It’s not uncommon for companies to have so many things they measure that its hard to know what really matters. And when it comes to marketing, most companies today can measure a never ending sea of metrics – from impressions, to click-throughs, to response rates, to cost per lead, to marketing spend, to revenue, to lead conversion ratios, to customer tenure, customer satisfaction, and well, the list goes on. It’s normal to want to include everything, so one of the biggest dilemmas is deciding what to keep in and what to throw out.
When it comes to your dashboard, more isn’t necessarily better. Think about the dashboard in your car, there are just a few gauges and dials and maybe a message center that sends alerts. Quality is more important than quantity in your car as well as on your marketing dashboard. Try to keep your dashboard to a few key measures. What should you keep? At the executive level of your dashboard you need 5-10 core metrics and they should fall into four metrics categories that show:
· how marketing is moving the needle, that is whether marketing is being effective.
· whether you are making your performance targets related to customer acquisition, retention, and value
· your efficiency improvements
· marketing’s financial contribution and ROI
The measures you choose for these categories shouldn’t be based on what’s easy to measure or easy to find. While impressions are easy to measure and find, it is hard to use this measure to make a strategic decision. You want your measures to lead to actionable conclusions. That means you need to measure things that really matter to your company and connect marketing to the business. Each metric you chose should be meaningful on its own and not overlap with other numbers.
A simple example from financial measurements can help illustrate this point. It is somewhat redundant to look at both gross margin and net profit, because net profit is simply gross margin minus fixed costs and a few other expenses. In this example, you just need one, the one that will give you the insight you need.
Some times people are afraid to report on certain numbers because of the implications. For example, profits per employee might lead to staff reductions. If you want to be perceived as a strategic player, choose marketing metrics that will bring key issues to the surface for discussion and strategic consideration.
While you want your dashboard to show your performance, it is important that it serves as a decision-making tool. That means you need metrics that will help you understand the impact of the change in that measure. Select measures that will help affect your competitive position, your ability to succeed and will drive action. The metrics you report should help serve to monitor accountability on action. First and foremost you want to report on measures that will help you determine whether you are doing the right thing, not whether you are doing things right. The TV show, The Amazing Race, provides some insight into this concept. The concept involves teams getting from point A to point B with various obstacles and tasks in between. If you are measuring efficiency, you might look at “miles traveled per day.” And while this might be interesting, you could be traveling quickly but in the wrong direction. No matter how fast you are traveling, if you are heading in the wrong direction you cannot win. We hope you will revisit your dashboard to make sure the metrics you are tracking are helping you ask the right questions and facilitating strategic decisions.
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
