Analytics Added | December 19th, 2013 | Share Analytics
Analytics Updated | Thu, Dec 19, 2013 at 15:52
What is a Control Group?
Control groups can measure the incremental revenue, response or customer retention from marketing campaigns. A control group is a random sample of individuals who do not receive a direct marketing offer. And their behaviour may be compared to similar, randomly-selected individuals who do receive an offer. Time series campaign analysis involves comparing control and offer groups – before, during and after a campaign period – over days, weeks or perhaps months. Observing the control group’s behaviour versus those who receive an offer allows two important calculations: the incremental gain (eg. revenue, cost savings, response) and overall return on investment (ROI) for a marketing campaign.
A Control Group Example
As an example, let’s imagine that a website publisher wishes to send a direct marketing offer to 500 subscribers (TARGET_GROUP). An additional 100 subscribers (CONTROL_GROUP) with a similar profile will not receive an offer. Each TARGET_GROUP subscriber is to be issued a discount on next year’s annual subscription fee: obtained by visiting a landing page on the publisher’s website within a specified one-week period. The discount offer will be communicated via a Facebook campaign targeting the website publisher’s existing base of contacts. And each TARGET_GROUP member will be required to provide his or her Facebook profile link to receive the discount offer.
Measuring Social Media Marketing ROI
A time series, control group social media marketing campaign analysis will attempt to answer the following question: Does offering a discount offer reduce the website publisher’s subscriber attrition rate? TARGET_GROUP’s rate of attrition (%ATTRITION) may be compared to the CONTROL_GROUP’s. Attrition might be measured by the percentage of subscribers who do not buy a subscription for the next year. Both groups are best evaluated on a week-to-week basis: before, during and after the campaign period.
Graphing Control Group Social Media Marketing ROI Results
Graphing the TARGET_GROUP and CONTROL_GROUP over time – according to the %ATTRITION variable – will provide an answer to the question: Does offering a discount offer reduce the website publisher’s subscriber attrition rate? It would be good news if 80% of the TARGET_GROUP renews next year’s subscription and only 40% of the CONTROL_GROUP does. Such a result might indicate the discount offer is effective at influencing subscribers to keep reading the website publisher’s content. If an annual subscription costs $40, every retained customer represents $40 in revenue that is not lost. For a website publisher with 1,000 subscribers, it means potentially keeping $16,000 in revenue by offering a discount offer to prevent subscriber attrition. The costs of conducting the campaign (eg. discount cost, staff time, creative costs) must be subtracted from the $16,000 incremental revenue gained in order to calculate an ROI. And this ROI result will allow a website publisher to determine the value of conducting future anti-attrition Facebook marketing campaigns.
Written by tumbleweedmarketresearchanalyst
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