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Measuring your marketing: Metrics for difficult times

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27th Apr 2009
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The marketing department is often the first to suffer cuts in a recession. But by focusing on measurement and gaining a better working knowledge of metrics, the CIM's Mark Stuart says marketing can prove its contribution - and improve the individual marketer's career.

By Mark Stuart, The Chartered Institute of Marketing

It's a business cliché to say that what doesn't get measured doesn't get done – and yet many marketers are guilty of ignoring this fundamental principle. The common image amongst the rest of business is that marketers are the creative, arty types who don't get involved with stats and figures, nor are they properly accountable for their expenditure.

A Deloitte survey from 2007, for example, indicated that a third of CFOs do not believe marketing is a key driver of growth in their organisations – an astonishing figure. This preconception is largely untrue but to distance themselves from it, marketers need to prove that they can talk figures with the accounts department and have a financial grasp of the costs, output and value of their contributions to business.

"Marketing can help organisations extract greater value from available resources, rather than being a drain on budgets and a diversion of money into expensive branding and communications exercises."

In the public sector, this focus on measurement is increasingly being used to demonstrate the value of marketing. Many parts of the NHS, for example, which were previously resistant to the idea of 'marketing' being introduced into the health service, are beginning to see that marketing can help organisations extract greater value from available resources, rather than being a drain on budgets and a diversion of money into expensive branding and communications exercises.

Even business mogul Sir Alan Sugar describes marketing as the 'spending department', And if this is a common conception, it's one that needs to be changed.

What are the metrics?

It can be hard to isolate the contribution marketing makes to the business but there are several steps marketers can take both to evaluate their own effectiveness and to communicate as much to the rest of the organisation.

Firstly, it's important to know what you're trying to measure and be aware of the distance between attitudinal and business measures. A metric like awareness, for instance, is useful (and easily measured) but harder financial metrics are needed to see how this awareness turns into purchase decisions.

You also need to find correlations between media exposure and sales to see whether and how marketing is driving growth and take account of variables – such as seasonality and hidden expenses - in any calculations you make of marketing's contribution. And you need to bear in mind the fact that some areas are easy to measure but less important to success – and vice versa.

Awareness and action

Whilst an increased focus on metrics is desirable, they bring their own pitfalls to be aware of as well. Too much focus on sales can lead to you producing good short-term figures, but insufficiently investing in long term growth. Moreover, measuring market share can be an important metric in some sectors and less relevant in others.

The key is to have a series of tested metrics that you can balance to create a 'metric of metrics', if that's desirable (or requested by the board). The balanced scorecard approach developed by Kaplan and Norton is a tried and tested approach to put this into action.

All campaigns should be measured against objectives. Any good marketing plan will outline what these objectives are, outline how they will be met and indicate how success will be measured. Ideally, however, there shouldn't be too many objectives and a certain amount of robustness should be built into measurement.

Most promotions, for example, technically lose money, but if they have brought large numbers of customers to your company and have then encouraged them to spend much more with you, they shouldn't be marked as unsuccessful as a result. Or an email campaign that doesn't appear to generate all that many leads can still be successful if it has cost virtually nothing and leads to future recall. Similarly, some metrics will indicate success when in fact the results are not as good as they seem.

"Many companies can find metrics a help in terms of focusing their resources on where they want to make significant gains, cutting out less profitable areas of the business and identifying new areas for growth."

Nothing to be frightened of

An increased awareness of metrics needn't be an extra burden for the marketer. Rather, by being aware of the need for measurement, many companies can find metrics a help in terms of focusing their resources on where they want to make significant gains, cutting out less profitable areas of the business and identifying new areas for growth. It's likely that you'll automatically start focusing on segmentation more, for example, as you seek to target your resources more effectively by getting greater value from the markets you operate in.

Ultimately, marketers should be measured by results as that's good for the profession – it will erode the 'colouring-in department' image that marketers sometimes get unfairly labelled with. And it’s good for the individual marketer's career, as well. Rather than being afraid of numbers, engaging with metrics, understanding how they work and being able to speak the right language at senior level, will help any marketer on the upwards career ladder.

Mark Stuart is head of research at The Chartered Institute of Marketing

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