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Dec 3, 2006

A note on Marketing Metrics

More than ever, marketers are being pressured to deliver hard data on how their efforts increased the company's bottom line. In these days of lean profits and leaner budgets, a focus on metrics can mean the difference between a marketing department that's considered highly valuable and one on the brink of extinction. Three primary metrics are suggested as a starting point for marketers to track their performance. Once they are aware of their competitive position, their desired outcomes, and what it will take to achieve these outcomes, companies will be better able to identify their success factors, the benchmarks, and the appropriate metrics to meet their target. In order to determine which success factors to measure and the appropriate metrics for each, marketers must have a clear understanding of the company's goals Listed below are four key performance indicators that support three metrics gauges:

  • market share
  • lifetime value and
  • brand equity.
These gauges are directly linked to the three specific performance areas that marketing can impact - Acquisition, Penetration and Monetization Acquistion : The first responsibility of marketing is to identify and enable the organization to acquire customers --- for without customers, there is no revenue and without revenue, there is no business. Acquisition enables the company to increase its market share. While marketing may not close the deal, marketing strategies move the customer through the buying process, from awareness to consideration. There are four key performance indicators that enable you to address market share: > Customer Growth Rate > Share of Preference > Share of Voice > Share of Distribution Penetration : The second responsibility of marketing is to keep the customers the company acquires and grow the value of these customers. It is expensive and ultimately disastrous to have customers coming in one door to only just go out another. High customer churn signals a variety of problems and hinders your ability to create leverage. Four performance indicators that will help you drive these penetration-related metrics include: Frequency and Recency of Purchase > Share Of Wallet: Purchase Value Growth Rate > Customer Tenure > Customer Loyalty and Advocacy Brand Equity: Over time, intangible assets, such as a company's intellectual property, customer value, franchises, goodwill, etc. have had an increasing effect on a company's market value. Marketing professionals can improve the market value of their company's by improving their performance in four key areas. > Price Premium > Customer Franchise Value > Rate of New Product Acceptance > Net-Advocate Score A recently published report, Measures + Metrics: Assessing Marketing Value + Impact, written by Glazier, Nelson, and O'Sullivan, corroborates these gauges and performance metrics. Cheers Sudeep