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Evaluation – metrics and accountability
The smartest marketers are always gathering marketing intelligence – monitoring customers, environments, competition, collaborative relationships, and themselves – and using this intelligence to inform decisions about the 4Ps of the marketing mix (Iacobucci, 2015). The use of metrics was found to be positively associated with marketing mix performance (Mintz and Currim, 2013).
This information aids in the collection of data about environments, assists advertising, guides campaign plans, and is necessary for providing information about return on investment (ROI) and demonstrating accountability (Figure 1). ROI has always been one of the top challenges marketers face (Burrows, 2014). Accountability is no longer an option (Stewart, 2009; Clark and Ambler, 2011). If accountability fails to eventuate, marketing will be reduced to a tactical function (Stewart, 2009).
Figure 1 – A Marketing Performance Dashboard example
Image source: enterprise-dashboard.com
Accountability is about economic outcomes and financial results which marketing needs to embrace to control its destiny (Stewart, 2009). A lack of accountability in marketing hinders internal legitimacy and hinders collaboration across departments (Park, Auh, Maher and Singhapakdi, 2012). Demonstrating accountability and ROI mitigates these concerns.
Importance of marketing metrics
Metrics provide a baseline useful for monitoring an organisation’s environment. The general consensus is that you cannot manage what you do not measure (Sharp, 2013). The purpose of market metrics is varied, useful in quantifying, comparing and interpreting performance outcomes, enabling marketing managers to understand how the brand and organisation is performing as well as offer diagnostic information for further improvement (Sharp, 2013). Regardless of industry, size of state of maturity, Popky (2015) states the application of metrics must be: easy to understand and use; easily replicated; and provide useful, actionable information that impacts the business.
Figures 2 and 3 show the various dimensions in Sharp’s (2013) marketing metrics model.
Figure 2 – Marketing Activity Metrics (from Sharp, 2013)
Figure 3 – Marketing Activity Metrics unpacked (from Sharp, 2013)
Using marketing evaluation metrics to measure company position is one thing, measuring the success of a campaign is another. Metrics might tell you that a campaign failed but will not necessarily tell you why. In advertising, Kevin Roberts (see clip below) says there are only 3 criteria to evaluate a campaign: Do I want to see it again? Do I want to share it? Do I want to improve it?
Source: WOBI – World of Business Ideas – YouTube
Marketing Metric Issues
Business success, marketing and branding are all interconnected but there is no consistency or consensus across three areas on how success will be measured (Schultz, 2006).
Using the right measures. The proliferation of data available measuring ROI. There is no one-size-fits-all approach – no set of metrics is perfect. No list of metrics is right for every organisation.
Professionals are challenged by collating, interrogating and operationalising data in real time (Burrows, 2014). Sharp (2013) downplays the skills required to interpret data while for others this is a concern (Mintz and Currim, 2013; Burrows, 2014).
Increased emphasis on accountability, metrics and ROI stifles creativity and innovation (Wyner, 2008), but concerns are counterbalanced by the opportunities technology-induced platforms provide organisations and customers in engaging with each other.
Metrics – What the Professionals Say
In the following clip, four professionals attending the 2015 B2B Connect conference in San Francisco are asked to identify what marketing metric they could not live without: lifetime customer value to expense; cost per lead; cost per opportunity; and revenue.
This next clip sees Tony Vidler (2015) highlighting his priority metrics: cost of acquisition and lifetime value.
In Metro.com’s Definitive Guide to Marketing Metrics, improving performance, profitability and credibility using marketing metrics is by: planning for future success; maintaining financial integrity; measuring strategically; creating the right environment; and cultivating a continuous improvement culture. Improving ROI is better than just proving ROI.
To increase the overall use of metrics and enhance accountability, Mintz and Currim (2013) suggest:
- Linking managerial compensation to metrics
- Training managers on development and use of metrics
- Involving managers from other functional areas in marketing mix decisions to promote a company-wide decision-making process
- Hiring a CMO to participate in top management decisions
- Involving managers with quantitative backgrounds in marketing-mix decisions to increase relative use of financial over marketing metrics.
Brooke, Z. 2016. “Top Marketing Executives Talk 7 Big Problems”. American Marketing Association Leadership Summit. 30 April. AMA website. Accessed 22 May 2016. Weblink: https://www.ama.org/events-training/Conferences/Pages/top-marketing-executives-talk-seven-big-problems-at-ama-leadership-summit.aspx
Clark, B. and Ambler, T. 2011. Managing the Marketing Metrics Portfolio. Marketing Management, Fall, pp. 16-21.
Iacobucci, D. 2015. Marketing Management. First Edition. Cengage Learning, Stamford, USA.
Marketo. 2011. Marketing Metrics & Analytics. The Definitive Guide. Marketo.com. Accessed online 22 May 2016. Weblink: http://www.surrey.ac.uk/Training/documents/definitive-guide-to-marketing-metrics-marketing-analytics.pdf
Muntz, O. and Currim, I.S. 2013. What Drives Managerial Use of Marketing and Financial Metrics and Does Metric Use Affect Performance of Marketing-Mix Activities? Journal of Marketing, March, Vol. 77, pp. 17-40.
Park, H-S., Auh, S., Maher, A.A. and Singhapakdi, A. 2012. Marketing’s accountability and internal legitimacy: Implications for firm performance. Journal of Business Research, Vol. 65, pp. 1576-1582.
Popky, L.J. 2015. “Identify the Marketing Metrics That Actually Matter”. Harbard Business Review. July 14. Accessed 22 May, 2016. Weblinl: https://hbr.org/2015/07/identify-the-marketing-metrics-that-actually-matter
Schultz, D.E. 2006. Measuring Up – Brand metrics need an overhaul. Marketing Management, March/April, pp. 10-11.
Sharp, B. 2013. “Marketing Metrics”. In Marketing: Theory, Evidence, Practice, edited by Byron Sharp, pp. 78-120. Oxford University Press, Melbourne, Australia. (With contribution from Svetlana Bogomolova)
Stewart, D.W. 2009. Marketing accountability: Linking marketing actions to financial results. Journal of Business Research, Vol. 62, pp. 636-643.
Ubelhor, K. 2015. 8 Reasons Why Your Marketing Campaign Failed. proofHQ blog. October 27. Accessed 22 May 2016. Weblink: http://www.proofhq.com/blog-marketing/8-reasons-why-marketing-campaign-failed-008309/
Wyner, G.A. 2008. Do Financial Metrics Stifle Marketing Creativity? Marketing Management, November/December, pp. 6-7.