Metrics that matter

Data.

We need more of it. We’re already drowning in it.

Impressions, sessions, CTRs, conversion ratios, views, revenue, profit etc. this list goes on and on and on. Excel has blinded me so many times, even the dog can’t guide us from the abyss.  

Digital has been a blessing and a curse. It’s finally given us the ability to put a numerical figure against the work we do. A stat to prove our work. Our ambition. Our value.

“The engagement figures are up this week…”

Great. What about the bottom line? You know, the stuff that keeps the lights on?

Let’s be honest…

Fed-up with the humblebrags of how many likes, shares, and retweets a brand’s status update got, I thought I’d ask the Twitterverse a simple question:

As @freddjohns and @RobMeyerson jokingly said, ‘Facebook Fans’ and ‘Facebook likes’. Yet, these are genuinely seen as successes.

However, if we want to keep our seat at the big table, I’m going to suggest the Finance Director will need a little more than the ‘like’ number to justify the expense.  I could be wrong…

Tweet sent.
Smart people responded.

Sharing their incredible insight and wisdom.  The beauty of Twitter.

Rather than leave these to the confines of the archives, this rant is about sharing those responses here. Helping to guide us out of the data black hole.

For metrics that matter, this rant covers three key areas:

• The ones that lead to paying the bills
• The ones that pay the bills
• The ones that lead to paying the bills in the future

TLDR: Skip to the metrics here.

Deciding the right metrics for the KPIs

One thing is clear, as summarised by, @FinanceDirCFO:

“The specific metrics depend on your company and industry, but there’s one thing I can tell you which is of near-universal application….you only really need about 5% of the metrics you’re currently measuring.

“More depth, less breadth is the best way…”[tweet]

It’s not a question of more data, it’s about having the right data. As @Content_grinder confirmed, “It’s all context” [tweet].

Cash is king. Without the life-blood of cash, corporate anaemia will follow.  How to avoid this catastrophe?  “Sales.” A point raised by, @scmeikle, @ChrisMalbyTynan and @Slightly_Random (tongue-in-cheek).

@ChrisMalbyTynan, further clarified:

“I’d argue that the metric that matters most is sales.

“Too many marketers focus on the # of likes, engagements, etc. without understanding the overall impact on the business.” [tweet]

This is so true, it hurts.

The gap between Sales and Marketing can be bigger than the Grand Canyon. Creating an impossible division to bridge and give us the rep of being the ‘colouring-in department’.

Accountability in marketing is critical.

Binet & Field (2007) covers this in their paper, Marketing in the Era of Accountability: Identifying the marketing practices and metrics that truly increase profitability.

However, problems can arise from just focussing on a single campaign objective. It’s not reflective of the true impact of marketing activity. Instead, objectives and KPIs should be detailed and prioritised.

Some companies naturally have a longer burn. A more structured approach should be considered for the customer journey. As @SamuelBrealey, advised:

“Build a custom funnel for comms, as part of an overall business metrics hierarchy. From bottom, filtering up – cancel out anything that isn’t linked.” [tweet]

Of course, knowing if you have the right data will depend on the desired outcome. As @dave_wakeman, said, “My answer would be the ‘it always depends’ on your strategy. So I guess the first metric that matters is a simple yes or no for whether or not you’ve done a real strategy.” [tweet]

So much data. So little insight.

Critiquing what we’re measuring and ‘why?’ was a key theme:

“Getting the right measurement is a constant challenge. Defining the right KPI’s to measure performance taking into consideration the brands stage of growth and other key variables makes it doubly hard…” [tweet] (@mrdipeshasha).

Taking this further, @mrdipeshasha, highlighted the need to consider a longer-term view on the KPIs used to monitor performance. Elements such as:

• Stage of growth for the brand
• Selecting KPIs that allow measuring the progress you make and encourage overachievement
• For every KPI, deciding upfront the key metrics to support and provide insights should be agreed upon upfront

The latter point is discussed extensively by Binet & Field (2007), “…accountability leads marketers to focus on a narrow range of intermediate key performance indicators (KPIs), particularly awareness and direct responses. However, there is no single measure that reliably predicts effectiveness…”

Knowing the KPIs available to us is one thing, deciding which ones to use are another –
“… fundamental problem for measuring marketing performance is defining and identifying both the best metrics and best practice” (Ambler, 2003).

Shared by @colinalewis, Ambler (2003), highlights the need for “common use of language” and to “regularly review” both the internal and external metrics used to measure marketing performance.

Ambler (2003), questions how and what is measured, advising the following:

• End-user behaviors (retention, acquisitions, usage) and the reasons behind their behaviour (awareness satisfaction, perceptions etc.)
• Integrating these results with financial metrics
• Comparing against forecasts and objectives
• Comparing competitors against the same criteria
• Adjust short-term performance according to changes to market-based assets (brand equity)

If any of the above is not considered, then it’s not fit for a market-orientated approach.

Data alone is not enough. It has to be processed, understood, and actioned.

@RuthArnold shared prompts developed by @duncan3ross to support this process of ensuring we’re collating only what we need, when we need it. They included:

• Why are you doing this?
• What surprises are there in the data?
• What else could you measure?
• What bias have you overlooked?
• How sure are you about the question?

A bad workman always blames his tools. That’s why we need to ensure we have the right ones for the job.

As @Shockley_MRX, said:

“… the question may be which are useful, not important. Mechanics want tools that fix a problem, rather than tools that matter.

Many marketing metrics (NPS, familiarity, favorability, vague brand image traits) aren’t useful for fixing problems.”

Expanding on this, @Shockley_MRX,  shared the paper ‘Measuring advertising’s effect on mental availability‘ which outlines the importance of adding mental availability (MA) metrics to existing brand health tracking. 

@Rbambrick86, replied, “…Benefit of MA is it can be a headline KPI and meaningfully diagnosed into action (linking your brand more strongly to category entry points).”

Monitoring your brand’s health is an essential part of evaluating marketing success. Especially when it comes to mental availability and who to target. Something of a challenge when it comes to  B2B digital marketing activities.  In the article shared by @POSMarketer, research identified that intent data should be the ‘go to’ to inform the marketing strategy, as it gives insight into market perceptions.

As Binet & Field (2007) stated: “Marketers pay too much attention to intermediate attitudinal measures, and too little to business and behavioural outcomes.”

Supporting the idea of monitoring brand health,@mixesintheattic, @pauldervan and @JCPHankins, confirmed using Share of Search (SoV/SoM) as a proxy for this. With @JCPHankins, advising that it can be used for fast-moving consumer goods (FMCG) such as tea, cereal, chocolate and premium make-up.  

Binet (2018) reinforced the idea of using behavioural metrics such as frequency, weight of purchase, average spend per transaction, share of category requirements, retention rates, repurchase rates and cross-selling rates as part of the insight and understanding of performance. After all, data and strategy go hand-in-hand.

Profitability and strategy 

When it comes to marketing, most focus on promotion. While this is a huge part of what marketing is about, it’s not the only aspect.

Yet, when there’s so much focus on promotions, ensuring our campaigns are effective usually revolves around the aforementioned impressions, CTRs etc.

However, if marketers do delve into the numbers that make an impression with those sitting at the table, Binet & Field (2007) argue that marketers “…focus on the wrong ones: sales rather than market share, and volume rather than value.”

This isn’t to say sales are not important, they save us from the P45. What this is about is understanding the context in which marketing activity is working within, especially when it comes to the sales activation vs branding debate – a rant for another time.

Of course, the strategy deployed will vary dependent on the category entry points and industry.

Profitability was a key metric many referenced for thinking about this from a prioritisation POV: 

“I’d probably say [profitability] is a huge one. In the sense that you can have huge revenue or even market share but still not make a dime. But then again, maybe the goal isn’t making money.”
@stefhamerlinck

“Agree with what most of the others said. The biz metrics are real important. Another interesting one is profit contribution. What % of the profit is coming from X product or Y marketing channel. Really valuable when it’s time to evaluate efforts.”
@SchoonbeeChris

For context, @ThePolderBaan, shared how the likes of Ford and Ferrari would differ due to the proposition offered and the profitability available. “Different strategies, different revenue streams.”

Directly informing the marketing strategy:

For the differentiation of the brand, exclusivity becomes a critical factor and would have to be considered for the marketing strategy. Otherwise, brand equity would be damaged. 

The volume of sales KPIs differ dramatically for the two brands, but profitability would still be a comparative figure. ‘Like for like’ as they say.

And this comparative element is essential.

Changing metrics mid-campaign or through a new strategic approach is like moving the goal to another pitch.

We should only compare like for like. If you have campaign metrics like sessions, impressions etc. Keep them.

Introducing new ones? You’ll need to calculate the previous or at least provide context that this is ‘year one’, if, the data is unavailable.

Exaggerated extrapolation creates frustration.

Speaking of profitability, Return on Marketing Expenditure (ROME) rather than Return on Investment (ROI) should be used. Reframing should shift the focus to “…profit and less on return on investment.”  (Binet & Field 2007).  

Focusing on incremental returns from all marketing activity to warrant its efficacy.

The metrics that matter

Single metrics, objectives and KPIs are not enough to judge the performance of marketing. Likewise, not every metric has the same level of importance.

Binet & Field (2007) summarises: “…there is no single measure that reliably predicts effectiveness, and focusing on individual metrics actually reduces effectiveness.”

This is why when we look at marketing metrics, we should look at it for both the now and future returns.

With special thanks to everyone already covered in this blog, and…

@Runsforcoffee1
@mixesintheattic
@mrdipeshashah
@AlexFaust
@Shockley_MRX
@ehdecker
@pauldervan

…these are the marketing metrics that matter (with reference links for more details)

The ones that lead to paying the bills

• Reach (% Audience reached)
• Ad recall
• Share of Search
• Mental Availability
• Measures of attention
• Intent
• Recognition of brand assets
• Conversion rates (relative to own performance and peers – from ad performance to applications and sales)

The ones that pay the bills

• Sales (Unit/volume of sales)
• Revenue
• Profitability (CEPs, margins etc.)
• Gross profit  
• Elasticity

The ones that lead to paying the bills in the future

• Retention
• Net Promoter Score (NPS)
• Market penetration
• Return of marketing expenditure (ROME – instead of ROI)
• Share of Market (SoM)

Without data, we can’t make the diagnosis. Without the diagnosis, we won’t know what we need to track.

Any metric without a purpose is useless. Regardless of what they are. Each one should inform strategy and action. Otherwise, there’s no point in collating it.   

Start with the desired output. Work backwards.

Share your thoughts

What marketing metrics matter? Have we missed one? Let me know in the comments below, tweet me @CJPanteny, or get in touch.

Oh, and don’t forget to follow everyone mentioned in this blog. They’re smart and entertaining.
You won’t be disappointed.

And if you liked this blog, don’t forget to share it on your socials and bask in its ranty goodness.

See you next time.

References  

Ambler, T. (2003) Marketing and the Bottom Line, 1^st edition, Pearson Education

Binet, L (2018) How not to Plan: 66 ways to screw it up, 1^st edition, APG Ltd.

Binet, L, Field, P. (2007) Marketing in the Era of Accountability: Identifying the marketing practices and metrics that truly increase profitability. Institute of Practitioners in Advertising (IPA).

Marketingcharts (2021) What Are B2B Marketers’ Most Critical Challenges Right Now? Available at: https://www.marketingcharts.com/customer-centric/datadriven-117333 (Accessed 10 November 2021)

Vaughan, Kelly & Corsi, Armando & Beal, Virginia & Sharp, Byron. (2020). Measuring advertising’s effect on mental availability. International Journal of Market Research. 63.