Are you measuring enough?
- by helga
- 0 comments
A couple of weeks ago I spent two days in a ‘Marketing Metrics’ workshop at the Chartered Institute of Marketing (CIM). It was a nice, intensive overview of what evaluation tools are out there and how to adapt them to each business. Here’s a brief summary of some of the things we’ve looked at.
As an aside – you know it’s commonplace to hear in marketing-centric groups that Marketing Managers should be getting ever closer to Finance Managers and CFOs, in order to increase the accountability of marketing. Alternatively, it could also help if marketing professionals themselves showed a higher incidence of finance-related backgrounds, rather than backgrounds on communications and ‘softer’ skills, where the focus is more on the promotional and communications side of the marketing mix. I’m no less guilty than the average here, as my background is in the creative industries and in branding and communications. I’m also a graphic designer, which I believe is a really great skill to have alongside, although sometimes not appreciated in the same way as more ‘serious’, corporate-talk marketing skills.
I totally understand this lobby towards Finance within the marketing profession. If marketers were closer to where the money is, they would have more power in the business. It would be easier for them to become respected stakeholders and decision-makers around product development, channel strategies, corporate strategy and investment. They would also become more indispensable in the corporate world, a role that for the moment I dare say still lies with the traditional Sales force. What’s not to like about more accountability?
This is where marketing metrics enter the picture, providing handy tools to show that what we’re doing as marketers is actually working. There are hundreds of metrics and measurement frameworks available. Econometrics and big data are an interesting, emerging field for example. For the sake of time and sanity, it’s good to start by knowing EXACTLY what you’re trying to achieve with each tactical activity and higher level marketing strategy, and focus on the core metrics which are key to evaluating results related to that.
For example, if your business’s focus in the next year is acquisition of new clients, you should be looking at:
- Customer growth rate
- Customer churn rate
- Average cost per customer
…amongst others. But if the priority is monetising the business proposition in general, perhaps you should focus on things like:
- Revenue per customer or per purchase
- Gross margin
- Return on Investment (ROI)
There are obviously also ‘global’ performance measurement systems like the traditional balanced scorecard, which provide a great framework to evaluate how the business is doing in key areas including staff engagement/motivation, customer satisfaction and community topics. Any serious business should be looking at the long term, and the long term means creating shared value for your customers and for communities at large.
Some of the most common metrics reported to the board (From “Which Marketing Metrics Are Used and Where?” a paper by Patrick Barwise and John U. Farley (2003) available at www.msi.org) are:
- Market share (c. 80%)
- Product/service quality (just under 80%)
- Customer loyalty/retention (c. 60%)
- Customer profitability (c. 60%)
- Customer lifetime value (c.40%)
Finally, it was also very interesting to look at several marketing dashboards, i.e. ways of showing progress towards objectives in a simple, visual way. They can be great! From car and airplane dashboards, to wheels and other metaphors, presenting updated metrics in an interesting, visual way could really have a positive impact on focus and motivation. Well, at least it has for me.
So… what are your main business objectives and your marketing objectives? Have you defined what success looks like for the short, medium and long terms? Are you really progressing towards it?