Metrics and Marketing

Marketing Pie ChartMetrics are an essential element of modern marketing. The numbers related to the processes of a business can be useful in a variety of ways, and one of their most important uses is measuring the success or otherwise of a marketing plan.

Even small businesses can now compile and analyze statistics that just a few years ago weren’t even able to be captured from their manually-kept records. For example, the ROI of a marketing campaign is now routinely calculated by many SMEs so they have a better idea of how effective their marketing expenditure has been and can adjust their mix accordingly for the next campaign.

Management has to decide which metrics are to be monitored and avoid the problems created by having too much data to sift through when making strategic decisions. Some numbers are more important than others and nominating exactly which ones are right for a particular organization requires careful consideration.

Let’s say a business determines that there are three primary functions for its marketing activities to fulfil:

– To acquire new customers
– To retain existing customers
– To provide a high level of customer satisfaction

The next task is to decide which metrics will be the best to use for evaluating the success or otherwise of the business processes related to these functions.

To acquire new customers

Customer acquisition sounds simple enough, and certainly the basic measurement of new customers added to the database is important. But to get a fuller understanding of how successful the business is at acquiring new customers there are other metrics that can be useful to monitor.

Share of market – tells management how effective the marketing has been at influencing new customers away from competitors

Rate of acquisition – should correlate with marketing activity

Cost of acquisition – can be used to compare the effectiveness of one marketing campaign with another

To retain existing customers

Again there’s a basic source of measurement – customers that subtract themselves from the database of active purchasers. There are also some less obvious metrics about individual customers that have a bearing on how well the business is doing at retaining its customer base.

Value of purchases – measures increase/decrease in customer lifetime value

Frequency of purchase – tells management if retention efforts are increasing the attraction of the business to existing customers

To provide a high level of customer satisfaction

Every business, regardless of size should conduct regular customer satisfaction surveys to measure and monitor the metrics that apply to this important area. This doesn’t have to be a massive research effort but it does have to be so well thought-out that the questions carry over from one survey to the next for monitoring purposes.

Some typical questions that lead to useful answers are:

1. On a scale from 1 to 5 where ‘1’ is poor and ‘5’ is outstanding, how do you rate the service you received?
2. Did our product perform as well as you expected?
3. Do you intend to purchase from us again?
4. If you have made a warranty claim was everything resolved to your satisfaction?

There are some basic requirements that every metric selected for measuring and monitoring need to meet:

– It should relate to a driver of business profitability
– It should lead to findings that are actionable
– It should be capable of being accurately measured
– It should be measured in the same way every time

Marketing metrics show management how effective their marketing strategies and programs are at building the business. They can highlight deficiencies as well as identify marketing elements that are demonstrably successful.

By establishing a set of marketing-related metrics that are regularly measured and monitored a business can obtain a much better idea of how successful it is at acquiring, retaining and satisfying the most important person in the organization – the customer.