Do Your Marketing Metrics Show You the Full Picture?
To provide a full view of marketing’s impact, the authors suggest creating a marketing road map that illustrates: the efficiency and effectiveness of marketing campaigns, the role of marketing programs in driving sales and satisfaction, the value of the brand and capabilities, and the impact of marketing-related activities in other functions.
Metrics matter. They establish operational discipline, help assess the effectiveness of key activities, and validate that business outcomes are being achieved.
For marketers, the metrics we do (or don’t) report also send powerful signals about how we view our business impact and set expectations for how we intend to contribute to the business. If the metrics we offer are too limited, we risk misleading or under-educating our colleagues in other functions about marketing’s full role and impact. Incomplete metrics signal a marketing function with limited impact on business growth and transformation.
To set the right expectations, we recommend marketing leaders develop a marketing metrics roadmap that foreshadows what you’ll measure and signals how you’ll contribute.
Creating a Successful Marketing Metrics Roadmap
To construct a roadmap, it’s useful to first identify what information is most valuable. The goal is to ensure you’re taking a comprehensive view of business impact. Questions to ask include:
- whether the metrics impact the income statement (e.g., sales revenues) or the balance sheet (e.g., brand equity value as an asset)
- whether the metrics are historical (e.g., last quarter) or forward-looking (e.g., expected customer lifetime value)
- whether they are single period (e.g., a demand-generation campaign) or multi-period (e.g., an improved in-market testing capability that will pay off over multiple time horizons).
CMOs should then arrange their full set of potential metrics in a sequence. The optimal sequence will vary by company, but below is an example of a common road map.
Start with metrics that track the performance of marketing programs, such as promotional campaigns. Measure the actual outcomes compared to the expected ones. Did people click? Did customers visit? Did they do so enough to justify the investment? Overall, how effective and efficient were marketing’s campaign activities? What was the ROI? While these are important metrics, in our experience, the reaction of executives outside of marketing is typically unexcited: “Great, I’m glad we didn’t waste the money.” They simply expect marketing to get this right — as well they should.
So, campaign metrics need to be supplemented by other metrics with broader enterprise applicability. By far the dominant ones we see are sales and customer satisfaction (e.g., revenue growth, net promoter score). This seems to be where the majority of today’s marketers are concentrating their efforts, according to data collected from our ongoing monthly survey of CMOs.
The competition for consumer attention in the digital era places a premium on building strong, compelling brands. Brands drive growth, engage stakeholders (customers, employees, investors, and partners), and are key financial assets for the enterprise. New engagement channels, such as social media, reduce the costs of brand-building, and advancements in artificial intelligence and analytics make fine-tuned targeting easier. Marketers should be measuring the value of brands as long-term assets for the enterprise — whether it’s the master brand, individual brands, or the brand portfolio. Relevant metrics include brand awareness, consideration, and preference; perceptions of brand quality and differentiation; brand affinity, personality and associations; and brand equity value.
The capabilities stage involves assessing the value marketing creates when it builds and deploys new processes, tools, data, or people to enhance performance. These metrics will differ from organization to organization, but capabilities that could be measured include: improving the quality of customer/market knowledge and embedding it more deeply into adjacent business processes; reducing the costs of customer acquisition (e.g., by enhancing e-commerce capabilities); and improving customer profitability and customer lifetime value (CLV) (e.g., by improving engagement capabilities and reducing churn).
Today, marketing creates value beyond the boundaries of its function, and the enterprise stage is where to measure its comprehensive impact. For example, HR leverages the brand in employee engagement and talent recruiting. Corporate strategy teams leverage customer and market insight to inform choices about the market segments in which to participate and the sources of differentiation in which to invest. Sales and customer success teams leverage account-based marketing programs to retain and grow account revenues. In its full scope, marketing impacts growth rates, valuation multiples, and hence enterprise value, so as marketing activities become more enmeshed with other functions, it’s increasingly important to articulate this value.
Which Marketing Metrics Are — and Aren’t — Being Measured Today?
The CMO Survey — a biannual survey of senior marketing leaders — identified 26 different metrics being used by marketers in its August 2021 survey. It asked how often and consistently they’re measured, which, in our experience, tends to correlate with their actual reporting and use in management meetings.
The most used were campaign and sales/satisfaction metrics. Brand-related and capability metrics were very infrequently measured by marketing teams.
This is extraordinary, as most senior marketers we know view brand as a critical aspect of their jobs. To be so underweighted on brand equity metrics is out of sync with the role and impact marketing can play. And to ignore metrics associated with capability-building is to massively underplay marketing’s role and value to the business.
So, why does this gap exist?
We think the answer lies partly in marketing getting mired at the sales/satisfaction point on the roadmap. These metrics can attract both scrutiny and skepticism from members of other business functions, as there is vigorous internal competition to claim credit for driving sales. Attribution to particular functions’ efforts is not just technically difficult to establish, but also politically fraught. As a result, marketing can invest in extensive and ever-deepening efforts to support and justify these measurements and to prove attribution, consuming excessive bandwidth for just one of many possible sets of metrics.
We also see cases where the C-suite has adopted a single set of enterprise-wide metrics, such as NPS. These initiatives have the benefit of driving cross-functional alignment, but often crowd out efforts to track the underlying drivers of NPS outcomes, such as brand and capabilities.
In other cases, marketers have simply settled for their perceived primary role around supporting sales and have given up on broadening other teams’ understanding of marketing’s role.
To provide a full view of marketing’s impact, we must include all roles and contributions: the efficiency and effectiveness of marketing’s campaigns, the role of marketing programs in driving sales and satisfaction, the value of the brand and capabilities, and the impact of marketing-related activities in other functions.
A marketing roadmap reduces the risk that your department becomes associated with only one role, such as supporting sales. It opens C-suite colleagues’ eyes to the value of activities around brand, capability-building, and enablement of other functions’ work across the enterprise. Even if full realization of the roadmap is a long way off, articulating metrics will reveal marketing’s model for delivering business impact.