No matter what organization you are a part of, whether it be your own small entrepreneurial venture or a something larger in scale, marketing metrics are a vital consideration to the effectiveness and efficiency of the company.
As a marketing management student, I’ve gained experience in the theoretical and applicable aspects of various tools available to general public for developing and monitoring a marketing plan.
Marketing Metrics are a way for individuals and companies to identify potential issues with their marketing strategy while also measuring the overall results of their marketing efforts, performance.
The great thing about metrics are that many of them are universal, in which majority of the reasonably educated understand what the metric is outlining, and what a change in the metric will indicate.
Let’s review some of my personal favourite metrics, while also clarifying what indicators will allow us to conclude whether or not our business successful. Essentially, we are looking at the requirements for calculating the metrics and the decision-making criteria for success.
Return on Investment (ROI)/ Return on Marketing Investment (ROMI):
Return on investment is a common and extremely useful metric that provides the analyzer with an indication of the overall performance. This is such an ideal metric because not only does present one with great insight on the investment effectiveness, but is also versatile and so simple to perform.
Essentially, Return on Marketing Investment focuses on the same concept, but specifically acts as means for measuring the revenue generated in association with one particular marketing venture. Therefore, when calculating the ROMI, you must take the incremental revenue attributable to the marketing venture and multiple that figure by the contribution margin, then subtract the marketing investment. One last step, divide the whole thing by the marketing investment and Viola!… You have your Return on Marketing Investment.
Regardless of which formula you are using, you will develop insight on the overall profitability of the investment in question making this one of my personal favourite metrics in terms of measuring marketing strategy profitability. A rule of thumb for either of these metrics is the bigger the better. However, be wary if the result is less than 100%, as this indicates a loss from the venture.
In examining the results of brand penetration calculation, a larger figure represents a better overall awareness of the product. After all, in this competitive consumer world, product penetration is critical to producing profit.
Unique name for a metric, eh? Beyond its “cool” factor, this is an importance metric for businesses that launch a new line or product. The results of this metric are presented in percentage form, indicating the amount of sales that the new product is essentially taking away from the business’s previous products.
Ultimately, a low cannibalization rate is ideal, as it indicates that profits from other brands won’t be negatively impacted by the launch of the new product or brand.
Most business, regardless of if they provide services or products, provides consumers with coupons as a marketing strategy to boost traffic and subsequently profit. There is a (pretty simple!) metric specifically designed to measure the impact of coupon distribution on a particular periods sales.
A lot of business is complete online nowadays, and as a result, metrics have been developed to measure online success and indicate potential problems before they become detrimental.
This is a critical measurement for websites that offer online shopping as it acts as a warning for a poorly set up site that encourage consumers to “drop off” of the site prior to purchasing.
Not all consumers who create an online shopping cart are going to complete the purchase; however it is rational to assume that most will. Essentially, the lower the abandonment rate, the greater the indication that your website is performing properly.
Now that we are aware of some vital metrics for marketing, let’s address how we can come up with the required data to calculate these vital metrics. There are many viable measurement tools available online to the average Joe for free! Google Analytics and Social Mention are two of my favourite in measuring the effectiveness of brand and product awareness.
So why use Google Analytics? You gain insight on your visitors, their behaviour and their interaction with your website. As a result, you can tweak your website layout and details, as well as your online marketing efforts in conjunction with the results provided by this free and detailed tool.
My previous blog post “The Art of Listening” utilizes this tool to “listen” to any online activity pertaining to two competing products, Colgate and Crest.
Essentially, Social Mention is a free, user friendly website that tracks all mentioning’s of whichever keyword you search for via all social media websites.
So for example: Say I search for the keyword “ lulu lemon” in attempt to see who is chatting about this particular brand. The follow screen shot displays the results of this search:
As you can see, Social Mention tracks in real time, with the first search finding posted via Facebook only a mere 11 minutes ago! In the left hand corner there are four metrics already calculated for the viewer; sentiment strength, passion and reach.
The sentiment ratio compares positive to negative feedback on the keyword. In this case, for every 6 positive comments on the lulu lemon brand, there is one negative piece of feedback.
The strength percentage figure indicates the frequency of the keyword being mentioned. In this case, there is an 11% chance that the lulu lemon brand will be discussed via social media.
The passion figure relates to loyalty, in that it indicates the probability that people will continue to talk about the lulu lemon brand.
The reach percentage figure indicates the span of awareness of the keyword In this case, 35% of the time; lulu lemon is mentioned by different consumers.
Now that you have an understanding of the importance of metrical analysis, and the ability to gain such insight for free, go out and try it for yourself! You won’t regret it!
Farris, P., & Bendle, N. (2010). Marketing Metrics: The Definitive Guide to Measuring Marketing Performance. Upper Saddle River, NJ: Ft Press.
Google Analytics. (2011) Retrieved from: http://www.google.com/analytics/
Social Mention. (2011) Retrieved from: http://www.socialmention.com/