Probably no other element of your marketing strategy has as great an impact on your bottom line as using marketing analytics and marketing metrics to tweak your marketing strategy. Marketing analytics allow you to track results from your marketing strategy and, well designed programs, highlight areas of poor performance quickly so firms can modify their marketing strategy to improve performance.
The RIGHT metrics
To improve performance, you need to have the RIGHT metrics. What constitutes the RIGHT metrics varies depending on the type of business you have, your target market, and factors impacting that market. Jack Welsh says this about metrics:
You might, for instance, have a strategy around innovation aimed at producing the leading products in every cycle, or you might have a strategy to become the low-cost global supplier, or you could have a strategy to globalize a company, taking its strengths in one market and translating them to every market.
Some metrics, such as Net Income are universal — applying equally well to all businesses. Other metrics, such as time to market (used to assess how long it takes a firm to bring a new product or product improvement to the marketplace).
Regardless, applying these metrics blindly might not be the right marketing strategy. By concentrating on net income, you might not invest in innovation that costs money now and may not provide returns until sometime in the future. You also might postpone equipment maintenance, leading to greater costs as poor maintenance leads to increased frequency of equipment replacement.
Having the right metrics can be very useful in planning your marketing strategy and tracking your performance; having the wrong metrics leads you to focus on improving the wrong things which doesn’t help your marketing strategy and may even lead to poorer performance.
For instance, Jack Welsh, former Chairman of GE, recently stated that an overemphasis on metrics assessing short term shareholder wealth was
On the face of it, shareholder value is the dumbest idea in the world
Nascent social media is facing its on analytic problems. Specifically, concentrating on gaining large numbers of followers on Twitter or Facebook friends may have no impact on your performance. For instance, your social network may not contain those in your target market — consumers who have a need for your product, and the money and authority to buy it.
By focusing on improving these marketing metrics, you are expending scarce resources on the wrong things. This leaves fewer resources to concentrate on elements of your marketing strategy that DO have the potential to improve your performance.
Solution to your marketing strategy problems
- Don’t think just because other businesses are measuring something, you have to
- Understand your target market and what motivates them to purchase your product
- Data has a cost, so measure those things that have the greatest potential to impact your performance
The Right People
In order to be effective, metrics have to reach the people who have the authority and expertise to plan or make changes to the firm’s marketing strategy. Unfortunately, research suggests that analytics may not be reaching decision makers.
A related problem is that decision makers may not understand the metrics they get. Or, they don’t know what decisions will impact these metrics. Similarly, decision makers may be inundated with data and might miss critical information hidden by too much unnecessary information.
- Identify influencers and make sure they get reports detailing performance of your marketing strategy
- Graphical or visualization software can significantly improve how well managers understand reports and reduce the cognitive load associated with handling large amounts of data. Here is a good overview of available visualization software.
- Training will help decision makers understand how to interpret analytic reports.
Metrics – An Invitation
I’ll concentrate on metrics and analytics the rest of the week. If you have a suggestion of a metric you’d like to see presented, let me know. If you want to share a metric you find valuable, please contact me about writing a guest column to introduce my network to your tool.