Quantifying marketing return on investment, or MROI, has traditionally been hit and miss. But now marketers are using cloud-powered dynamic econometric models to show CEOs and CFOs their marketing investments are driving business results – and to spell out the declines that would occur if they were to cut marketing budgets.

Meanwhile, as digital marketers’ ability to track people using cookies and online identifiers is removed by platforms and regulators, the ability to perform faster media mix modelling is rapidly climbing the CMO agenda.

Which is why Mutiny’s WarChest platform is being deployed by the likes of Samsung, Bank of Queensland Group and CUB. The brands are making more informed marketing investments as a result – and boosting credibility with the board.

Shift investment, power balance

Melody Townsend, GM for Retail Marketing at Bank of Queensland Group, says that while she’s long used econometric modelling, its focus had been limited to digital metrics and inputs that did not necessarily tally with hard business goals.

That is now changing, with WarChest-powered MROI models enabling the bank’s marketing team to better engage finance and top management earlier in the planning process and demonstrate how marketing investment is contributing to growth – but also to explain the broader variables at play.

“Like any other company, marketing budgets continue to be challenged. Media costs are spiralling upwards, we're always trying to reduce expenses across the organisation and marketing is an easy area to take dollars from,” she explains.

“How do we demonstrate to the finance department that marketing should not be seen as a cost, but as an investment in incremental sales?”

The ability to demonstrate MROI is therefore essential, she says.

Defend marketing budgets

“We had a situation last year where ME’s enterprise expenses had gone too high and they need to claw-back some of the marketing dollars,” says Townsend.

“The conversation we started with the business was ‘if you took the first 25 per cent, here’s what it would mean for incremental sales. Here’s what it would mean if you took 50 per cent, and here is what it would mean if you took the lot’.

“It was the most compelling conversation with executives and the finance department in recent times,” says Townsend.

“In the end, finance agreed to take 50 per cent – and I think that is testament to this collaboration [enabled by better econometric modelling]. Everyone is trying to get on board with the data and the insights – and that was the first time it was actually reflected in the amount of dollars we had to hand back.”

One year on, those projections have been proven correct, says Townsend.

“There is consistency in what we are driving in the home loan business by way of applications and settlements – and that continues to be the case.”

More power to marketing

Mutiny co-founder and Managing Partner, Henry Innis, says WarChest enables brands to “take the data out of the data science department and into the marketing department.” He says the platform generates the “so whats”, or the insight from the data, to validate decision-making.

That means instead of getting buried in curves and trying to plot investment levels, “we’re automatically setting those ranges as they change; we can tell the marketer whether they are overinvested, underinvested or effectively invested in [any given] channel”, claims Innis.

“So the more we can generate those ‘so whats’, the more we can empower every single decision.

Changing the ROI conversation

Bank of Queensland Group has also used sharper MROI insights to change the metrics of success for ME Bank, shifting away from cost per acquisition to a greater focus on lifetime customer value.

“There was a focus on acquisition volumes and cost. But that is actually not the right metric, because trying to drive the lowest cost per acquisition does not result in the best customer quality,” says Townsend.

“Instead, lets focus on the ROI we’re trying to generate and optimise towards that. It may mean that we’re spending more to acquire a customer – but the quality and longevity of that customer is going to mean more to the business.”

Townsend anticipated “pushback” from the finance department when she presented the need to change tack and realign targets.

“I thought they would say ‘no, that is the number we agreed at the beginning of the year’. But the conversation about bringing in quality customers – albeit fewer of them – has been extremely well received,” adds Townsend.

Has it worked?

“A home loan customer is a multiyear [proposition], so we’ll need more time to prove that out,” she says. “But the early indications across our everyday transaction and online savings accounts suggest that is certainly holding true.”

Build better business cases, credibility

Mutiny’s Henry Innis thinks unlocking insights around more meaningful business goals will help marketers move the needle as well as gain corporate credibility.

“I think cost per acquisition has been confused with return on investment; we have all of these efficiency metrics focused on driving down the cost per lead or whatever it may be,” he says.

“But MROI should actually be looking at the revenue, the longevity, the value of a customer throughout the complete lifecycle. It should not be focused on the value of that customer at the point of acquisition.”

“In a performance-driven market, we need to be able to put a financial case around these things – and that’s what MROI can do.”
 

Hear how top marketers from Bank of Queensland Group, Samsung and CUB are putting WarChest to work via this podcast from Mutiny and Mi3.