Right Metrics October 6, 2015. Copyright © 2015 Accenture All rights reserved. 2 Discuss why...

Right Metrics

October 6, 2015

Copyright © 2015 Accenture All rights reserved. 2

• Discuss why effective use of KPIs is important

• Highlight approach for selecting and communicating appropriate KPIs

• Share key success factors and challenges to developing KPIs

Today’s Objectives


Data deluge is accelerating

Sky-high expectations:Customer and Marketing

Interactions are exploding and are

increasingly complex

Utilizing the right KPIs is imperative as data continues to explode and the accountability for Marketing increases

Key Trends Driving Importance of Selecting Right KPIs


Insight Generation Process

KPIs Help Drive Actionable Insights

Discrete objective facts about customers’ behavior, or explicit customer feedback

Understanding patterns, trends and relationships; Determining root cause

Action Plan to implement; Recommend improvement

Insight Generation Process

Observations from Metrics

HypothesisFrom Experience

Validate

Data Insight Action

Develop

KPIs are similar to the gauges on a car dashboard in two ways:

1. They are few in number, reducing distraction

2. They lead to important insights … conveying only the most relevant information to the journey at hand

– e.g., “We’re almost out of fuel”

Key Performance Indicators enable these insights


A KPI Framework is a strategic and structured approach to prioritizing KPIs. These KPIs are not a collection of all measurable metrics but only the most important for the business goals. The KPI Framework will include the following:

What is a KPI Framework?

1 Set clear, mutually exclusive business objectives and measurable goals

Prioritize and align specific KPIs for each goal

Define and align on calcualation methodology for each KPI

Develop data source for each KPI

Align objectives, goals and KPIs by key stakeholder group

2

3

4

5


KPIs Framework Benefits

Clarity

Reporting

Governance

• Clearly aligns KPIs to specific business goals• Consistently defined KPIs across business units

that provide visibility to business performance

• A clear structure of business stakeholders in which to communicate appropriate updates and insights

• Enable the creation of effective dashboards and reporting

“If you can’t measure something, you can’t understand it. If you can’t understand it, you can’t control it. If you can’t control it, you can’t improve it.” - H. James Harrington


Value Creator• Prioritize spend to meet

objectives, deliver growth and gain the highest ROIs

Execution Effectiveness• Measure performance of current

marketing activities

• Manage an increasingly complex, multi-channel customer experience

Business Operator• Effective develop and

communicate insights up and down the organization

Measurement of a Business LeaderMetrics are increasingly important for marketing executives to master as the role of marketing gains prominence in orchestrating customer experiences and driving business growth.


Increase EngagementWith Loyalty Program

Increase Personalization

KPIs Framework: Loyalty Program Assessment Example

KPI #9

KPI #1

Changes in Product Mix

KPI #2

Campaign Response Rates

KPI #3

Rate of New Acquisition

Member Sales PercentKPI #10

KPI #6

Growth of Customer Value / Share of Wallet

KPI #7

Social Media Links, Brand Posts

KPI #5 Rate of Active Members

KPI #8

Rate of Mobile app download

Rate of Points Earn and Redeemed

KPI #4

Improve relevance of messaging, promotions

Improve appeal of program / rewards

Increase Net Contribution to Enterprise

GOALS

1

2

OBJECTIVES KPIS

Improve Financial Performance

3

Influence shopping behaviors

Increase engagement with Program across channels

Sales Lift

Profitability per TransactionKPI #11


KPI Usage Options

AssessmentsProjections Optimization

Objectives:• Analytics• Test and Learn

Budget Cycle

Objectives:• Campaigns • Loyalty Program• Financial results

Objectives:• Objective setting• Case for Change

Objectives:• Organization• Investment

decisions

KPIs are used to support multiple initiatives within the organization


Metric Definition Calculation

Example Metrics: Digital, Acquisition, and Campaign Performance

Understand channel strategy by measuring key customer segments

1A. Digital

Cost per Action Online advertising pricing model where the advertiser pays for each specific action

Cost per 1000 times ad viewers takes action

Conversion rate for display ads, search

Number of desired outcomes per click for display ads / paid search Number of desired outcomes / number of clicks

2A.Acquisition Campaign

Performance

2D. Branding & Customer Experience Analytics

Customer contact volume

Average number of customers contacted per campaign per year Number of customers targeted annually / campaigns

Response rate Percentage of the total campaign population responded to the campaign by outreach channel: DM, email, digital, social, outbound tele-call channels

Number of customers who took desired action / total customers

Campaign Click-through rate

% impressions that lead a user to click on an ad Number of click-throughs / Number of impressions

Net Promoter Score

Score of people who would recommend brand’s products and services to their colleagues, allows understanding of brand reputation

Percentage of promoters – percentage of detractors

Customer Experience Index

Program evaluation captures emotional attributes such as whether customer feels happy, cared for and respected

Survey data measured on 100 points

Percent of engaged members

Number of customers that have >1 transaction or interaction per month within the past 6 months

# of customers have transaction or interaction / total members

1. DM represents Direct Mail


Metric Definition Calculation

Example Metrics (Continued):Loyalty, Customer Segmentation, and Financial

Understand customer segmentation and financial metrics

4. Financial

% spend allocated to each channel

Expenditure allocated to digital, social, mobile, in-store, print, etc. Expenditure per channel / total expenditure

ROI by channel The incremental business generated by DM, Email, Internet, Telephony based on the responses

Incremental revenue – campaign cost / campaign cost

Acquired customer cost

Average cost of acquiring new customers Total cost incurred / number of new customers acquired

2F. Loyalty

3. Customer Segment-

ation

Customer loyalty % of customers who repurchase the organization’s products and services

# of customers repurchased / total existing customers

Total churn rate The % of customers who have switched to another provider (complete) or stayed and added another provider (partial)

Complete churn + partial churn

Customer satisfaction score

Percent of total customers whose reported experience (ratings) exceeds specified satisfaction goals

Number of customers exceeds satisfied / Number surveyed

Top / High Potential Shoppers

Top 5% (top) to 15% (high potential) of sales to better understanding of behaviors and more robust personalization

Spend in top 5% / 15% (or # of Transaction, Profitability,Program Engagement

Category Mix Measures diversity of categories that the customer shops - % of total departments transacted

# of departments transacted / # total departments in store

Participation rates

Measure performance against goals, other segments and total customers

# of transaction, average basket size, campaign response rates


Stakeholder Objectives KPI Types

• Define vision• Establish high level goals• Hold leaders accountable• Provide guidance for future

actions

• Strategic level KPIs to measure marketing effectiveness, efficiency and productivity

• Drive continuous improvement in business performance

• Communicate actionable insights to C-Suite

• Deliver coaching to enable outstanding customer experience

• Operational level KPIs to track the effectiveness of marketing programs, budget utilization and marketing program efficiency

• Successfully execute strategies / programs

• Engage customers personally and productively

• Communicate feedback / enhancement opportunities

• Customer level KPIs to provide insights to better serve customer

• Operational level KPIs to track performance

KPI Communication: Different KPIs for Different StakeholdersThere are different communication objectives at every stage of management, each requiring different metrics

C-Suite

Functional Managers /

Process Leaders

Frontline Team Members

Copyright © 2013 Accenture All rights reserved. 13Copyright © 2013 Accenture All rights reserved. 13

KPI Communication: Program Dashboard

Organizational Unit

Executive Actual Goal

Previous 3 month average

Profit from Transactions 65% 70% 57%Revenue from Transactions 45% 40% 42%Transaction Completion Rate 55% 54% 51%Customer Loyalty (Repeat) 24% 23% 21%Average Customer Life time Value 40% 50% 34%Net Promotor Score $525,234 $500,000 $475,000Approvals from Risk $52,523 $55,000 $48,000IT Combined Uptime, Error Rate, and SLAs 3.7 3.8 3.6

Organizational Unit

Operations Actual Goal


Site Transaction Completion Rate 65% 70% 57%Site Task Completion Rate 45% 40% 42%Mobile Transaction Completion Rate 55% 54% 51%Mobile Task Completion Rate 24% 23% 21%Percentage Online vs Offl ine (Trans and Tasks) 40% 50% 34%Revenue from Transactions $525,234 $500,000 $475,000Profit from Transactions $52,523 $55,000 $48,000Customer Satisfaction (from funnel) 3.7 3.8 3.6

Organizational Unit

Marketing Actual Goal


Campaign Conversion Rate 65% 70% 57%Net New Accounts 45% 40% 42%Net New Visits 55% 54% 51%% Repeat Visits 24% 23% 21%Bounce Rate 40% 50% 34%Return on Marketing Investment $525,234 $500,000 $475,000Net Promotor $52,523 $55,000 $48,000

Organizational Unit

Risk Actual Goal


Approval Path 65% 70% 57%Declines 45% 40% 42%Decision Possible 55% 54% 51%Write Offs 24% 23% 21%Organizational Unit

Product Actual Goal


Online Transaction Success Rate 65% 70% 57%Principal from Transactions 45% 40% 42%Send Money Success Rate 55% 54% 51%Limits Reached 24% 23% 21%

Example

A Program Dashboard is a one-page summary of program status in the form of KPIs


Data Challenges

To ensure a smooth reporting process, data challenges and solutions must be

addressed

Metric Definitions Data

• Data quality issues reduced confidence in the reporting

• Data is silo’ed within business units or technology platforms preventing the development of a comprehensive view

• KPI definitions / methodologies are often not standardized across business units and technology platforms

Technology

• Limited technology capabilities to provide data from customer interactions

People

• Organization has limited resources with the skills to perform analytics, reporting

• No clear ownership of reporting, results in duplicative / irrelevant / conflicting reporting

Carl Horton

NA Loyalty Practice LeadAccenture Interactive

+1-203-895-2837

[email protected]

RetailCMT

Allie Cripps


+1-415-503-7448

[email protected]

Financial ServicesHospitality

AI’s Global Loyalty & Rewards Practice is part of Digital Marketing

Digital Marketing Global Offering Lead: Glen HartmanDigital Marketing Community of Practice Link

Global Loyalty Lead: Farrell HudzikCampaign Management, Mktg Op Model, MRM and Loyalty Community of Practice Link

ACCENTURE INTERACTIVE

David A Slavick

Analytics / Loyalty Practice SMEAccenture Interactive

+1-224-357-8216

[email protected]

Retail Focus: Specialty, Big Box,

Grocery/Drug, Convenience, Pure Play E-commerce

John Weigman


+1-

@accenture.com

Technology Solutions

https://kxsites.accenture.com/groups/OF002514/default.aspx



Appendix


Example Categories for Measurement

1. Channel Engagement

Digital

2. Campaign

MobileSocial

PrintIn-store

Direct MailEmail

Acquisition CampaignSales Campaign: Cross-sell / Upsell

Win back Campaign

Employee Incentive CampaignBranding Campaign

3. Customer

4. Financials

Demographic segmentation

Life-stage segmentation

Life-cycle segmentation

Value Segmentation

Behavioral Segmentation

Sales and Costs

Impact

Time to market

Loyalty Campaign

1A. 1B. 1C. 1D. 1E. 1F. 1G.

2A. 2B. 2C. 2D. 2E. 2F.

3A.

3B.

3C.

3D.

3E.

4A.

4B.

4C.


The funnel is useful when discussing overall Marketing Effectiveness (ROMI) and Operational Effectiveness (Conversion Rate) and can be applied to many different functional areas.

Conversion Funnel Example

Eyeballs / Awareness

Raw Visits to Website

Initial Learning Phase

Registration

Get Support

Engaged Learning

Complete TaskComplete Transaction

Loyalty Participation

Advocacy &

Promotion

Risk Optim

ization • IT Effectiveness Optim

ization

Custo

mer

Exp

erie

nce

Opt

imiz

atio

n • S

uppo

rt (C

onta

ct C

ente

r)

Start Transaction

Key Decision Point

No perceived benefit from advocacy

Not yet qualified or engaged

Not yet qualified or engaged, OR chooses to transact offline

Risk decline, user errors & usability issues, IT barriers

Risk decline, user errors & usability issues, IT barriers

Low satisfaction, lack of awareness of or interest in loyalty programs

Not yet qualified or engaged

Fallout

Satisfied, Loyal customers respond to product offerings Loyalty Program benefits and generate repeat transactions.

Customer Advocates generate new awareness of brand, services and website to more qualified prospective Visitors.

Satisfaction


Campaign Reporting Process

While reporting is often thought of as a post-campaign process, it can only be

successfully developed with some foresight before campaign launch

Trigger Stakeholders & Objective

What to Measure Which Metrics

• Determine whether a trigger has been set which requires metrics and reporting

• List all stakeholders and determine their key objectives

• Determine which metric buckets are relevant for the program you are measuring

• Outline the ideal report per stakeholder including metrics and level of detail (daily, monthly, YoY)

• Note overlaps• Define each metric

1 2 3 4

Challenges Execute Campaign Campaign Insights

• Preemptively determine data challenges to creating reports

• Work with key stakeholders to develop solutions, work-arounds or next-best-metrics

• Measure campaign periodically to • Ensure campaign has

been executed properly• Confirm data and

metrics are accessible and complete

• Check for quick optimization opportunities

• Develop full campaign measurement reports with KPIs

• Determine insights and recommendations for future campaigns

5 6 7


How am I performing?

Key Questions to be Answered

Key Questions

Segment Dimensions

Consumer Traits Consumer Traits Behavior Profiles Channels Assessment

Data Views

Who are my customers, their value, profiles,

spending and trip behavior?

WHO?

What are customers placing in their

baskets, and what are their buying patterns?

WHAT?

What marketing and merchandising

activities are driving purchase behavior?

WHY?

How does my customer population align to stores, other

channels?

WHERE?

StoreResponse

Online Response

BasketContent

TripType

BrandResponse

PromoResponse

Demo –graphics

Price

Lifestage

ProfitMargin

Assortment

SpendProfile

TripFreq.

StoreFormat

HOW?

SalesCust-omers

Loyalty

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