Written by Suresh Chaganti Feb 14, 2021

Why it is hard to analyze Marketing Performance

As a business leader, you want to keep a close eye on your metrics to understand how your business is performing.  But any single metric such as revenue, average order value by itself does not convey the whole picture. How do you know which data points are most important? What to trust? How to value them? It’s not uncommon to feel like there are more questions than answers.

At VectorScient, we see this very often. That’s why we built this free tool, to help you not only understand what is working and what isn’t working, but what you should be doing next. Only a holistic look at a number of metrics together will give an insight into what is working and what isn’t. 

With just three pieces of information, we’ll let you know in a few minutes, how your marketing is performing and offer guidance on how you can improve your business. It’s fast, it’s simple, and it’s powerful—giving you the information you need to set your business on the path to success. 

Who is this tool built for?

The Marketing Performance Estimator is designed for business leaders responsible for running profitable e-commerce businesses. With just a few simple inputs, the estimator can help you identify which aspects of your business are working well, along with those that are cause for concern. A fully customized report will offer several additional insights to help you make the right steps towards improving the health and performance of your business.

How the tool helps assess business performance

It’s not always easy to get a sense of overall business performance—not because you don’t know what you need, but because what you need is often difficult to measure. The estimator doesn’t just provide superficial metrics to tell you things you already know, but relevant insights you can put to work right away. 

Business performance can be an abstract concept, especially if you don’t care to break it down. Many businesses focus on superficial or narrowly defined metrics: revenue, ROI, Year-over-year Sales, etc. Those metrics, while helpful, don’t usually provide a holistic perspective of business performance—let alone the relationship between marketing and sales. A complete understanding of those metrics and the relationships between them will allow you to make informed decisions that can help you optimize marketing costs, maximize profit margins, expand your customer base, and extract maximum value from each and every customer.

At VectorScient, we’ve made it our mission to put your data to work and help you fully understand how your business is performing. With that purpose in mind, we’ve created a tool that helps you understand not only where you are in your business journey, but what the next step should be to reach your goals.

What you will learn

We designed the estimator to deliver maximum value with minimal information. With just three simple and distinct pieces of information, we can help you unlock powerful insights, including: 

  • How your business is performing in acquiring new customers
  • How effective your retention efforts are
  • Whether your promotions have been impactful, or whether they are too aggressive
  • Whether your operational costs are at risk of increasing
  • If your profitability is at risk of eroding
  • If you have customer concentration risk

Why we created the estimator

Our goals for the estimator are simple. We want e-commerce marketing leaders to:

  1. Use this estimator as a compass to better understand where they are in their business journey.
  2. Based on this self-assessment, confidently take decisive action to improve the performance of their business.

Our success is tied directly to our ability to create value for our customers. With that in mind, we conceived and designed this free estimator to take the fewest inputs possible and generate the most insightful, valuable outcomes for marketers.

Your ability to use the free estimator for yourself brings us one step closer to our mission of unlocking the full potential of data and analytics for your business. 

What information is collected

We understand the sensitive nature of the data you provide. We do not share the data with anyone else, and we never will. Only summary information, measured annually, is required to use the estimator. With as few as three distinct details, we can provide critical insights into the health of your business. In order to use the estimator, you will need: 

  1. The number of customers in your database at the end of 2020 and 2019.
  2. Total Revenue in 2020 and 2019.
  3. The total number of orders in 2020 and 2019.

How we process the information you provide

The estimator will interpret the essential information you provided, serving up insights into the strength of your business performance and any risks you should keep a close eye on. 

We compute three derivative metrics:

  • Percentage of Change in Average Revenue per customer (Year 1 and Year 2)
  • Percentage of Change in Revenue (Year 1 and Year 2)
  • Percentage of Change in Average Order Value (Year 1 and Year 2)

Each of the metrics can show a decreasing or an increasing trend. Several combinations of trends and scenarios are possible. 

Each scenario reflects your current business performance as well as potential risks, and each possible combination has implications on how to interpret your marketing performance at large. The interpretations are created to provide qualitative commentary on your marketing performance that can be used to map where you are and what your next steps should be.

What the various outcomes are

A calibrated final score is computed based on the various derivatives, metrics, and percentage of change measured in the 2 years of information you provide. 

Depending on how your marketing and sales have been performing, several combinations are possible. Some examples are:

  1. Overall revenue is increasing, and revenue per customer is increasing, but average order value is declining.
  2. Revenue is showing a declining trend, yet the average order value is increasing.
  3. Revenue per customer is declining, along with the average order value.

Visit https://content.vectorscient.ai/marketingperformance to see your business score and understand what it means. Below are some sample interpretations: 

  • You are expanding your customer base, selling more to existing customers, and increasing average order value. On the negative side, this could also indicate a decreased number of actual orders and/or increased time between purchases, which may signal future risks.
  • Revenue increases signal a superficially healthy business, but your business may be entering a negative cycle, as evidenced by lower average revenue per customer despite an increase in average order value.
  • You are expanding your customer base, and revenue is increasing. But this growth is coming at a cost, as evidenced by lower average order value. Low Average Order Value indicates a combination of more aggressive promotions, lowered prices, selling lower-valued products, or a greater number of orders—each of which increases marketing and operational costs at the expense of your profit margins. 

How the marketing performance analysis helps you

Together, your performance score and your outcome can help you quickly uncover areas where your business is performing well—and where it’s not. Organizations that consistently excel evaluate their metrics holistically to better understand what factors are influencing their revenues and costs. Successful organizations also leverage their data to understand the risks they’re facing—both in the short-term and the long-term. This report will set you on the path to a deeper understanding of your business.

What you can do next

This report was created based on only the annual information you provided to us. If you’re interested in getting even more accurate and actionable insights based on your detailed data, email us at myadvisor@vectorscient.com. Imagine the insights we can unlock with a closer partnership.

Visit https://content.vectorscient.ai/marketingperformance to get started today.

Hope this is helpful! Drop me a note with any questions or like/share/comment as you see it fit. Thank you!

Picture credits: https://www.freepik.com/photos/technology

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