scenarios before proceeding
Run simulations
Predict which will work best

© Stephan Sorger 2016 www.StephanSorger.com; Marketing Analytics: Introduction 6

Models: What is a Model?
Topic Description
Model Simplified representation of reality to solve problems
Example: Advertising effectiveness model
Purpose Evaluate impact of input variables
Example: Assess how advertising impacts sales
Decisions Models provide guidance on marketing actions
Example: Decide on ad budget to achieve objectives
A

Sales
Advertising Effectiveness:
Response (sales revenue)
increases with increasing ad budget
until Point A, then decreases

time
© Stephan Sorger 2016 www.StephanSorger.com; Marketing Analytics: Introduction 7
Styles: Verbal, Pictorial, Mathematical
Topic Description
Verbal Expressed in words
“Sales is influenced by advertising”
Pictorial Expressed in pictures
Chart or graph of phenomenon
Mathematical Expessed in equation
Sales = a + b * Advertising

Verbal Pictorial Mathematical

Sales = f(advertising)

© Stephan Sorger 2016 www.StephanSorger.com; Marketing Analytics: Introduction 8

 Models: Forms
Topic Description
Descriptive Characterize (describe) marketing phenomenon
Identify causal relationships and relevant variables
Example: Sales = a*Advertising + b*Features +c*…
Predictive Determine likely outcomes given certain inputs
Classic “What If?” spreadsheet exercise
Example: Sales forecast model
Normative Decide best course of action to maximize objective,
given limits on input variables (constrained optimization)
“Given X, what should I do?”
Example: Determine price using forecasts at diff. prices
Descriptive Predictive Normative
Sales This Way

Advertising

© Stephan Sorger 2016 www.StephanSorger.com; Marketing Analytics: Introduction 9

Models: Variables
Topic
Variable
Independent Variable
Dependent Variable
© Stephan Sorger 2016 www.StephanSorger.com; Marketing Analytics: Introduction 10
Description
Quantity that can be changed, or varied
Examples: Advertising budget, Sales
Variable whose value impacts dependent variable (x)
Controllable: Advertising budget
Non-controllable: Customer age
Variable representing marketing objective (y, or output)
Responds to changes in independent variable
For-profit: Revenue, Profit; Not-for-profit: Donations
 Models: Terminology: Linear Response Model

Y (Sales)
Dependent
Variable Y=a+b*X

b Y = Sales (Dependent Variable) (Output)

Y-intercept 1 a = Parameter: Y-intercept
(Sales level b = Parameter: Slope
Slope = rise/run = b/1
when x = Advertising (Independent Variable) (Input)
advertising
spending =0)
X (Advertising)
Independent Variable

© Stephan Sorger 2016 www.StephanSorger.com; Marketing Analytics: Introduction 11

Metrics
Topic Description
Definition Business-oriented key performance indicators
Examples: Sales per channel, Cost per sale
Purpose Monitor and improve marketing effectiveness
Take corrective action as necessary
Example: Marketing expense as percentage of sales
Metrics Families Groups of control metrics; Diagnostic & predictive info
Example: Sales metrics: sales/industry; sales/product
Metrics Dashboards Marketing automation systems
- Eloqua, Marketo, Pardot
Salesforce automation systems
Netsuite, Salesforce.com

Metrics Dashboard

© Stephan Sorger 2016 www.StephanSorger.com; Marketing Analytics: Introduction 12

Outline/ Learning Objectives

Topic Description
Definitions
Styles and Forms
Metrics

© Stephan Sorger 2016; www.StephanSorger.com; Marketing Analytics: Introduction 1

Let’s Get Started!
Participant Introductions
- Name Say your name clearly so others can hear you
- Reason for being here What you hope to learn in the course
- Geographical area Desired geographical area for team meetings
Listen for your area during introductions
During Class Break
- Meet with Others Meet with others from your area during break
- Contact Info Exchange email addresses & phone numbers
- Get to Know Familiarize yourself with others during cases

Example:
North Bay Team 1: SF-Marina
SF East Bay Team 2: SF-Downtown
Team 3: East Bay
Peninsula
Team 4: North Bay
South Bay Team 5: Peninsula/ South Bay
© Stephan Sorger 2016 www.StephanSorger.com; Marketing Analytics: Introduction 13