Marketing Performance Measurement and Management - Metrics and Management

Metrics and Management

Measurement and metrics enable marketing professionals to justify budgets based on returns and to drive organizational growth and innovation. As a result, marketers use these metrics and performance measurement as way to prove value and demonstrate the contribution of marketing to the organization.

Popular metrics used in analysis include activity-based metrics that involves numerical counting and reporting. For example, tracking downloads, Web site visitors, attendees at various events are types of activity-based metrics. However, they seldom link marketing to business outcomes. Instead, business outcomes such as market share, customer value, and new product adoption offer a better correlation. MPM focuses on measuring the aggregated effectiveness and efficiency of the marketing organization. Some common categories of these specific metrics include marketing's impact on share of preference, rate of customer acquisition, average order value, rate of new product and service adoptions, growth in customer buying frequency, volume and share of business, net advocacy and loyalty, rate of growth compared to competition and the market, margin, and customer engagement. In addition, MPM is used to measure the monitoring of operational efficiency and external performance.

Operations performance metrics is a term used when organizations manage marketing functions as a business. Organizations committed to implementing MPM may create positions such as marketing operations director and marketing finance director. Program-to-people ratios, awareness-to-demand ratios, the cost vs lead, the cost vs sale, and conversation rates are the typical data collected and analyzed. Operational performance metrics, however, primarily provide the organization with a way to rationalize marketing investments, but do not correlate marketing to business strategy and business performance.

MPM tightly focuses on these operating measures to help marketers view how efficiently resources of the organization such as people, facilities, and capital are used. External performance measures aligned with business outcomes assess things such as the value an organization provides to customers or the performance of an organization relative to its competitors.

By using a top-down approach, marketers develop metrics and specific performance targets known as key performance indicators (KPI). First business decisions are made to define the scope. To create metrics and KPIs, marketeers involved in MPM try to first brainstorm on the business outcome that they are trying to impact. This is followed by asking the opposite questions that need to be answered to determine if the questions have an impact on this outcome, and the necessary supporting data required to answer these questions. After determining what data is needed, marketeers need to search for this data, and determine the decisions and actions that must to be enforced as a result of this data mining.