Understanding Efficiency
Efficiency equals input divided by output and expressed as a percentage. (Efficiency = output x 100 / input) It’s simply a matter of what you get out of a system as opposed to what you put into a system.
Even with all the accountability inherent in direct marketing, companies have traditionally just looked at yield, not efficiency. How many responses can we get out of a program? How many transactions did the campaign generate? Or, how much did we pay per response? But, as the field has become more sophisticated, as Automated Marketing Communications tools have become available, yield is not enough. Today, efficiency is more important than yield.
Trialogue looks at ways to examine the relationship of input to output. On the most basic level if you consider direct marketing input vs. direct marketing output, most programs are operating at 2-3% efficiency (i.e., the percentage of output to input or, in this case, response rate). That’s not good enough anymore.
Today, you have to consider the metrics of dollars expended vs. sales and margin achieved. You have to look at the relationship of total communication expenditures vs. revenue. Sometimes, the answer is a function of efficiency from the number of enterprise-wide contacts vs. desired response. In other words, you have to consider total touch points to the prospective buyer, how that relates to the motivation to buy and how it relates to costs.
Whether you look at yield, or you have the infrastructure to consider efficiency, success is no longer a matter of increased exposure. It is not so much a matter of function (what the results of the effort are), or even what you intend to test to improve those programs, as it is a function of what it is appropriate to measure. Simply measuring the right things can have a more significant impact on results than increasing number of responses.
We offer the large scale corporate experience to understand how to set objectives against an efficiency-driven environment, and more importantly, what to measure in order to achieve success.
