Measuring What Matters Assessment
Peter Drucker, widely regarded as the “father of modern management”, once said, “if you can’t measure it, you can’t manage it”. Now, more than ever, measurement is a fundamental part of the marketing process. Good marketers are expected to understand marketing analytics and use marketing performance as the basis for allocating budget effectively. As a result, marketers must measure metrics that matter; metrics that can translate to strategic actions and drive accountability.
The key to measuring marketing effectiveness lies in the ability to benchmark performance over time. Measurement is of little value unless it can be used to assess the current state of operations and help marketers determine how to optimize performance. Ultimately, organizations can only improve marketing effectiveness if they have a baseline to compare existing performance. Marketers should be utilizing unique metrics to measure three areas of marketing operations:
- Budgeting and Execution: Metrics for measuring how well the current marketing plan is tracking against budget and on-time execution. This includes a top-down and bottom-up view of budget allocation and the ability to track performance against plan and forecast accuracy.
- Campaign Performance: Metrics for measuring closed-loop marketing on marketing campaigns; to help link marketing spend with related performance. (For example, increase lead-to-sales conversion, increase click-throughs, increase sales for a certain product, maximize form captures, etc.)
- Operational Efficiency: Metrics for measuring the cost of marketing operations; workflow and processes cycle time, time spent managing activities, time spent on analysis, content re-use, shipping costs, etc.
The following questions will help determine steps your organization can take to improve measurement practices.
Read each question and write down the appropriate points based on an honest assessment of the current state of your marketing operations.
Does the marketing function have a set of pre-defined metrics that are benchmarked over time?
- Yes, there’s no room for improvement - Award yourself 4 points if you are confident marketing is measuring the right metrics and using these metrics to make better decisions over time
- Yes, but we could do better- Award yourself 2 points if you feel fairly confident you are measuring some metrics over time, but there is still some room for improvement
- We need to work on this- Award yourself 0 points if you know your marketing function needs to spend some time defining which metrics to measure and how to measure them
Do you measure customer lifetime value?
- Yes- Award yourself 4 points if your organization has ever tried to measure customer lifetime value, and used this to determine the maximum cost per lead.
- No- 0 points if you are not quite sure how to calculate customer lifetime value
How confident are you in your ability to measure current performance and adjust marketing campaigns in mid-cycle?
- Confident- Award yourself 4 points if your organization can adjust marketing campaign effectiveness based on mid-cycle campaign performance
- Room for Improvement- Award yourself 2 points if your measurement activity tends to be weeks or months after a campaign is executed
- We can’t do this today- 0 points if, for whatever reason, you can’t measure marketing campaign performance
Do you have access to data required to measure marketing performance?
- Yes, and it’s timely- Award yourself 2 points if you have access to the data necessary to calculate the metrics your organization uses (or would use) to measure marketing performance
- Yes, but it’s difficult to get- Award yourself 1 point if you have access to the data necessary to calculate the metrics your organization uses (or would use) to measure marketing performance, but the time it takes to gain access impacts the ability to maximize marketing effectiveness.
- No- 0 points if the data required does not exist, or is very difficult for marketing to get their hands on
a._____+ b._____+ c._____+ d._____= ______
How did you score?
- 0-4 Points: You’re falling short - A final score between 0 and 4 indicates you could increase marketing effectiveness considerably by measuring and benchmarking metrics over time. Every organization must determine pre-defined metrics for measuring marketing performance. Start by mapping out a few different “nice to have metrics” to measure each of the three main categories of marketing measurement: Budgeting and Execution, Campaign Performance, and Operational Efficiency.
- 5-10 Points: You’re a few inches shy - A final score between 5 and10 indicates you marketing group could use some education on marketing measurement. Consider automation and technology to help standardize and benchmark performance over time. If access to data is a significant barrier to effective measurement, list out the different sources of data in your organization. Then prioritize each source and start tracking small win’s by going after the low hanging fruit. Partial data is better than no data in the eyes of the CFO.
- 11-14 Points: You’re measuring up - A final score between 11 and 14 points indicates you have a good grasp of marketing performance. Quality data and superior marketing execution suggest you have already used marketing measurement to optimize marketing execution and operational efficiency.