Direct Selling: Making a Match
To run the correlation analysis, you’ll need two data sets: order counts by day for the catalog (e.g., call center) and unaccounted-for Web orders by day for the same period. Remember, unaccounted-for Web orders are those that cannot be attributed to a specific marketing activity, such as e-mail campaigns, search marketing and pay-per-click programs, affiliate marketing efforts, etc. Here you’re looking for orders that came directly to your URL or were a result of organic search, particularly on branded keywords.
Put these two columns of data side-by-side for each day of the period, and allow Excel to run the numbers for you. What results is a modest table with a handful of numbers, the most important of which is the correlation coefficient, a number between zero and one that indicates the degree to which two variables are linearly related. To get the real answer to the question, “How much does my catalog drive Web orders?” you must square the correlation coefficient to produce the coefficient of determination—a measure of the proportion of each other’s variability that two variables share.
If, for example, a correlation coefficient of 0.9 says there’s a high level of linear relation (the variables “move” the same way), squaring the coefficient says that 81 percent of the variability is shared between phone and Web orders. So, in this example, 81 percent of Web orders are directly related to phone orders. And if phone orders are driven by the catalog, so must 81 percent of the Web orders.
The findings that you uncover in evaluating your own data will give you two pieces of valuable information: 1) how important your catalog is to your overall business; and 2) the factor to use in allocating unaccounted-for orders back to catalog segments once the matchback itself is complete.
So even if you match and can attribute only 50 percent of the orders to the catalog, you know that you should attribute, in this example, 81 percent of the remaining unaccounted-for orders to the catalog. This is where allocation comes in.