Samples
PMP Update
Catalogue Effectiveness and ROI
Financial and brand equity metrics
The need for marketing metrics
In recent years, much has been written about marketing metrics. There has been a strong push to be more precise about the impact of marketing on bottom line results.
It's no longer good enough to have a positive feeling about marketing implementation.
Accountability, measurability, ROI, shareholder value, tangible results and marketing effectiveness have all become central in the life of marketers.
Yet, as simple as it sounds, Return on Investment, is not a straightforward concept.
Marketers in the field have lots of different ideas about how ROI applies in their business. But despite this range of views, all marketers agree on one truth about measurement. Increased shareholder value should be the ultimate goal of any accountable marketing activity.
Hard measures are important, such as incremental business gained and increases in individual customer spend. But equally, soft measures such as customer satisfaction and the response to added services are also vital.
Power of catalogues had to be documented
In the case of catalogues, retailers have long been aware of how powerful home delivered catalogues can be. Yet there has been very little proof. Until now.
Marketers in Australia today spend more than $1.6 billion annually on the production and distribution of catalogues.
With such expenditure there have been louder and louder demands for marketers to understand the effectiveness of catalogues. Information is required about the bottom line effect and the impact on perceptions about the brand.
In this environment, PMP Distribution has acknowledged that marketers and their senior managers want to know about the sales uplift that catalogues can generate.
Up to now, producing reliable figures has been difficult. How can you attribute sales to a catalogue when other advertising channels are active in the same marketplace?
Current measures
The measures available today include:
- Sales at company level during catalogue sale periods.
- Sales at store level during catalogue sale periods.
- Sales of products featured in catalogues.
Such figures are always interesting, of course, but they are limited in their scope.
Critical questions
The really crucial data that catalogue marketers want relates to incremental value:
- What proportion of sales would have been made anyway with no catalogue distribution?
- What precisely is attributable to a catalogue?
PMP Distribution has now invested time and effort to uncover the type of measurable information that professional marketers so badly want.
For users of the letterbox channel, there is now accurate data available.
The new approach to measuring catalogue effectiveness recognises that catalogues need to act as a “shop window”. In particular the new approach offers:
- Meaningful and actionable insight;
- Quantifiable metrics that make sense to the CEO and the CFO; and
- A feedback loop after each catalogue distribution that can lead to better future targeting.
Freedom Furniture: the much-needed proof
PMP Distribution teamed up with national retailer, Freedom Furniture, to carry out a project based on analysis of customer and sales data. Freedom has 58 stores across the country and a transactional database of 1.5 million. The well-known Freedom Furniture catalogue represents a substantial ongoing investment.
The PMP Distribution project, involved selecting two CCD areas for analysis. The chosen CCDs were of equal distance from a Freedom Furniture store. They both enjoyed the same geodemographic characteristics. But one CCD received a catalogue distribution and the other did not.
For this sort of exercise, the retailer needs to have a transactional database so the sales can be tracked. In this case, the average household spend in the two CCDs was compared.
The catalogue achieved a whopping 40% uplift in average household sales. The project did its job. The effectiveness of the catalogue was proven.
Suddenly, with a 40% increase in sales, the annual investment in catalogues was seen in the correct perspective.
Little wonder that Freedom Furniture has been a 2003 and 2004 Catalogue Award Winner and is an ADMA Effectiveness Award Finalist in 2005.