Useful Marketing Metrics

We have been concentrating lately on marketing metrics and how to wisely plan their use. Today, we’d like to drill down and take a closer a look at the specific types of marketing metrics considered the most useful. First some general guidelines:

1)    Try to limit yourself to five different metrics so that you can maintain organizational focus.

2)    For every metric, every campaign, every channel, every location and every product: measure success versus goals.

3)    Report data in a time series to highlight trends.

4)    Organize your data using an intuitive summary or dashboard to enable executives to quickly discover how well you are performing.

5)    Recognize marketing personnel who perform well and bring in results.

6)    Track results on a weekly, monthly and quarterly basis, and try to make improvements with each report.

The most valuable strategic metrics are ones that serve as leading indicators, but diagnostic metrics are also important to see what is currently working. Indicators come in three flavors:

• Revenue – these predict the aggregate impact on company revenue. Examples of leading indicators include the number of prospects and leads, and forecasts of the contribution marketing will make to future revenues. An important diagnostic metric is your actual conversion rate (leads, sales, etc.) as opposed to benchmarks and trends. Of course, you need to show historical rates of lead generation versus targets cycle times to see where you are coming from.
• Marketing Program Performance – what is the incremental contribution of each marketing program? A forecast of the expected contributions of your marketing programs is key. To gauge current performance, you’ll need to collect response rates, and how well test groups exposed to your marketing program react versus control groups. Looking backwards, you can see how well you have performed historically by measuring the amount of investment and ROI.
• Profit Per Customer – this is the long-term value associated with your next incremental customer. Forecasts of retention rates and products per customer will show you where you want to go. Current metrics like the amount of investment needed to acquire a customer and the marginal cost to serve that customer will keep your current operations on track. Also, track the average selling price over time to make sure you are keeping up with the competition and inflation.

These metrics should keep your CFO satisfied, because they speak to his or her concerns regarding margin, revenue, profit, cash flow, ROI and shareholder value. When the CFO is happy, the entire marketing department knows it is on the right track.

 – Eric Bank