Last issue’s article, “Is Marketing ROI Dead?”, discusses how companies need to begin shifting their ROI viewpoint from campaign and product silos to a more holistic marketing performance management strategy. It advises on two key steps to begin this evolution. This article will elaborate on the first of those steps – how to determine the right marketing metrics to measure.
Now, I’m not saying I’m going to be able to hand you the “holy grail” of all marketing metrics you should be measuring and managing. I wish it were that easy! However, hopefully this article will impart some provoking thoughts for your journey toward creating the most relevant metrics to build into your marketing performance management (MPM) framework.
Think about the key dimensions of the business that you’re managing. Try to look at marketing from all angles to broaden the measurement viewpoint. Most metrics can be categorized into four dimensions. First, look at the processes of the marketing department. Is your marketing team running efficiently? For example, are you ahead or behind schedule on executing marketing campaigns and are your external marketing services providers (e.g., agencies, fulfillment houses, data providers) meeting your deadlines? By managing the performance of the marketing team through metrics, you will have a better pulse on their efficiencies; and, if inefficiencies arise, you can isolate quickly and act swiftly. By proactively managing the marketing process, you will improve the bottom line through decreased costs and increased productivity.
Second, you need to be able to track the overall effectiveness of marketing programs. I’m not talking about specific campaigns — like how the broadband cross-sell marketing campaign did via the web with the three free months offer to existing digital cable customers. That’s a campaign performance report. And, while those detailed reports are important, I’m talking about an aggregated view of the effectiveness across all of those marketing programs – both direct (e.g., personalized e-mail offers, catalog campaigns) and broader media vehicles (e.g., search engine marketing, trade promotion, print ads). By having both a top-down aggregated view and the ability to drill-down into the details, you will have a better understanding of the impact each is having on the business to determine what the right media mix should be.
The third dimension is broader business metrics. This really focuses on non-program specific measurement. These types of metrics are very relevant to all C-levels and create a bridge of common measurement infrastructure. For example, sales growth, market share, total sales and total profits are important to not only the CMO, but to every other executive in the boardroom. By measuring these metrics along side the other dimensions, you will be able to better determine if they are in alignment, and how the metrics are impacting each other.
In my opinion, the fourth dimension is the most important of all – the customer. The reality is that, with the exception of marketing process, the others all directly, or indirectly, impact customer metrics. And, it will be important to understand how these other metrics positively or negatively influence the customer relationship. Some examples of customer metrics include products per customer, net-adds, customer profitability, customer satisfaction ratings, and customer lifetime value.
So, if there were a “holy grail” for marketing metrics, the one I would be sure to include would be customer lifetime value. There is no better way to positively affect your bottom line than to nurture the relationship you have with each of your customers to maximize its value over time.
As far as the rest, it will be what’s right for your business. The good news is that there are marketing performance management solutions that do provide best practice metrics like those we’ve discussed. It doesn’t mean that you will likely use them all, as each business is unique, but at least you won’t feel like you’re flying blind; rather, that there’s a chance of getting close to that “holy grail.”
Michele Eggers is a Customer Intelligence product manager at SAS, Cary, NC. She can be reached at Michele.firstname.lastname@example.org Copyright © 2006 SAS Institute Inc., Cary, NC, USA. All Rights Reserved.