Efficiency metrics such as marketing headcount to revenue, time to fulfillment of an inquiry, and cost measures help us assess how well the marketing operation is being run. But they don’t help us understand how marketing is affecting the business and how well it is driving key business outcomes. These questions are addressed with effectiveness metrics. Effectiveness metrics help us understand the role marketing is playing in acquiring and retaining customers. Effectiveness metrics help us make decisions about strategy. Impact metrics are designed to demonstrate the link between what marketing does and tangible effects on the organization’s ability to gain and sustain a competitive advantage.
If you’re wondering which you should measure and improve first effectiveness or efficiency – it’s not a chicken or egg question -choose effectiveness. This may seem counterintuitive since financial pressures often take you down the efficiency path, but improving how your marketing effectiveness is about generating incremental sales and customer value as opposed to efficiency which focuses on reducing waste. It’s hard to make decisions about where to cut when you don’t know what is and isn’t working. This choice is about doing the right things and then focusing on how to do these things right. Only by starting with effectiveness can you demonstrate marketing’s impact on the achieve key business outcomes and make a strong case for playing claim a strategic role.
Of course to measure effectiveness takes data. One of the primary reasons we fall short of being a strategic partner is that we lack the data, analytical models and right metrics needed to demonstrate our contribution and connect marketing back to the business. To drive effectiveness you will need analytics and data that can be used to tease out the causal relationship between particular marketing efforts and such business outcomes as customer acquisition, customer loyalty, and customer profitability. The more you can show the impact of marketing efforts and investments on the bottom-line the more influence marketing will have on company business decisions and future business strategies.
VisionEdge Marketing, Inc, is a leading data-driven metrics-based strategic and product marketing firm located in Austin, Texas. The company specializes in consulting and learning services that help organizations use data to make fact based decisions to address market, customer, and product opportunities and to improve and measure marketing performance. For more information, go to www.visionedgemarketing.com.
About Nathan Kaiser
