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Monday, October 31, 2011

True Value: Measuring Marketing (Part II)

(Part II of a two-part post)

Photo from jannoon028
As started in my last post, measuring marketing performance has always been a challenge to marketers due to the vast number of mediums to execute against, as well as determining what metrics are meaningful.  Marketers have come a long way; today, marketers have the ability to capture data elements from almost every stage of the buying process from awareness to satisfaction. As a result, we face a flood of data, making the identification of meaningful data overwhelming.

As marketers do better jobs at measuring their efforts, they are using KPIs (Key Performance Indicators) more religiously. KPIs are quantifiable measurements, agreed to in advance, that reflect the critical success of a firm, group, practice, product, etc.   KPIs for marketing vary according to specific areas of responsibility, but are essential for valuing effectiveness of initiatives.

What you Can Measure

The question I get a lot is "what can you actually measure?"  You can measure almost all of your efforts - the key is your objective for using a medium and setting KPIs to measure effectiveness of marketing mediums in achieving your objectives.  Below are a few examples of areas that can be measured - just the tip of the iceberg.  I stress, it is important to set objecitves for your efforts, otherwise you will not know what initiatives to execute and what to measure.

  • Website – ensure you develop KPIs for analyzing your success (hits, page vies, time on site, number of downloads, etc.).  These will help determine if your online efforts are yielding results that help you with your objectives.
  • Social media – based on your objectives you can measure your blog subscribers, email subscribers, Twitter followers, Facebook fans, YouTube subscribers, SlideShare followers, social bookmarking followers/friends, etc.  If you keep track of your community stats you can analyze increases or decreases and where you need to spend more time.
  •  Advertising – the hard one to measure, especially for B2B - as most advertising is to increase awareness.  To be most effective, ensure you have a call-to-action on advertising to provide easy connections for access to information.  For B2C, the call-to-action is critical (phone number, web address, promotion code, toll-free number, etc.).
  • Direct Mail/Collateral – targeting is key for measurement in this area as it is voluminous - especially for B2C.  Ensure you know what you are measuring so you know if the piece is effective.  A few tracking ideas include, response rate (via use of personalized URLs, campaign page on website, use tracking codes on coupons or reply cards/forms/envelops, use specific toll-free numbers for a campaign, create a specific e-mail address for the campaign, etc.).  
  • Events - remember that there are event metrics as well as post-event metrics. You can measure desired vs. actual attendees, evaluation of attendees, sales that the event helped generate, number of attendees followed-up with, business generated from event, etc.
  • Public Relations - the key is how these are helping reach set objectives of the organization.  Examples of KPIs: Number of articles, subscribers, posts, visits, number of 500 word+ features, cover stories, executive quote inclusions, company and executive profiles, percentage positive/neutral articles, comments in Twitter, number of negative @messages, etc. 
  • Client Satisfaction - companies should set their KPIs for understanding clients' impressions of our product/service.  KPIs can also uncover needs or areas for up-selling/cross-selling business.

Examples of specific KPIs:
  • Account Expansion -   Measures the increase in business from existing clients
  • Acquisition Cost - The cost of a single response to a promotion or total cost divided by total number of responses
  • Customer Churn - The retention to attrition ratio in a given period
  • Lead source – when a deal closes or sales are made, determine where the buyer originally made contact (via event, direct mail, newsletter, etc.). This can help identify channels that work more efficiently than other channels for business acquisition.
  • Market Share - Product or service sales as a percentage of the sales across all competitors
  • New Customers -  Percentage of new customers over existing client base
  • Price Sensitivity - Price flexibility of each product per market segment. How much are people willing to pay for the product in given industry, geography or application based on survey results.
  • Reach - The percentage of potential ad viewers who will be exposed to at least one ad in a given period
  • Sales Per Customer - Number of sales made by a given customer in a given time frame

Marketing is more than an expense to an organization - it is investment that should lead to increased opportunities for revenue generation.  As marketers, it is our job to help demonstrate the effectiveness of our strategic initiatives and execution of tactics.  Here's to planning and analyzing the effectiveness of your marketing efforts.

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