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Marketing Metrics <P1> (OVERALL METRICS (The primary objective of…
Marketing Metrics <P1>
GOAL SETTING
Establishing targets for performance is one of every manager's essential functions, and is the first step in the process of marketing performance evaluation. Marketing metrics can be thought of as a way to link individual marketing tactics (such as an online ad, a public relations campaign or a channel promotion) to overall strategy.
When setting a performance target with a new metric. managers are left with two guidelines Two guidelines. First. assess other tactics' results on these metrics before setting targets with new metrics. Second, when it is necessary to set targets without the benefit of experience, such as in the case of a very new promotional tactic for the organization. The adage to try to set achievable but challenging goals is good advice.
Three levels of targets for marketing performance. The most conservative target is the "external" target, which may be revealed to analysts and the business press. The middle target is known as the "internal" or actual target, with the .. "stretch'' target being the most ambitious, providing an aspirational goal for employees and encouraging them to think about new ways to substantially increase marketing effectiveness.
The setting of specific and challenging goals has long been shown to be associated with superior performance when compared to setting less ambitious goals or no goals at all.
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OVERALL METRICS
The primary objective of most businesses is profit. which is a good starting point in setting an overall goal for a marketing initiative.
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A derivative of ROI , return on marketing investment (ROMI) focuses only on the incremental profit and costs that can be attributed to a specific marketing campaign or tactic. ROMI relies on the ability to estimate the discrete profit that is attributable to specific actions.
Payback period the projected length of time until the marketing initiative pays for itself. Given estimates of the costs to develop a new product and the projected profit flows over time, the payback period can be calculated.The sole use of this metric favours smaller. more incremental projects over larger, longer-term projects - even those with substantial long-term profit potential. Payback period also ignores any profit achieved after the breakeven point and does not take into account the time value of money.
Net promoter score (NPS) quickly measure customer loyalty by asking only one question of customers. Customers are asked, '"On a scale from 0 to 10. how likely is it that you would recommend our company to a friend or colleague?"
Market share is another commonly used overall metric. Simply put market share is a particular company's percentage of sales of the entire market as the company sees it.
Customer lifetime value (CLV) attempts to predict the value of the future profit flows associated with an individual customer over the length of time the firm can retain the customer.
Customer lifetime value (CLV) attempts to predict the value of the future profit flows associated with an individual customer over the length of time the firm can retain the customer.
Note that within CLV. there are two distinct metrics. each of which can be used to set goals individually: customer retention rate and margin per customer.
Customer satisfaction (CUSAT)
Asking customers to rate three aspects of their experience with the company: 1) level of overall satisfaction; 2) the company's performance when compared to the customer's expectations, and 3) performance compared to the customer's ideal product or service in the category.
PROMOTIONAL METRICS
Once targets for overall metrics have been established. supporting goals for individual marketing mix elements should be established. so as to develop a congruous system of cascading goals that allows for both the tracking of overall success and the understanding of exactly which marketing tactics were impactful and which were not.
Brand awareness plays a crucial role in determining which brands will be considered by a consumer and which will not; consumers cannot consider alternatives that they are not even aware of.
Brand awareness can be measured using recall (i.e .. unaided awareness) or recognition (i.e .. aided awareness).
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Brand preference indicates the likelihood of potential customers favouring a given product (for either rational or emotional reasons).typically from among a choice set of relevant competitors.
Purchase intentions are typically measured by asking potential consumers how likely they are to purchase the product in a given time frame. While purchase intentions correlate significantly with actual purchase behaviour. intentions are not a perfect predictor of sales - particularly for innovative new products.
Brand equity is the set of assets (and liabilities) associated with a brand that adds to ( or subtracts from) the value provided by a product or service to a firm and/or the firm's customer.
Share of voice is the portion of total advertising activity within a product category conducted by a given brand.
Most firms would prefer to have a lower share of voice (and thus lower adve11ising costs) while more efficiently attracting customers through distinct. memorable ads
Cost per impression CPM gives an indication of the cost efficiency of promotional tactics at exposing potential customers to brand messages.
Customer acquisition cost measures the cost to acquire one additional customer through a given promotional tactic. This puts the emphasis on the results of the promotion (customer acquisition) instead of merely generating impressions.
