As the Marketing industry continues to evolve, businesses are increasingly turning to data and analytics to gain deeper insights into their strategies and outcomes. Marketing analytics involves the systematic analysis of data from various marketing channels to understand performance, optimize campaigns, and drive informed decision-making.
Although marketing analytics covers a broad range of areas, this blog post will be the first of 2 posts. This first post will discuss the importance of marketing metrics in marketing analytics and focus on how to pick good metrics and avoid bad or inappropriate ones. The second post will consider the benefits – as well as the frustrations – that building or having marketing analytics capabilities can bring.
What Are Marketing Metrics?
Marketing metrics are quantifiable measures used to gauge the performance of marketing activities and strategies. These metrics provide valuable insights into various aspects of a marketing campaign, helping businesses understand what works and what doesn't.
Why Are Marketing Metrics Important?
- Help in evaluating the performance of marketing efforts. By tracking key metrics or indicators, marketers can identify which strategies are effective and which need adjustments. This iterative process helps refine campaigns for optimal performance.
- More efficient resource allocation. By understanding, analyzing, and acting on key metrics, marketing teams can prioritize where to invest their time, money, effort and people. Understanding marketing metrics, which ones to track and how to understand them, can help modest marketing budgets to go further.
- Enable data-informed decision making. In a rapidly evolving digital landscape, decisions based on intuition alone may fall short. Metrics provide more tangible justifications for decision-making, which hopefully reduces uncertainty and increases the likelihood of success.
How to Choose Marketing Metrics?
In 2006, John Davis published a booked called Measuring Marketing: 103 Key Metrics Every Marketer Needs. Each metric has its own merit and it would be good to be familiar with what most of these are, (despite some being outdated and replaced with newer, digital metrics), I don’t think I could keep track of 103 metrics on a regular basis.
In fairness, he does divide the metrics into sections such as: Marketing Planning and Customers (32 metrics), The Offering (48 metrics) and Sales Force (23 metrics). Nevertheless, in my experience, you don’t need this many metrics to help make data-informed decisions about your marketing activities. Additionally, not all metrics are created equal and not all metrics will help understand and run your marketing activities.
If you are familiar with KPIs (Key Performance Indicators) then you know that KPIs are about selecting the key metrics for your business or function, ensuring they represent the true pulse of what you are trying to achieve. They are not a one-size-fits-all solution where everyone uses the same KPIs. NOTE: If you’re not familiar with KPIs – or their cousin, OKRs – check out my earlier blog post.
With this in mind, how would you select good or appropriate metrics for your marketing activities?
- Make sure they are relevant to your activities and goals. Effective marketing metrics align with broader business objectives. They measure progress toward achieving specific business and marketing goals. For example, you might be an established business with a goal to improve customer loyalty. As a result, you might monitor more retention metrics over acquisition ones. Whereas a company that is just starting out may need to pay more attention to acquisition metrics until they can build a customer base and start worrying about loyalty.
- Make sure they are actionable. Good metrics provide insights that enable marketers to make informed decisions but more importantly, take action. For example, if one of your business goals is to increase revenue from an established base of customers, you might want to use average order value (AOV) as a metric and monitor changes over time. You can take action by experimenting with recommendation engines or product bundling options to increase your AOV and potentially overall revenue.
- Make sure metrics are measurable and trackable. It doesn’t help much if you define the best metrics or KPIs if you can’t measure or track them. For example, if you want to improve customer loyalty but you aren’t able to identify whether customers have multiple purchases, it would be impossible to measure customer loyalty, never mind understanding if it has improved.
If these are how you select good or appropriate metrics, how do you avoid bad or inappropriate ones for your marketing activities?
- Avoid vanity metrics. So many dashboards are riddled with vanity metrics. These are metrics that might make your business or marketing activities look impressive but are without any real business impact. To quote Shakespeare (in part), vanity metrics are akin to “a poor player, that struts and frets his hour upon the stage, and then is heard no more: it is a tale told by an idiot, full of sound and fury, signifying nothing.” Vanity metrics do just that, signify nothing.
But be careful here. What may be a vanity metric to one is not to another. For example, if you are just starting your business, website traffic might be an important metric to indicate if you are building awareness. But for an established company with millions of visitors, this might be a vanity metric. It looks high and impressive on a dashboard but doesn’t indicate any advancement towards a business goal of improving customer loyalty or sales.
Impressions tend to be considered a vanity metric. In social media or online advertising, Sprout Social defines impressions as “the number of times your content is displayed, no matter if it was clicked or not”. Similar to website traffic, if you are building awareness and your social media posts are growing from 50 impressions to hundreds of impressions, this is important to consider because your content is being displayed more frequently. This information is actionable because you can look at which posts got more impressions and try to replicate those successes.
However, if you are a large company who regularly gets thousands of impressions, you likely aren’t using impressions to gauge awareness like a small company might be. Instead, you would be more interested in which impressions led to engagement and or a subsequent conversion. In this instance, you might have a large and exciting number of impressions on your dashboard but what if you had little engagement or no conversions? How would impressions help you take action then?
- Avoid using metrics in isolation or without context. Not unlike the how you select good or appropriate metrics, some metrics work better when used alongside other ones. For example, you shouldn’t just look at an email click-through-rate (CTR) and ignore conversion rate. Or you shouldn’t just look at a website’s add-to-cart or checkout funnel metrics without looking at conversion rate as well (however you have defined “conversion” in these examples).
Although marketing metrics and KPIs are invaluable tools for businesses aiming to thrive in today's competitive landscape, we need to remember they are just that – tools. Leveraging the insights gained from metrics, combined with experience and expertise, marketers can steer their strategies toward success. Embracing a data informed approach not only enhances performance and resource allocation but also helps achieve marketing and overall business goals.