Few people get into marketing because they like metrics and statistics, but it’s a vital part of the job. The right metrics can make you a department star and generate some rare love and respect from the C-suite. But, the wrong metrics can measure you out the backdoor.
So, which metrics do you use? Are you using them the right way? How do you communicate their value to different levels of management? Whether you’re starting, rebuilding, or auditing your marketing measuring program, there are some universal Do’s and Don’ts to consider.
So Many Metrics, So Little Time
There are hundreds of marketing metrics, and all of them are helpful for different people, projects, and goals. In general, there are four broad categories of metrics in which a marketer might be interested:
- Activity Metrics— Activity metrics are digital engagements like downloads, CTRs, etc.
- Cost Metrics— Cost metrics are your CAC, retention, churn, etc. numbers.
- Quantity Metrics— For better or worse, a 2010 study showed that the number one metric used by lead generation marketers is lead quantity.
- Financial Metrics— Financial metrics are any that speak directly to considerations like revenue, ROI, profit, cash flow, etc.
You might set up metrics to interpret what has happened in the past, to monitor what is currently happening in a campaign, or to forecast what might happen in the future. There are categories and subcategories, and software programs to distill each. Where do you start? Which metrics are most important? Are there some you should ignore?
Do: Keep an Open Mind
Once you’ve found metrics that work, stick with them so you can compare apples to apples over time. But be careful not to get stuck in a rut. Take the time to experiment with additional, different, metrics to improve your reporting.
“When I was an analyst, I experimented with all sorts of crazy metrics,” says MineThatData President Kevin Hillstromm (@MineThatData). “I always wanted to see if there were different metrics that explained how customers were behaving, and I wanted to identify metrics that aligned with future company success.”
Of course, different projects focus on different goals, so you’ll want to use different metrics from one campaign to the next as well. Craig Smith (@CraigPSmith), Author and Publisher with DMR, doesn’t choose metrics until after the project is outlined, “I have found that having a specific platform and metric in mind before the goal and/or supporting objectives are determined is putting the cart in front of the horse, and almost never works. Treat digital as the means to an end. Go into a new project with an open mind, and really spend some time thinking about and discussing what you are trying to accomplish before you move on to digital strategy and measurement.”
There will be a few systems and forms that will carry over, because you need to compare the efficiency and profitability of each campaign. Beyond those proven foundations,start with the end in mind. Design your metrics systems around your projects, and make sure you don’t miss an opportunity because of outdated or irrelevant metrics.
Don’t: Monitor Metrics in a Vacuum
Regardless of the metrics you choose to measure, the systems you set in place, or the numbers you capture, remember that none of it happens in a void. “Context and market forces must be considered before making decisions, and the stage in the buyer’s journey impacts the comparability of all metrics,” advised Ion Interactive Co-Founder and CEO Justin Talerico (@IonInteractive). “We can’t look at a click-through rate on a nurture email and compare it to a click-through rate on a customer or lead-gen email. All three of those stages have drastically different baselines and norms in terms of variance.”
One landing page may have varying CTRs based on how the user got to it, where buyers were on their journey when they found it, whether they are connected to the brand on social channels, etc. Resist the urge to over-simplify. After you establish your primary metrics, consider some of the most common variables for each, and monitor the niches for trends.
Marketing Your Metrics to the Execs
A recent Fournaise Marketing Group survey discovered that most marketers aren’t communicating very well with their executives:
- 80% of CEOs don’t trust, and are not very impressed by, the work done by marketers.
- 80% of CEOs believe that marketers are too disconnected from the financial realities of their companies.
- 75% of CEOs think that marketers do not understand (or deliberately misuse) the “real, business” definition of terms like, “results,” “ROI,” and “performance.”
Clearly, marketers — in general — have some work to do in learning to communicate with the C-suite. Learn to speak their language, and then use it to give them only the information they need.
Do: Speak C-Suite
While just about any metric you choose to track will add value and provide insights, financial metrics speak the language of the people in the corner offices. If you want friends in those offices, learn their language.
Wilson Raj (@WilsonRaj), Global Director of Customer Intelligence at SAS, recommends establishing, “a clear link between marketing activities, marketing objectives, and business outcomes. Speak the language of the business by understanding how your business leaders evaluate marketing performance. Financial measures such as revenue, profit, and shareholder value frame the C-suite understanding of overall corporate health. Connect marketing measurements to business results. Or in other words: frame marketing metrics as financial metrics.”
There are two main categories of financial metrics that most marketers should focus on:
- Revenue Metrics — Marketing’s aggregate impact on company revenue.
- Marketing Program Performance Metrics — The incremental contribution of individual marketing programs.
“CAC (Cost to Acquire a Customer) is at the strategic top of our measurement pyramid,” suggests Talerico (@IonInteractive). “CAC focus is common amongst high-growth businesses because it simplifies everything below it into a single number — total (all-in) sales & marketing cost divided by the number of customers acquired.”
The Fournaise study revealed that 85% of CEOs would like marketers to focus on tracking and improving four key indicators:
- Market Share
- Marketing ROI
The metrics that drive your organization, or that speak to your C-suite may be different, and they may change from one campaign or season to the next. Start with the basics—the common ones that most CEOs want to see—but listen to the language coming from the top. They will tell you which numbers they need.
Hillstromm (@MineThatData) decodes C-suite speak and uses it to add a narrative to the numbers: “Listen carefully to what executives say. If expenses are being carefully watched, then there is a profitability problem. Look at any marketing program where money is being spent, and find ways to measure the programs that deliver the best return on investment. You don't just start telling everybody about metrics. You craft a story that aligns with the message you're hearing from executives. In this fashion, executives are much more likely to listen to the ‘metrics maven,’ and are much more likely to take action.”
Marketers are communicators. We spend our days learning the language of the marketplace, and speaking it back to our audiences. Secure friends in high places, demonstrate the real value of your team, and maybe even secure a little extra funding, by doing the same linguistics with your execs.
Don’t: Bore Them With Tales of Yesteryear
Perhaps the biggest part of effectively communicating with the C-suite is helping them look ahead and plan for the future. It’s easy to measure the metrics of what has already happened — leads generated, conversion rates, etc. — and it is helpful, but don’t stop there. Prove the full scope of marketing’s value by setting up your metrics to map trends so you can include predictive analytics.
“Marketers typically report on marketing activity and associated costs, rather than reporting on metrics [that] executives use to set direction,” notes Raj (@WilsonRaj). “Instead of only reporting what has happened, progressive marketing measurement programs should also answer the question: what will happen? Or even better: what must the business do to make that desired business outcome happen? Including predictive elements such as campaign lift modeling, propensity to purchase (or churn), projected lifetime value measure, etc. are equally vital.”
Once you start looking forward, you can break down both categories of financial metrics into time dimensions:
- Past — How did we do?
- Present — How are we doing?
- Future — How will we do?
Those questions give you three categories of metrics that can each be applied to Revenue Metrics and Marketing Program Performance Metrics, to detail your metrics plan:
- Business Performance Metrics and KPIs — These are the most common reporting metrics that you share with executives. They are mostly backwards-looking metrics.
- Diagnostic Metrics — These metrics deliver insight into your current performance, often by comparing against historical data trends and competitor and marketplace benchmarks.
- Leading Indicators — These metrics help you look forward and forecast future results.
Those breakdowns create a framework for financial metrics that looks like this:
“I created (and still create) five year sales forecasting models for executives,” explains Hillstromm (@MineThatData). “I build the models in spreadsheets, using annual repurchase rates (a very important metric), annual spend per repurchaser (a very important metric), and annual new customers (a very important metric) to illustrate how the business is likely to evolve and change over the next five years. I build flexibility into the models. In other words, if a company retains 45% of last year's customers, I allow the executive to change the percentage to 50%, so that the executive can see the five-year impact of changes upon short-term metrics. This style of analysis — converting metrics into forecast models — has been the most effective way I've found to illustrate to an executive the meaning of various metrics.”
Those models and predictive analytics may not always turn out to be perfectly on target, but your team will continue to narrow and hone them month to month, campaign to campaign. Setting up some metrics that you can use to push forward, inspire vision, and help managers and leaders practically plan the future, will set up you and your team for big things.
Do Measure, Don’t Give Up
There are a lot of numbers, systems, and philosophies to choose from when building a marketing metrics plan. You’re already monitoring some of the basics across seasons and campaigns, but don’t be afraid to branch out and try something new. And if you know your numbers aren’t communicating value at an executive level, its time to shift some of your focus.
With metrics, as with marketing, all the best advice is a starting point, and its up to you to listen to managers, push trends, and experiment to figure out what works best for your organization.