Do you know the financial impact of your marketing activities on your company's bottom-line? What is the impact of a 5% increase in customer satisfaction on your income statement?
The answer to these questions lies in the meaningful analysis of marketing metrics. Marketing metrics help relate your marketing expenditures to your marketing assets (brand, customer equity) and financial returns.
Measuring marketing outcomes
But why are so many marketers nervous about using marketing metrics? Why do metrics often have a negative connotation as tools to "make marketers jobs more complicated"? I have seen many marketers getting lost in data and struggling to measure marketing outcomes accurately. However, metrics create accountability and help to establish credibility for the discipline. Every reputable marketer should use metrics to their advantage and to demonstrate the value of marketing for generating business results.
There is a multitude of marketing metrics in the market. From share of hearts, minds, and markets, to margins and profits, to customer profitability. Choose the metrics that really matter. It's the ones that relate to revenue and profitability that are of interest to the CEO, CFO, and the Board. Use metrics that clearly demonstrate the contribution of marketing to the company's objectives, such as ROMI (return on marketing investment) or the number of marketing-qualified leads.
Don't choose metrics that sound interesting and impress people, such as Facebook 'likes', Twitter followers, and favourable "Hello Peter" comments, as a way to try to justify marketing spend. The C-suite will not be impressed - they want to evaluate the real payoff of marketing investments and assess results-driven metrics. Demonstrate the ROI of marketing initiatives!
It is easy to measure marketing activities (although these conversations are usually held around cost and/or budget discussions), but the measurement of marketing results is far more powerful, albeit challenging.
Often, a simple three-step approach can be applied. For example, you can measure the impact of advertising activities on consumer recall, on the public's perceptions of the business, and on sales leads and revenue.
Multiple marketing metrics
The use of any single metric lacks context and can provide a distorted view of performance. Businesses are usually complex, and so require multiple metrics. For example, marketing metrics can complement traditional financial metrics when used to assess business and brand performance. The combination is needed to give a complex picture of business health. But, the interpretation of marketing metrics requires knowledge and understanding.
In long sales cycles, such as with B2B marketing, revenue correlation lags in time - often months. And during this time, the customer may experience a number of other marketing and sales touch points in a journey that might dilute the marketing results. It's therefore important to differentiate between lag and lead metrics.
Every CMO needs to develop a holistic view on Marketing, stay focussed on results and link marketing outcomes back to business strategy. This implies a move beyond the tactical and short-term.
Work with your peers in your organisation, your CEO, and your team to understand what metrics matter and what outcomes will drive true value for revenue and customer retention.
Marketing is supposed to be a value-creator, not a money-burner.
Dr. Dunja Kartte, PhD (Economics) works for MAC Consulting - a multi-disciplined, dynamic and innovative and South African management consultancy. As an expert in her field, she has headed-up Marketing projects that link Marketing strategy to Business strategy and measure their impact on company value. Dunja has project experience in different industries (Business-to-Consumer and Business-to-Business) both in developed and emerging markets. Contact her on 011 537 1800 or email
A major issue in the context of Africa - and even South Africa - is the lack of reliable marketing metrics. To get an accurate market share or brand equity score when the target market is predominantly rural and vernacular is not only difficult, but expensive. The result is that many marketing departments are in a catch 22 position: they continue to use metrics because it is what good marketers should do, but they don't trust the metrics and don't have the resource to improve its accuracy. The emperor is without clothes in many market share and tracker presentations: vigorous note taking happens on data few trust.
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