Posted on 31/07/2017, 14:40
It’s not only Hagrid’s three headed beast of Harry Potter fame that goes by the name Fluffy. Marketing has been “accused” of being ‘fluffy’ by which it is meant that it is not measurable, not accountable and it is unclear how it impacts the business.
That may have been true once, and we have heard many non-marketers quote Lord Leverhulme, founder of Unilever:
“Half the money I spend on advertising is wasted, and the problem is I do not know which half”
But in today’s digital age all your marketing should have a tangible impact on the bottom line and the data is key to your success. The following quote is far more apt
“No great marketing decisions have ever been made on qualitative data”
John Scully 1939-, former president of Pepsi and CEO of Apple
Marketing must be every bit as accountable as every other department. In a previous article we discussed how your marketing plan should be keyed into the wider business goals, producing a set of measurable objectives. Marketers should be able to tell you what they’re doing and why, and how their efforts are improving results for the business.
In this article, we’ll discuss marketing Key Performance Indicators (KPIs) – what to measure and why – and how to create a marketing dashboard giving a quick ready reckoner on where you are.
What does a dashboard look like?
Your dashboard can be as simple or as sophisticated as you like and just like an aircraft’s instrument panel, a good dashboard will tell you about the health of your marketing, its trajectory and whether you are likely to arrive at where you want to be.
Many CRM or automation software packages contain the functionality to create something that is highly visual and provides an instant overview of the key parameters. If you don’t have marketing software, excel will allow you to do something similar (see our free download for an example you can use). The important thing is that the KPIs it visualises are reporting the results that are relevant to your business.
So, what should you measure?
Well that depends upon your business objectives. The chart below shows the results of a survey amongst SME owner managers and highlights three key categories:
The #1 objective for most businesses is to drive sales growth. If that is true for you then lead generation, cost per acquisition (CPA) and business development activity KPIs should take centre stage on your dashboard.
Metrics such as numbers of leads created, cost per lead, new clients / customers in the period and CPA are vital and will tell you a lot about your lead generation, lead conversion, and how much are you spending to secure a new customer.
Some businesses take this further and measure the upstream activity that generates the leads … they know that if the activity isn’t there, the leads won’t flow and downstream there will be a collapse in new client / customer wins!
If you are an eCommerce business then your dashboard needs to show the number of visitors to your site, its ordering page and the number of people who check-out.
For many businesses client retention rates are also key.
Your go-to-market model may depend on ongoing, retained monthly business from your client / customer base. If so, your marketing dashboard needs to tell you your client attrition rate and alert you at the earliest sign of problems.
If your business is more geared to discrete repeat purchases from a loyal customer base then measure how many clients are coming back and the average client spend.
Client / customer engagement can be an important barometer; KPIs such as newsletter sign-ups are a good example of this and some newsletter automation software will even give you an engagement rating for each person on your mailing list.
If your key marketing objective is brand building, then measure awareness KPIs such as:
Facebook and Google both have an awareness measure that is an estimate of the number of people reached that will recall your post / ad / content.
But … Don’t focus only on the numbers
As well as the hard numbers, marketing should report on their monthly activities. It is important that they are accountable for what they said they’d do!
Return on Marketing Investment (ROMI)
ROMI is a way of measuring the business contribution attributable to marketing and can be calculated in many ways according to your business objectives. E.g.
Sales / Marketing ‘invested’ or risked.
ROMI can be measured in at least two ways
If you aren’t using KPIs to measure your marketing efforts or calculating the return on your marketing investments then you don’t know if you are doing well, if you need to improve, or if the money you are spending is giving any benefit at all.
The metrics you select need to be appropriate to your business objectives and summarising them in the form of a highly visual marketing dashboard that is published in your organisation is a great way of bringing accountability to a function that is vital to your business.
In or last article, “Measuring What’s Important” we discussed key performance indicators or KPIs. There are lagging KPIs such as financial measures that tell you what just happened and leading KPIs that indicate what your financials are likely to look like.Read More
Following on from our previous blog in this series, “The Most Important Thing”, the next step is to translate your goals into action. For this, setting your targets and measuring your performance against them is vital to making them happen.Read More
What do you want to achieve in your business? Every owner manager had their reasons for why they started out on that journey – what are yours? And more importantly, are they still valid, are you on track, or are your hopes and desires being frustrated?Read More