Marketing Metrics: A Comprehensive Guide to Measuring and Improving Performance
MARKETING METRICS is the set of measures that helps marketers quantify, compare, and interpret their performance. OBJECTIVES “To have 30 per cent of all retail outlets stocking our product by year 3.” STRATEGIES Product, price, place, promotion METRICS Are we hitting our targets? Business leaders wishing to make their marketing function accountable should demand answers to 3 fundamental questions – and in this order: 1. For what should their marketing function be accountable? 2. To whom? 3. And how should this be measured? Marketing effectiveness Return on Investment (ROI)/Cost per sale/Cost per lead/Conversion rate/Customer lifetime value Major Areas Of Marketing Metrics Market and brand metrics/Customer profiling, satisfaction and loyalty metrics/Channel and distribution metrics/Margins, profits and profitability metrics/Sales funnel metrics/Pricing metrics/Promotional and media metrics/Digital metrics/Business, finance and marketing metrics Market and brand metrics Brand Lift The degree of positive shift in customer awareness and perception of your brand/Brand Engagement The degree of emotional commitment your customer has toward your brand/Brand Preference The degree to which your brand is preferred/chosen over competitive alternatives. Customer profiling, satisfaction & loyalty metrics LOYALTY MEASUREMENT Intention of repeat purchase. MEASURING OVERALL SATISFACTION What is the complete opinion of your customer’s experiences? MEASURING THE ATTRIBUTES What are the likes and dislike? Channel and distribution metrics INVENTORY TURNOVER RATE = (Cost of goods sold /Average inventory) ORDER ACCURACY RATE = (Total orders delivered correctly / Total orders) x 100 TIME TO SHIP = Ship date – Date order was placed TOTAL UNITS IN STORAGE = The sum of current stock levels for all SKUs Sales funnel metrics Entrances how many ppl are entering you sales funnel? Website traffic, ad campaign reach, and email campaign audience Conversion rate how many ppl who enter your funnel convert into customers? (total conversions/total leads in funnel)*100 conversion can be orders, quote requests, downloads, micro conversions along the funnel Total sales (how much revenue are you generating from your conversions) =numbers of orders*price per unit Average order value (what’s the average amount spent on an individual sale) =(total revenue/total orders) Pricing metrics USER-BASED Per number of concurrent users, teams, viewers, members etc. ADOPTION-BASED What is the complete opinion of your customer’s experiences? USAGE-BASED Per unit of output delivered, per GB, per contacts, per emails etc. VALUE-BASED Against an agreed-upon performance level or outcome Promotional, media & digital metrics FOR MODERN MARKETERS; Web traffic sources Website traffic leads Returning visitors Online conversion rates Click-through rates Business, finance and marketing metrics Marketing metrics (traffic, leads, conversions, etc.) measure marketing campaign effectiveness Finance metrics (revenue, margins, ROI, etc.) track monetary performance Business metrics (sales, share, retention, etc.) indicate overall growth & profitability
FOUR ORGANISATIONAL TEAM STRUCTURES Functional organization has various functional marketing specialists such as market research manager, sales manager, advertising manager, etc. The product management organization responsibilities are assigned for a specific set of products. This organizational form does not replace the functional organization but adds another layer of managers who are essentially program coordinators. Market management organization has a market manager who serves to coordinate marketing activities for a specific set of customers. The matrix organization generates groups or teams who work collaboratively across different functional areas. workflow management system (WIMS) is a system that defines, and manages the execution of workflows through the use of software, running on one or more workflow engines, which is able to interpret the process definition, interact with workflow participants and, where required, invoke the use of IT tools and applications. In a centralized bureaucratic structure, performance monitoring and assessment is done through centralized control mechanisms. This allows for standardized reporting procedures. In a decentralized organic structure, performance is more difficult to assess due to the flexibility and discretion given to specialists. Reporting may be more informal and varied. In external transactional relationships, performance reporting is based on formal contracts that clearly specify procedures and outcomes. In external relational arrangements, performance reporting is more subjective and based on the ongoing relationship, since outcomes are hard to specify in advance. TYPES OF MARKETING – SALES RELATIONSHIPS Undefined; Independent from one another, own objectives and agenda, interact to solve problems (reactive cooperation). Defined; defined processes, guidelines, and rules that keep people reasonably aligned, “good fences make good neighbors”. Aligned; clear boundaries between the two exist, but they’re flexible, engagement in joint planning and training. Integrated; blurred boundaries, shared structures, systems, and rewards, shared management of key accounts, shared metrics, “rise or fall together” culture. If you need to change how your marketing team and sales team operate; Undefined to Defined; create clear rules of engagement, including hand-off points for important tasks (such as lead follow-up). Defined to Aligned; • Establishing regular meetings between Sales and Marketing to discuss major opportunities and problems. • Defining who should be consulted on which decisions (e.g., “Involve the brand manager in $2 million+ sales opportunities”). • Creating opportunities for Sales and Marketing to collaborate—for example, planning a conference. Aligned to Integrated; Integrating straightforward activities such as planning, target setting, customer assessment, and value-proposition development. Replacing existing process and systems with common processes, metrics, and reward systems. How do you choose a software/CRM? •Budget •Features •Input from team •Research •Test your options Potential benefits of a software/CRM; • Holistic view • Automation • Forecast revenue
incorrect measurements and metrics? Low-quality, measuring the “wrong” metric, invalid metrics relationship between incorrect measurements and business failure? High cost Opportunity Cost Duplication of work THE RISKS OF RELYING ON SINGLE SOURCES OF METRICS A single metric is unlikely to provide the whole picture Too many metrics may make drawing a clear conclusion too complex Aim to have a selected number of metrics that gives actionable and accurate information margin of error The degree of error in data. data unreliable? Biased data Bugs and malware Validity of sources Outdated/inaccurate data Human error Data corruption and rot service-level agreement (SLA) is a document that defines the level of service expected by a customer from a service provider. Service level agreement metrics are a way of measuring whether your business or service provider is meeting the standards you have set for yourself. Eg: Time to first response Average handle time No. tickets resolved INTERNAL BARRIERS TO CHANGE Marketing metrics are too complex to use Adopt marketing metrics that are intuitive and make sense for its business operations. Marketing metrics do not solve business problem Identify business problems, and identify correct metrics to measure performance. Inertia (Too many metrics; not knowing where to start) Start with marketing profitability metrics. No budget Manager insights, experience, and intuitions are a good place to start and require no budget. No time Applying marketing metrics should not be extra work, but a part of work. 
MENDELOW STAKEHOLDER MATRIX Mendelow (1991) suggests we analyse our stakeholder groups based on; Power; the ability to influence our organisation strategy or project resources and Interest: how interested they are in the organisation or project succeeding. MCKINSEY 7S Strategy: this is your organization’s plan for building and maintaining a competitive advantage over its competitors. Structure: this is how your company is organized (how departments and teams are structured, including who reports to whom). Systems: the daily activities and procedures that staff use to get the job done. Shared Values: these are the core values of the organization and reflect its general work ethic. They were called “superordinate goals” when the model was first developed. Style: the style of leadership adopted. Staff: the employees and their general capabilities. Skills: the actual skills and competencies of the organization’s employees.
SOURCES OF DATA Strategic data sources Operational/activity data sources Outcome data sources Predictive data sources Decisions / objectives / direction set by the executive leadership. Executive leaders make these decisions based on; The data from the macro-environment (PESTLE) Industry related data (Porter’s 5 forces) Operational data is a form of strategic data that captures information on the internal functions and processes of a business. Operational data can come from; Order-to-payment cycle Sales information systems Databases, data warehousing, and data mining OUTCOME DATA SOURCES measures, using indicators, what results of an activity/program; can come from; Surveys. Interviews Focus and other small groups Observations Records and documents PREDICTIVE DATA ANALYTICS : Use of statistics and modeling techniques to make predictions about future outcomes and performance; can come from; Historical data Past purchase/ordering records, production logs, inventory records, past social media interactions like tweets, posts and online reviews, emails & company communications, etc. Real-time data Social Media APIs Robust data is comprehensive, accurate, and reliable. Enables organizations to make informed decisions and optimize their marketing strategies. Robust data provides insights into consumer behavior, which is essential to creating effective marketing campaigns. Measuring ROI accurately requires robust data that tracks campaign performance across different channels and platforms. DANGERS OF MEASURING THE WRONG FACTORS Misaligned incentives: Focusing on the wrong metrics can incentivize behaviors that do not align with the organization’s overall goals. Lack of strategic focus: Focusing on metrics that do not align with the overall strategy can result in pursuing initiatives that do not contribute to long-term goals. Missed opportunities: Focusing on the wrong metrics may cause organizations to miss out on emerging trends or opportunities that could drive growth. Validity ensures that data collected reflects the true state of the phenomenon being studied in marketing. eg, the impact of an advertising campaign, Reliability of data is necessary to make accurate comparisons between different marketing initiatives. eg; advertising vs promotions. Appropriate data collection methods and measurement tools are necessary to ensure validity of data in measuring marketing performance. Periodic audits of the processes used to collect, analyze, and report data are a good way to ensure that the data are fundamentally sound. CREATION OF INCORRECT STRATEGIES AND KPIS KPIs are only really useful if they are aligned to your strategy and inform strategic decision making. Lack of understanding of the target audience can lead to the creation of ineffective marketing strategies. Incorrect marketing strategies and KPIs can have detrimental consequences on businesses, including a decline in sales, loss of market share, damage to the brand’s reputation, misallocation of resources, demotivation of employees, and the inability to identify areas that need improvement.WAYS TO OVERCOME USE OF UNRELIABLE OR INCORRECT DATA | DEFINING THE FEEDBACK LOOP feedback loop is the part of a system in which
some portion (or all) of the system’s output is used as input for future operations. Feedback loops can be either negative or positive. Negative feedback loops are self-regulating and useful for and maintaining an optimal state within specific boundaries. CREATING A TEST AND LEARN ENVIRONMENT The ability the test and learn gives businesses the opportunity to experiment, iterate and grow skills and competences throughout the organisation. Businesses must therefore be open to the adoption of a test and learn culture, which will enable marketers to optimise marketing efforts, create first-class digital experiences and develop learning across the organisation. ASSESS EFFECTIVENESS Be open-minded about the findings and have a clear plan for how to use the results. Start with clear and measurable objectives. Linking activities and outcomes. For questions about program impact, either a baseline or a comparison group will be required (preferably both). 
START-UP •Cash flow; What cash do we have and how much do we have left? •Burn rate; How much cash are we using every month? •New customers; How many new customers do we have? •Acquisition cost; How much is it costing us to get new customers? •Retained customers; How many of the new are staying with us? •Viral coefficient; How many other people did each customer connect us with •Promotion; How many people responded to a specific message via click through or call? GROWTH STAGE AND BEYOND •Growth rate; How fast are we growing sales compared to last year and the year before? •Profitability; Are we making
more profit than we have in the past and is that rate increasing? •Customer retention; How long are customers staying with us and are they migrating to a competitor? •Lifetime value (LTV); How much revenue/profit are we making from each customer? •Productivity; How well is marketing working in terms of acquiring and retaining customers? •Inventory; How fast is inventory being used up? 
DIFF MEASURES FOR DIFF PPL ALLIES; HIGH POWER / HIGH INTEREST •Those that are allies for the programme will most naturally want to see whether the project is successful from the start. •They will want regular and fairly low level metrics that determine whether the programme is having any effect as quickly as possible. •They will be after measures that can gauge changes in consumer behaviour such as: •Number of responses to calls to action •Short term changes in sales figures in periods during and after the ads have been aired •Number of web site visits DEFENDERS; LOW POWER / HIGH INTEREST •The parties that support what you are doing but have little power over its implementation or outcome will normally also be interested in shorter term metrics that show the impact on them as a result of the campaign. •These may include: •Changes to distributor orders levels •Spikes in specific product line interest levels •Numeric distribution through retailers REGULATORS; HIGH POWER / LOW •The stakeholders in this sector will normally be taking a longer term view on the project and so will be less interested in the data and more in the analytics that are derived from them. •They will be looking at longer term trends and impacts on the business and may want to see metrics on: •Campaign break even point •Overall return on marketing investment •Advertising to sales ratio that determines the efficiency of the campaign OPPONENTS LOW POWER / LOW INTEREST •These stakeholders will be looking for any data that can support the notion that the campaign may not be performing as well as expected and so will most likely prefer a mix of short term operational metrics linked to the overall more strategic ones. •Normally the programme manager will not provide easy access to these data for these groups and may be tempted to inflate the results in order to stave off criticism if the programme is not going to plan. STRATEGIC METRICS •Strategic metrics are measurements used to evaluate the effectiveness and progress of an organization’s long-term goals and objectives.
•These metrics help businesses to track their performance and make informed decisions to achieve their strategic goals. •Market share; This metric measures the percentage of sales revenue or unit sales within a specific industry or market, indicating a company’s competitive position. •Revenue growth rate; This metric measures the percentage increase or decrease in revenue over a specific period, indicating the organization’s financial performance. OPERATIONAL METRICS •Used to provide a view on how well the marketing function is performing commercially, viewing it as a mini business within a business These metrics provide a better insight into understanding about organisational efficiencies and the return on the investment in marketing These metrics provide a clearer connection between the performance of a programme and wider business results. •Return on marketing investment; the financial contribution attributable to marketing as a fraction of the marketing expense invested. •Cost of customer acquisition; how much it has cost the organisation to acquire a lead or, in more detail, a paying customer. ACTIVITY METRICS •Essentially focus on the counting of events, transactions, visits and other activities Provides low level measures and as such do not provide any real perspective on how those activities have any impact on the overall goals for marketing and the wider organisation. •Number of visitors to the stand •Number of samples tried •Number of product displays completed OUTCOME-BASED METRICS •The output of well designed and implemented metrics will provide understanding about how the various marketing inputs impact outcomes Outcome metrics determine the impact of a marketing activity by measuring the effect on individuals and groups after the activity has finished. •Market share; specifically what increase in market share has been detected as a result of a set of activities. •Customer Lifetime Value (CLV); an assessment of the net profit that can be associated with a specific customer or set of customers. LEADING INDICATORS •Leading Indicator metrics support the process of strategic decision making and facilitate business decisions regarding strategic direction. •Provides insight into future behaviour by measuring activities that have an indirect effect on individuals and groups and which predict their behaviour in the future. •Pipeline to quote ratio; a metric that compares the expected delivery of sales by a salesperson to actual sales. •Consumer confidence; usually a more qualitative and comparative measure that estimates how confident individuals and groups are about their own prospects in the near future. METRICS AND BRAND MANAGEMENT •‘What is not measured is not managed.’ •Metrics are important for brand management. •Metrics helps businesses to; •understand how the brand is performing against customer expectations •determine how the brand is performing against the competitive set •identify brand weaknesses before they become business problems •establish areas to focus brand building efforts on to create business value.
Margin=(Revenue-LOGs)/Revenue Contribution=Sales-VC=Total fixed cost/contribution margin *optimal pricing, cost management, sales volume.
MARKET AND BRAND PENETRATION • This set of metrics focuses on the dynamics that determine and drive the decisions and choices that buyers make when presented with competing offers that fulfil the same or similar purposes. Typical metrics that can be implemented in this area will include: • Market share: Market share is the percentage of a market (defined in terms of either units or revenue) accounted for by a specific entity. • Unit Market Share: The units sold by a particular company as a percentage of total market sales, measured in the same units. • Revenue Market Share: Revenue market share differs from unit market share in that it reflects the prices at which goods are sold. • Penetration is a measure of brand or category popularity. It is defined as the number of people who buy a specific brand or a category of goods at least once in a given period, divided by the size of the relevant market population. • Market penetration refers to the percentage of total customers in a company’s target market that the company has acquired as of a specific date. • Brand penetration measures the adoption of a specific brand within the market. It represents the number of people who buy a particular brand over a specific period divided by the size of the concerned market’s population. AWARENESS METRICS VS ACTION-BASED METRICS Awareness, Attitudes, and Usage (AAU): Metrics of the Hierarchy of EffectsAwareness, Attitudes, and Usage (AAU) studies empower marketers to measure and analyse customer knowledge, perceptions, beliefs, intentions, and behaviours. These studies, sometimes referred to as “tracking” data, help monitor long-term shifts in customer awareness, attitudes, and behaviours. AAU studies yield valuable insights when compared against a clear reference point, which could be data from previous time periods, distinct markets, or competitors. Awareness metrics: These metrics measure the extent to which customers are aware of the existence, features, benefits, or value proposition of a particular offering. Examples include; • Brand Recognition: The percentage of customers who can correctly identify or recognize a brand or logo. • Ad Recall: The ability of customers to recall an advertisement or promotional message associated with a product or brand. Action-based metrics: Evaluates the behaviours, interactions, or engagement of customers with a product, brand, or organization. These metrics provide insights into the actual actions, decisions, or responses demonstrated by customers. Examples include; Attitudes/Liking/Image: A rating assigned by consumers––often on a scale of 1–5 or 1–7––when survey respondents are asked their level of agreement with such propositions as, “This is a brand for people like me,” or “This is a brand for young people.” A metric based on such survey data can also be called relevance to customer. Perceived Quality/Esteem: A consumer rating––often on a scale of 1–5 or 1–7––of a given brand’s product when compared with others in its category or market. Intentions: A measure of customers’ stated willingness to behave in a certain way. Information on this subject is gathered through such survey questions as,
“Would you be willing to switch brands if your favourite was not available?” Intention to Purchase: A specific measure or rating of consumers’ stated purchase intentions. Information on this subject is gathered through survey respondents’ reactions to such propositions as, “It is very likely that I will purchase this product.” • ROI is a return ratio of all investments, taking into account all expenses on the project and revenues it generates to evaluate the overall profitability of a project. • ROMI is a marketing-specific metric that measures the degree to which marketing efforts contribute to revenue growth, calculated by attributing profit and revenue growth to the impact of marketing initiatives. • ROI is a general metric that takes into account all investments made, while ROMI shows the effectiveness of marketing investments.