MAXIMISING TOUCHPOINT ROI. What a professional touchpoint management system needs to deliver

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1 What a professional touchpoint management system needs to deliver

2 Introduction Investment decisions on marketing activities are often made based on gut feeling. While there are great examples of people making excellent decisions using intuition - just think of Steve Jobs - success without clear direction can be a long and difficult journey. A touchpoint management system needs to provide insights from an objective, mathematical perspective to help you make better decisions, improve your marketing performance and overall profitability. We live in a time of fundamental change from the media landscape to ever changing consumer behaviour and needs. This is mainly due to the evolving digital revolution and marketing managers need to be on top of these developments. In this paper, you will find: 1. Case study: Optimising touchpoint investment by channel 2. A professional touchpoint management system 3. How to maximise touchpoint impact by simulating different scenarios The more dynamic the market, the greater the benefit of a professional touchpoint management system.

3 1. Optimising touchpoint investment by channel

4 1 Case study: Optimising touchpoint investment by channel The challenge Our client specialises in real estate and construction financing. As a new player in the market they compete with well-known full-service banks. Driving brand awareness, converting awareness to consideration and strengthening brand engagement among potential customers are key to growth in this market. To successfully launch a campaign across all relevant channels, they needed to understand which touchpoints have most impact on awareness and brand equity. They also needed to understand return on touchpoint investment to reallocate budgets across touchpoints and run brand communications more efficiently. Touchpoint optimisation Analysing 28 different touchpoints, we found that digital ones like search engines and comparison websites, have the highest impact on awareness for our client s brand. The brand website - as the next logical step in the customer journey, shows high potential for increasing the conversion rate and creating real engagement, provided that its poor quality is improved. Further, our results suggested that spend on comparison websites and print ads could be reduced, without risk, to free up resources for more effective touchpoints, such as search engines and online banners.

5 1 Case study: Optimising touchpoint investment by channel A stronger return on touchpoint investment After the first wave of results, our client improved their website landing page that search engines drive traffic to. They also reallocated spend in line with our recommendations from our Budget Optimiser analysis, developed in cooperation with the University of Cologne, Germany and the University of Technology in Sydney, Australia. A year later, a follow-up survey showed a much-improved touchpoint impact compared to the initial results. The conversion rate from awareness to consideration had also slightly improved. In particular, the website s impact on brand equity had grown notably, with customers appreciating its clarity and simplicity. Reach remained stable for print and comparison websites, despite lower spend, and in turn, the higher spending on search engines and online banner ads had resulted in greater reach. Reallocating marketing spend leads to higher return Lower spend if possible Real estate portals/comparison website -34% spend Print advertising -25% spend (in US dollars) (in US dollars) +12% reach STABLE reach In order to increase spend when necessary Search engines -36% spend Online banner -29% spend (in US dollars) (in US dollars) +9% reach 37% reach

6 2. A professional touchpoint management system

7 A professional touchpoint 2 management system To accelerate business growth, an effective touchpoint management system must be based on a convincing concept in combination with appropriate data. A conceptually sound touchpoint approach meets the following criteria: view no blind spots Think beyond paid media. Our research gives clear evidence that paid media, e.g. TV or online banner ads, only explain around 25% of the overall success. For example, in the retail sector, service staff can make a big difference, and in the automotive sector it can be important that new car models are seen on the road. 2. Adaptive The importance of touchpoints can change from industry to industry and country to country. For one of our banking clients in Northern Europe we saw that the use of a peer-to-peer payment app was a highly relevant touchpoint. In other markets, the usage rate of these apps was below 1%. 3. Link to brand equity The ultimate business goal is to sell, sell, sell. We all know it. However, companies will not survive by short-termism alone, and this has been proven many times in history. Therefore, a sustainable management system also needs to explain how touchpoints help to build longterm brand equity. Brand equity ensures greater future returns and higher willingness to pay for your company s offer.

8 A professional touchpoint 2 management system 4. Alignment to strategies Touchpoint management systems need to be adapted to the specific business and market situations. For example, if a brand has agreed a three year contract for a sponsorship event, the recommendation shouldn t be to stop investing next year. 5. Touchpoint quality Touchpoint reach is highly relevant, but it is not sufficient. You also need to understand the quality of the touchpoint experience - how it influences the consumer s attitude, thinking and behaviour. Figuratively speaking, if you are running in the wrong direction, it doesn t help increase the speed. 6. Synergies There are many touchpoints you can influence directly, especially those with clear media spend like TV ads. Others can only be influenced indirectly, e.g. recommendation by friends and family. Analysing the synergy effects between them helps to gain control over all touchpoints. If you are running in the wrong direction, it doesn t help increase the speed.

9 A professional touchpoint 2 management system A touchpoint management system is only as good as the data that goes into it. There are clear requirements for data collection and modelling: 1. Data collection You must collect the data where your consumers are - increasingly online on mobile devices. Mobile devices are valuable both for passive data, e.g. from cookie tracking or metering, and for survey data. 2. Shorter and more relevant surveys Everyone is experiencing an overload of information, both on and offline. It is extremely challenging to get data from consumers - surveys therefore need to be quick, entertaining and only ask for relevant information. 3. Competitors data Your own touchpoint management is only as strong as your competitors. For example, offering a two-year warranty could be quite appealing - unless your competitors offer a sevenyear warranty. 4. Non-linear effects We know from our own decision making, and from research on behavioral economics - the relationship between a stimulus and the behavioural outcome isn t linear. The rule of diminishing marginal returns also applies to investment in touchpoints. Be sceptical about any approach that shows linear effects.

10 3. How to maximise touchpoint impact by simulating different scenarios

11 How to maximise touchpoint impact 3 by simulating different scenarios Let s be honest. Ultimately, all a marketer really wants to know is: how can you make the most impact with your marketing investments? How do I get a bigger bang for my buck? To answer this question, you first need to clearly define which return or impact metric you are looking to optimise, e.g. sales, brand equity, or another KPI. You then need to understand how you can optimise this metric via touchpoints. A quick and easy way would be to assume that the more marketing dollars the greater the return. This is the philosophy behind the so-called REMI (Relative Efficiency of Marketing Investment) score. It compares a touchpoint s contribution to a KPI to the share of spend. For example, if an online ad generates 20% of your touchpoint impact but only requires 10% of your spend, it is efficient, relative to other brand touchpoints. The same logic can be applied when benchmarking your touchpoint spend efficiency to that of competitors. Relative Efficiency of Marketing Investment (REMI) Touchpoint experience share (%) across brands and touchpoints Brand A Brand B Brand A 0.8% 7.5% 8.1% Share of spend (%) across all brands and paid touchpoints 5.5% 0.9% 9.8% REMI-score (Relative Efficiency of Marketing Investment) Brand B 0.5% 0.6%

12 How to maximise touchpoint impact 3 by simulating different scenarios REMI gives you a first idea of where your investment should be lowered and where the budget should be shifted. It cannot, however, tell you exactly how much money should be shifted. This is because the relationship between spend and impact is not linear, but rather an S-shaped curve with diminishing marginal returns. At a low investment level, every extra dollar tends to have a relatively high impact, but from a certain tipping point onward, impact tends to flatten out. However, if the brand already invests a large amount in TV it is not efficient to increase spend further, since the additional return is rather low at the flat end of the response curve. Depending on the current investment in radio, it might be more advisable to invest in radio ads instead, since the additional money spent might result in a higher return. S-shaped response curves Return more efficient less efficient TV Ads More effective Radio Ads Less effective Furthermore, the shape of these curves is different for each touchpoint and depends on the specific brand and market. For example, a brand s TV ad might generate more impact than its radio ad. Touchpoint investment

13 How to maximise touchpoint impact 3 by simulating different scenarios To accurately determine how much money should be reallocated, you need a touchpoint management system that makes use of these non-linear, market- and touchpoint-specific response curves to maximise return on touchpoint investment. The Connect Budget Optimiser featured in our case study has been designed to fulfil all the requirements of a modern and powerful touchpoint management system. By integrating heuristics from Nobel Prize winning research on behavioural economics, it offers excellent predictive power for market growth. The Connect Budget Optimiser simulates shifting small amounts of money in several iteration steps between all touchpoints where a brand is active, until an optimal allocation is found. It also takes synergy effects between touchpoints into account, even between paid and non-paid channels. For example, greater investment in TV advertising might lead to more recommendations, therefore resulting in higher impact for both touchpoints. The pure efficiency of a touchpoint does not yet tell you if you should invest more or less.

14 How to maximise touchpoint impact 3 by simulating different scenarios Keeping this in mind, our Budget Optimiser addresses three key business questions: 1. How can I best reallocate my existing budget to generate more sales (or maximise another KPI)? 2. How much budget can I cut without significant impact on my KPI? 3. What would happen if I improved the quality (content/messaging) of certain touchpoints? This easy-to use tool allows point-in-time simulations of various budget allocation and quality scenarios. In comparison to traditional econometric models, e.g. marketing mix models, there is no need for extensive data collection in order to run time series analyses. Even in poor-data markets our budget simulation is available and allows harmonisation of research across the world. In summary, the Connect Budget Optimiser provides a professional and easy to implement 360 touchpoint management system providing clear and actionable recommendations on how to make the most of your marketing investments. Budget Optimiser simulates optimal allocations of marketing spend Maximise impact Given a specific budget, maximise sales or brand impact of touchpoints Minimise budget Cut budget accordingly to a given sales or brand impact Fix touchpoints Decide which touchpoints can directly be controlled by change of spending Synergy effects Fixed touchpoints will be considered in optimisation via synergies with other touchpoints Define boundaries Set the upper and lower bound of possible touchpoint investments Set iterations Define the number and optimisation of steps of touchpoint allocations Response curves Adopt response curves of every touchpoint according to market experience

15 Connect with us Kantar TNS is one of the world s largest research agencies with experts in over 90 countries. With expertise in innovation, brand and communication, shopper activation and customer experience, we help our clients identify, optimise and activate the moments that matter to drive growth for their business. We are part of Kantar, one of the world s leading data, insight and consultancy companies. Find out more at Dr. Niels Neudecker VP, Head of Global Connect Centre US, New York niels.neudecker@kantartns.com Maren Seitz Associate Director, Global Connect Centre Germany, Munich maren.seitz@kantartns.com Nicola Niesl Senior Consultant, Global Connect Centre Germany, Munich nicola.niesl@kantartns.com

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