The Secret Sauce for Crafting Your Marketing KPI’s : Special Guest Blog
This is a guest blog from Laura Patterson - President of VisionEdge Marketing. Laura is an early pioneer on the science side of marketing, Laura is also recognized as one of the leading authorities in marketing measurement and performance, marketing operations, and marketing data and analytics. JAMSO supports the content provided and hope this special offering sprinkles a fresh perspective and insight to the specialist world of marketing - a must for every business.
It doesn’t matter what industry, part of the world, or size of company, every marketing organization today is being tasked to measure its value, impact and contribution. You don’t have to take my word for it, there’s plenty of research by IBM, ITSMA, Forrester, us and others revealing the increased pressure marketers are facing in this area. One of the key challenges is selecting the right metrics and key performance indicators. If you want to influence success, determining the right marketing KPI’s for your business is critical.
Key Performance Indicators (KPIs) are essentially a special kind of metric. Metrics help marketers assess their performance, whereas KPI’s are intended to provide leading insights into the future impact of marketing efforts on business outcomes. The number of metrics marketers can measure is nearly infinite, ranging from activity metrics associated with marketing deliverables such as number of campaigns and content produced; to output metrics which focus on measures such as response rates, open and click through, shares and coverage, and of course “leads.” The 2015 Marketing Performance Measurement Study Abbreviated Summary: A Diagnosis and Prescription for Marketing Performance Measurement revealed that best-in-class marketers are better at selecting and reporting on outcome metrics which link marketing performance to business outcomes. Once you have these metrics the KPIs, such as share of preference, share of wallet, product adoption rate, and others become more evident.
While your marketing metrics and KPIs might vary, they often fall into a common set of categories related to quality, quantity and rate of customer acquisition, customer retention, category and market growth, and of course financial contribution. Selecting the right marketing KPI’s is a bit like making a fine sauce, it takes the right ingredients, tools, time and a bit of trial and error.
Use this 4 step recipe to assist you on the process:
1. Determine how your organization is going to measure success.
Having that information is going to help you lay the foundation for establishing your organizations business outcomes and a critical underpinning for selecting a KPI.
2. Once you’ve identified the business outcomes, clarify the metrics to measure success.
Many marketers we’ve worked typically use metrics related to gains in market share, improvements in customer value, and so on.
3. Create a list of possible KPI’s that your marketing organization can use to determine whether or not an investment will have a positive impact on the desired business outcomes.
You will want to select indicators that both correspond to a change in a business outcome and have the most influence on that outcome.
4. Keep track of the results for each KPI and the success outcome.
Now you can perform an analysis to see which KPI’s are having direct impact on your business outcomes. What should you look for when monitoring your KPI’s? You want to develop benchmarks and norms, so look for changes in your KPIs and the corresponding outcomes. When tracked over time, that information will serve you as a gauge: when numbers are outside of the norm, the corresponding outcome will be affected.
A common question among marketers with whom we work with is, “How many marketing KPIs do we need?” The number of KPIs varies among organizations. It depends on the number and variety of business and outcomes and metrics. The real key question to ask is, “What performance indicators will serve as a signal of future performance”?
For example, does your analysis support customer satisfaction as an indicator of sales and ultimately market share? If your analysis does, then the marketing investments that create an increase in customer satisfaction are expected to generate an increase in market share. And the opposite is just as important, because a decline in customer satisfaction would signify that advances in marketing share (or the stability of your current market share) are in jeopardy. So once you’ve identified your marketing KPI’s, strive to tap into the activities that have proven success and will positively affect your business outcomes.
One of the key benefits of KPIs is that we can use data to support predictive and scenario modeling, which are essential for business planning and resource allocation. For example, if you data shows that there is a change related to customer behavior – it may be signaling a shift in the market, thereby enabling the organization to move in anticipation of the change and accordingly adjust product, channel, pricing and segmentation strategies.
Now that you know how crucial KPI’s are in determining future success in your organization, give it a try. Follow the 4 steps we provided you with and start selecting your KPIs. Tap into our expertise at VisionEdge Marketing when determining your marketing KPIs, we are looking forward to working with you to help you prove and improve the value of your marketing.
Bio: Laura Patterson is a proven marketing practitioner, respected consultant and dynamic speaker. She is known for her practical, no-nonsense approach to proving and improving the value of B2B marketing. Inventive and engaging, Laura quickly gets to the heart of the matter to provide actionable recommendations and solutions. Because her 20+ year career began in sales and now spans customer relationship management and marketing, her recommendations are always cross-functional friendly. An early pioneer on the science side of marketing, Laura is recognized as one of the leading authorities in marketing measurement and performance, marketing operations, and marketing data and analytics. A strategic marketer, data and metrics master, she has helped over a hundred companies in a variety of industries fulfill their marketing potential and achieve competitive advantage.