The film “Moneyball” tells how the Oakland A’s used analytics to gain a competitive advantage despite being a small market team. Essentially, they used numbers to do much more with the money they had. Whether it is baseball, retail, manufacturing, or tech, businesses from all industries can gain a competitive edge by using data wisely.
In baseball there are lots of stats to look at, and the Sabermetrics approach the A’s used combines these in clever ways to find win-correlated metrics. Similarly, you may run a system of KPIs in order to define success metrics in different parts of your business. Many online retailers already harness this information to optimize marketing efforts. Like the Oakland A’s, retailers with smaller budgets have “got to think differently” and make the most of their budget in order to compete against their Yankees counterparts.
Marketing certainly needs to increase ROI and optimize. “Moneyball” stresses the importance of relying on metrics to make decisions. The reason Beane (the general manager of the A’s) and Brand (the economist he hired to help him) were able to identify undervalued players and get more from their budget was that they used metrics to find these players rather than relying on gut instinct. In marketing you have click-through rates, conversion rates, retention rates, average purchase per customer, and other metrics that can help uncover areas for improvement.
Here are three ways you can apply a Moneyball approach to your online marketing:
1. Optimize Google Adwords
A few simple changes in keywords, landing pages, and ad content can give you a higher bang for your buck. Just like the Oakland A’s were in search for undervalued players, you can continually look for keywords that are highly searched but with little competition. This is very easy to do with Google’s or other keyword research tools.
Now that you’ve got the best keywords in place, the right location and partner site can determine the difference in the quality of the lead. You want your best prospects, those who are ready to buy, to click on your ads, rather than someone who’s looking for something else or window shopping.
Once your ads are running with various keywords, on different sites, and changing content, then you continue to make sure you’re getting the highest ROI. Continually check your click-through and most importantly your conversion rates to utilize the combination of keywords, ad placement, and content that maximizes sales. Brand says to Beane “Your goal shouldn’t be to buy players; your goal should be to buy wins.” Translated into your marketing campaign this would mean that your goal shouldn’t be to buy clicks, your goal should be to buy customers.
2. Find Up-Sell/Cross-Sell Opportunities
One of my favorite parts of the movie is when Beane is talking to David Justice about sucking the juice out of him. He explains it in a win-win approach to both Justice and the team. Your customers, just like the baseball players, are your most important asset. Without making them feel you are “sucking the juice out of them,” you can find ways to create a win-win situation and get more sales out of your current customers.
Based on your customers’ purchase history, you can find products they are likely to buy and when to best send an offering. For example, if a large percentage of customers bought a hat 60 days after buying a t-shirt, you can create a sting of increasingly aggressive campaigns offering a shirt before, at, and after the 60-day lapse. It’s been shown that recency, the date of last purchase, is the leading factor attributing to attrition. Use it to engage with customers at various levels of engagement and provide targeted offers that increase average number of purchases per customer and customer lifetime value.
3. A|B Test Campaigns
In “Moneyball,” Billy Beane waited no time to shoot the runt. When players were underperforming they got downgraded to the minors or traded quickly. They were aware that tweaks and adjustments would arise with new data about the players coming in every day. But they also didn’t judge too early, saying in the movie, “It’s day one of the first week. You can’t judge just yet.”
Your marketing campaigns also provide success data streamed continuously. Although you need sufficient data to change an email marketing or keyword campaign, there shouldn’t be any hesitation to kill any efforts that underperform. Unlike baseball, marketing does allow you to get creative and try different approaches to different customers. After trying new campaigns and A|B testing your efforts, you will end up with those campaigns with higher success rates and hence ROI.
About the Author
This is a guest post from Dr. Jaime Brugueras, CEO and Founder of Mineful. Mineful is a customer retention tool for online retailers specializing in triggered emails based on purchase history. For more information, follow us on Twitter @Mineful.