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Marketing measurement is improving, but not enoughThanks to advances systems and technologies, marketers today can accurately measure their contribution to revenue growth. They can calculate the return on investment (or ROI) their activities generate. They can even measure the effectiveness of many individual marketing initiatives. And they can use analytics to guide many of their decisions.
Marketing automation systems make it easy to do most of these things. Even so, only a minority of marketers regularly do them. Half a dozen recent surveys support this finding.
Marketers’ inability or unwillingness to use quantitative measures is deeply frustrating to senior executives inside and outside Marketing. In addition, it costs marketers individually if they can’t justify why their company should invest more in marketing.
[Back to top of page]Why senior executives are frustratedBoth CEOs and chief marketing officers (or CMOs) report their dissatisfaction with the current situation.
In one survey from 2011, 80% of CEOs and other senior executives said they don’t trust their company’s marketing group. Marketers are too disconnected from the financial realities of their companies, and they often lose sight of their primary goal, to channel demand. These CEOs want more solid evidence of how much Marketing contributes to revenue growth. In particular, CEOs of B2B companies don’t understand why marketers can’t focus on a few critical performance indicators to measure and report the level of demand they’re expected to deliver.
Marketing automation systems make it easy to provide such metrics. But many companies don’t have such systems. And of the companies that do have marketing automation systems, many aren’t using them as effectively as their leadership wants.
[Back to top of page]Which metrics are most importantSenior executives are interested in only a few measurements of marketing effectiveness. Marketers, in contrast, need detailed metrics that can help them make better decisions from day to day.
Smart marketers don’t conflate these two very kinds different kinds of metrics.
[Back to top of page]The metrics senior executives wantOver any other measurement of marketing effectiveness, senior executives want know the value they’re getting for their money.
Marketing ROI is the amount of revenue marketing generates for every dollar the company spends on marketing. When senior executives know this number, they can treat marketing like other investment opportunities. They can invest wherever they feel confident of generating high ROI.
In addition to ROI, many senior executives want to know the total cost to acquire a customer (or CAC). They want to compare the CAC to the average lifetime value of a customer. This comparison provides a good rough measure of marketing effectiveness.
Many senior executives also monitor the cost of marketing as a percentage of company revenue. This measure is accurate and easy to calculate, but it’s not very useful for making decisions.
It’s probably a mistake to burden senior executives with additional marketing metrics unless they want them. It’s important not to use detailed or specialized metrics with executives outside Marketing.
Metrics for day-to-day marketing decisions Marketing also needs additional metrics to evaluate the success of individual marketing programs or initiatives. For example, marketers need to know the cost per lead for each source or activity that generates sales leads.
The metrics you use will vary by marketing program, activity, or channel. For example, the best metrics for gauging the effectiveness of your website are different from those for measuring social media programs, content-marketing initiatives, ad campaign, public relations, email programs, and so on.
Some marketing initiatives are easier to measure than others. For example, with the exception of direct mail, use of online or digital channels is generally easier to measure than uses of printed media. And many organization report they have a hard time measuring the return on investment for content marketing in general. But with the right systems and technologies in place, you can do so.
The important thing is to develop and use appropriate metrics to help guide better decisions for each program or activity.
[Back to top of page]What ‘analytics’ doMarketing analytics are quantitative tools for measuring marketing performance. They come in many forms.
Google Analytics, for example, is a free and effective tool for measuring the performance of web pages. But for all its strengths, Google Analytics also has limitations. For example, it doesn’t track the activity of individual users on your site. It won’t tell you when a visitor arrives, which pages she visits, and how long she spends on your site. For this information, you need other kinds of tools.
Many other analytics can also help measure web performance—including heat maps, clickstream data, survey findings, and A/B split testing.
You would want a different set of analytics to measure the success of a business blog or your use of social media.
For each marketing activity or initiative, it pays to use the right analytics to help you make better marketing decisions.
[Back to top of page]How Redwell can helpRedwell can help you choose the appropriate marketing automation systems for your needs. We can also help you get more value from the systems you already have in place.
If you don’t plan to implement a marketing automation system, we can help you cobble together a series of reports, analytics and metrics that will help you in the meantime.
Redwell offers help with measurement and analytics at two levels:
We can help measure performance in these areas:
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