IPA|ED:final - existing customers

Joining up the dots: because we need a more holistic view of brand metrics

…because I believe brands should only invest in marketing
communications through existing users of their brand


Barriers to Scientific Measurement

Tim Ambler categorises five stages of sophistication in the
assessment of marketing; from Unaware to Scientific (see note 1).  Different corporations regard themselves as
being at different stages of this evolution (see note 2).  The ideal – based on a database of past and
current metrics, derivatives and diagnostics – is ‘Scientific’ (see note 3)
measurement, barriers to which are twofold.

Firstly, few companies have access to sufficient data, both
in terms of number of metrics but moreover in the consistency of any data over
time.  Secondly, the priorities of
organisations – and especially marketing departments – change over time, mitigating
consistent collection of metrics (see note 4).

The result of which is a further feeding for our collective
addiction for short-term acquisition gains as the primary metric of the result
of marketing effort.  Brands are
measuring and reporting acquisitions as a short-term proxy for longer-term
metrics that should be measured instead.

The right metrics

The creation and deployment of branded collateral to
existing customers and its subsequent communication to existing and potential
customers, requires a set of metrics to ensure success at several stages.

One, we need not just a database of current customers, but a
database capable of being cross-referenced across Ambler’s database of past and
current metrics, derivatives and diagnostics. 
This at its most basic permits us to know the value of our existing
customers; what’s the annual profit pattern and how long before they are likely
to defect? (They always will) (see note 5).

Understanding this is fundamental to addressing one of the
evaluation challenges necessitated by the adoption of the methods proposed in
this essay.  Most evaluation is centred
on acquisition.  To monitor retention you
have to gain an understanding of defection, but customers defect because of a
much broader and comparatively unpredictable set of reasons.

Two, we need to know which consumer touch points are most
relevant for and pertinent to existing customers; a playground for data
strategists with sufficient customer data. 
It is also important to understand the frequency of communication
required.  Every moment is an opportunity
for a customer to defect.  How
consistently or frequently should collateral be deployed?  This informs the brief for the creation of

Three, understanding of media consumption; specifically how
it’s consumed by both existing and potential customers.  Cross-referencing of existing and potential
customer data with media consumption panels – both proprietary (see note 6) and
industry standard (namely Touchpoints) – informs the Transaction planning
component of the process.

Four; metrics for advocacy and more specifically for word of
mouth – the most oft cited is the Net Promoter Score (NPS) (see note 7).  Despite initially being widely embraced by
the business community as a simple and comparable measure of loyalty and word
of mouth – which also handily correlated to business growth (see note 8) – its
importance has since been challenged (see note 9).  The debate revolves not however around
whether or not the NPS is a useful metric per se, but rather whether or not it
is the absolute metric for Loyalty. 
Consensus remains more than comfortable with the former; “The NPS has
been added to successful brand trackers … certainly a good use of the metric,
especially if it is presented alongside other word of mouth-related scores,
such as brand reputation or online buzz” (see note 10).

The online conversation is now large enough to significantly
indicate the levels of conversation within the wider population.  Tools for measuring this ‘buzz’ track not
only the extent of the conversations but also their polarity (positive versus
negative) and the relative influence of the conversation points (see note 11).

Difficult is worth doing

Even the best and most appropriate metrics if used
disparately will fail to give as complete an understanding as possible of our
activities and – more crucially – their adherence to any model (see note 12)
against which we base our hypotheses and actions.

Our ambition must be for a new and more holistic model based
on integration of the three data sets of CRM, advocacy (through word of mouth)
and media metrics.  There’s a perception
that our existing – acquisition-based – models of understanding are getting
better.  They’re not.  It’s the data we put into them that has
become consistently better over the last twenty years.

James Northway comments that “moving to this type of model
is going to require people to be a lot braver, because the measurement and
evaluation models don’t yet fully exist. 
‘Let’s put 80% on TV’ has an established formula … measuring
‘Transactions’ necessitates a much more holistic model” (see note 13).

Metrics shouldn’t be an add-on to attribute numbers to what
we produce for the brands upon which we work. 
Rather they should be an ongoing measurement to aid better understanding
of the contribution our efforts and activities make to the brand equity at the
bottom line of the businesses with which we work.

It may sound like a not-insignificant mountain to climb, but
we have a key advantage.  One of the most
important data sets is the one brands are closest to – their existing
customers.  We know – or should know –
more about them than any conceptual demographically-defined group of potential
‘consumers’.  The world is moving in our
direction; as the digital paradigm takes hold, it is facilitating not only the
accumulation but the understanding of that customer data.  It is our choice whether or not we take
advantage of it.


1. The five stages outline the generalised process through
which most companies develop thinking about assessment of marketing, and are 1.
Unaware, 2. Financial, 3. Many Measures, 4. Market focus and 5. Scientific

2. Nestle regarded them selves as being at the ‘Financial’
stage.  In this stage marketing
assessment is made purely on financial grounds, as opposed to the next ‘Many
Measures’ stage, in which a diversity of additional measures – such as
customer-based metrics – are used. 
Centrica described their organisation as being at this ‘Many Measures’
stage.  Duracell claimed to be moving
from the ‘Many Measures’ stage to the fourth stage; ‘Market Focus’.  In this stage the range of financial and
non-financial measures are consolidated into fewer more meaningful metrics,
which are presented to and assessed by the board.

3. At Ambler’s ‘Scientific’ stage; a “database of past and
current metrics, derivatives and diagnostics is mathematically analysed to
provide the shortest list of sensitive and predictive metrics.  Source: Marketing and the Bottom Line – Tim
Ambler, p79

4. Both of which are suggested by Tim Ambler in Marketing
and the Bottom Line

5. Method for calculating value of existing customers as
outlined by Frederick F Reichheld.  The
Loyalty Effect: The Hidden Force Behind Growth, Profits and Lasting Value.

6. ævolve’s CCS Study routinely asks it’s panel if they have
given or sought advice across twenty eight product and service categories.

7. Justin Kirby & Alain Samson.  Customer advocacy metrics: the NPS theory in
practice.  Admap Magazine, February 2008,
Issue 491.  “The Net Promoter Score is
based on the question 'Would you recommend [Brand/Company X] to afriend or
colleague', answered on a scale between 0 (not at all likely) and 10 (extremely
likely).  The score is computed by
subtracting the percentage of detractors (those giving 0–6 answers) from
promoters (9–10s).  The middle section,
between 7 and 8, is so called passives.”

8. Dr Paul Marsden, Alain Samson, Neville Upton, all London
School of Economics.  Advocacy Drives
Growth: Customer Advocacy Drives UK Business Growth.  05 September 2005.  Research by Marsden et al replicated work by
Bain/Satmetrix (F Reichheld: The one number you need to grow. Harvard Business
Review, December 2003) that demonstrated a correlation between the NPS and
business growth.

9. Tim Keiningham. 
The Net Promoter debate.  Admap
Magazine.  May 2007, Issue 483.  Simply put, we found no support for the
assertions attributed to Net Promoter. 
Our research clearly shows that claims of its superiority in predicting
firm growth, or in predicting customers’ future loyalty behaviours, are false”.

10. Justin Kirby and Alain Samson.  Customer advocacy metrics: the NPS theory in
practice.  Admap Magazine, February 2008,
Issue 491.  They go on to comment that “it
also represents the compromise many companies seem to have reached about the
NPS, namely to consider it one important dimension of a more complex mix of
customer satisfaction or brand health indicators”.

11. For example ævolve’s propriatory ‘onalytica’ tool tracks
online buzz

12. Kuhn – The Structure of Scientific Revolutions.  “There is no such thing as research in the
absence of any paradigm”.

13. Interview with James Northway, Joint Managing Director
of ævolve, part of Aegis Media.

Tomorrow: making it happen… Relentless Case Study


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s