Four ways marketers measure incrementality

Measuring campaign impact is a top priority for businesses looking to optimize their marketing output. One way to understand the value and impact of campaigns within lifecycle and CRM marketing is by measuring incrementality.

This method allows marketing teams to distinguish the actual impact of their efforts, independent of external factors.

This blog post explains how to measure incrementality within CRM marketing campaigns, as well as outlines how a Customer Data Platform (CDP) can help you uncover actionable insights.

What is incrementality?

At its core, measuring incrementality seeks to answer a fundamental question: "What would have occurred if the marketing campaign had not been executed?" This test aims to differentiate between outcomes influenced by CRM campaigns and outcomes that would have unfolded naturally. By doing so, marketers can precisely quantify the genuine impact of their campaigns, excluding any effects that would have manifested organically.

But before understanding the process of measuring incrementality, you must establish a foundation for providing accurate and meaningful results. This includes defining the specific goals for each of your CRM marketing campaigns. Whether boosting revenue, increasing customer lifetime value (LTV), or driving engagement, having well-defined objectives will inform your measurement strategy for your incrementality test.

You also need to segment your audience. Dividing your target audience into distinct segments or cohorts enables a more nuanced analysis of the incremental impact within each group.

Within these cohorts, you should create a control group that doesn't receive the marketing intervention and a test group that does. This provides a baseline against which you can assess the results of the test group. You should also ensure that individuals are randomly assigned to the control and test groups to minimize bias and create a fair comparison.

The different approaches and techniques for measuring incrementality

There are several approaches and techniques to measure incrementality in CRM marketing campaigns.

• A/B Testing: A/B testing involves splitting your audience into two groups: one exposed to the marketing campaign (test group) and the other not exposed (control group). By comparing the outcomes of both groups, you can estimate the incremental impact of the campaign.
• Holdout Groups: A holdout group is a subset of your targeted audience excluded from a marketing campaign. To measure a campaign's absolute effectiveness, you can compare the behavior and outcomes of your holdout group against the segment that received the content.
• Matched Market Testing: If creating a control group is difficult, you can use matched market testing. This involves comparing the performance of your target market with a similar market that didn't receive the marketing treatment. The differences in outcomes indicate the incremental effect of the campaign.
• Time Series Analysis: Analyze historical data to identify patterns and trends before and after the marketing campaign. By analyzing deviations from these patterns, you can estimate the incremental impact of the campaign in question.

Interpreting the results of an incrementality measurement strategy

Once you've executed your incrementality measurement strategy, the next step is to interpret the results and extract actionable insights by:

• Ensuring that your results are statistically significant, which indicates that observed differences are unlikely to occur due to chance.
• Comparing the outcomes of the test and control groups to quantify the incremental impact. Be sure to express the results as a percentage increase or use metrics aligned with your campaign goals.
• Analyzing the results across different audience cohorts or segments. This can reveal whether the campaign's impact varies among different demographics, allowing you to tailor future strategies accordingly.
• Separating the effects of the marketing campaign from other external factors that might have influenced outcomes. This enhances the accuracy of your measurements.

How a Customer Data Platform (CDP) helps

A Customer Data Platform plays a vital role in enhancing the accuracy and effectiveness of incrementality measurement. By combining customer data from various sources, a CDP offers a comprehensive view of customer interactions and behaviors in real time and improves the omnichannel customer experience.

This, in turn, aids in creating robust control and test groups, improving the reliability of your incrementality measurements. The insights from incrementality measurement provide a valuable roadmap for refining and optimizing your CRM marketing campaigns.

Conclusion

Measuring incrementality within lifecycle and CRM marketing campaigns is crucial to success. You can use approaches like A/B testing, holdout groups, Matched Market Testing, and Time Series Analysis to develop actionable insights to optimize (and drive value from!) your future campaigns.

A CDP can help improve the accuracy and effectiveness of incrementality measurement by providing a comprehensive view of customer interactions and behaviors from various sources and help deploy your campaigns.

By leveraging the power of a CDP and implementing effective measurement strategies, businesses can make data-driven decisions, improve campaign performance, and drive better results in their CRM marketing efforts.