The Missing Element in Marketing Measurement
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The document highlights the significance of including a 'voice of the customer' metric in marketing measurement, specifically through the Social Engagement Index (SEI), which quantifies customer experiences by analyzing social media commentary. The SEI has demonstrated a strong correlation to sales, with evidence showing it as a major driver of brand performance in marketing mix models. Michael Wolfe argues that understanding customer experiences offers valuable insights into brand performance and opens new opportunities for marketers.
The Missing Element in Marketing Measurement
- 1. The Missing Element from Marketing Measurement
- 2. Overview • Marketing-mix models have been a critical tool for helping marketers understand and quantify marketing effectiveness. • Nevertheless, something significant has been missing from these equations. That missing element has been the “voice of the customer” or a metric reflecting customers’ every-day experience with individual brands.
- 3. Overview • Michael Wolfe, of Bottom-Line Analytics, illustrates the importance of this issue and omission here. • This approach derives a customer-experience metric for various brands by converting textual experiential comments from social media into a metric. Called the Social Engagement Index or SEI, this metric converts these text into a time based metric using a set of linguistics and language rules, scoring emotions and personalization while accounting for special subject- matter context
- 4. Overview • The SEI as a metric has proven to be a strong predictor. In its application over a dozen categories and 18 brands, it has shown an average statistical correlation to sales of 75 percent! • When employed within comprehensive marketing mix models, the SEI has shown to be the largest single driver of brand sales. Within the context that this metric truly is a measure of the customers’ brand experiences, this should be no surprise. Providing a positive day-to-day experience at every usage touch point is, indeed, a most important driver of brand performance and sales!
- 5. The correlation* to sales over time shows the SEI™ has Predictive Power 5 SEI validation: four categories. Strong linkages and correlations of SEI to sales Correlation = 86% Correlation = 84% Correlation = 81% Correlation = 83% Correlation = 83% *Lead lag analysis has confirmed that causation is only one way – the SEI™ to a large degree is able to drive hard commercial metrics.
- 6. Recent Marketing-Mix Model cases show the customer experience (SEI earned media) as the largest sales driver 44.9% 9.1%4.0%2.2%1.8%2.3% 5.9% 29.8% Brand Gamma Decomposition of Sales Baseline TV Print Radio Owned Digital SEO Paid Digital Mobile Paid Digital Search Customer Experience Earned Digital Social SEI 54.1% 5.5%1.5% 4.4% 2.1% 2.8% 5.9% 23.7% Brand Beta Decomposition of Sales Baseline TV Print Radio Owned Digital SEO Paid Digital Mobile Paid Digital Search Customer Experience Earned Digital Social SEI 60.4% 4.5% 2.1% 3.3% 1.1%2.1% 5.3% 21.2% Brand Alpha Decomposition of Sales Baseline TV Print Radio Owned Digital SEO Paid Digital Mobile Paid Digital Search Customer Experience Earned Digital Social SEI 64.8%1.5%0.2%0.3%3.6%0.1%1.8% 27.8% Brand Omega Decomposition of Sales Baseline TV Print Radio Owned Digital SEO Paid Digital Mobile Paid Digital Search Customer Experience Earned Digital Social SEI
- 7. Summary & Conclusion • This document makes a case that there is an important and critical missing factor from today’s marketing measurement and that is a measure of the customer experience. This is a day-to-day measurement of a customer’s brand usage and experience. • By leveraging a highly linked social media metric representing this customer experience, Michael Wolfe illustrates the size and important role that the voice of the customer plays in driving brand performance. By measuring and monetizing this via a classical marketing mix model, it illustrates a whole new path of insights possible from this recurring exercise and also opens an opportunity to better understand the “whys” behind brand performance directly from the “voice of the customer”.