Good Metrics to Measure Marketing Productivity
A metric is a performance measurement used as a baseline to compare the actual results of a business plan to the projections. For example, when an inside sales representative's daily minimum for outbound calls is 20, that is used to gauge her performance. A marketing plan outlines a series of goals the company wants to reach, including units sold, revenue generated and an increase in market share. Certain metrics can gauge the overall success of a marketing plan.
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Return on Investment
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Return on investment is the difference between the overall cost of a marketing plan vs. the profit the plan generated. This can be a powerful metric that can be broken down into components and analyzed to determine which parts of the marketing plan were effective and which were not. Performance-tracking vehicles need to be in place to help break down return on investment. For example, if you spend 10 percent of your advertising budget on magazine advertising but only 1 percent of your customers indicate that they were influenced by the magazine ads, there is a low return on investment for using magazine advertising for that target audience.
Demographics
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Sales are tracked by unit and by revenue in a marketing plan. When you develop sales reports to develop marketing metrics, you should break the sales down by demographic information to determine the penetration into your target audience. For example, your sales data may project that no less that 60 percent of the unit sales for a marketing plan will come from your primary target market. That makes 60 percent your demographic metric that you will use to measure unit sales performance in your primary market.
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Brand Equity
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Brand equity is the ability of your product to sell when compared to the competition. It can be difficult to create a metric for brand equity in a marketing plan, but Ken Homa, writing on the Georgetown University website, recommends using comparative sales as a marketing metric. Compare the unit sales of your product vs. the competition during the period of the marketing plan. One way to gather this data is to ask your retail vendors how many units they sell of each product. If you use distribution, you could track unit sales by monitoring the online inventory of your distributors and compare daily inventory numbers to determine the number of units sold.
Customer Satisfaction
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You can establish customer satisfaction metrics in a variety of ways. You can do marketing surveys and set a metric for the percentage of customers that say they are satisfied with your product. Another way to gauge customer satisfaction is by the number of non-damaged returns you receive. Customer satisfaction is important to marketing productivity because it indicates how well you are setting customer expectations for your product. High customer satisfaction means that customers are getting what they expected from your products based on the information in your marketing.
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References
- Georgetown University, the Homa Files; Marketers Turn to Metrics to Measure the Impact of their Initiatives; Ken Homa
- CBA PracticeLink: Marketing Metrics: How to Measure Marketing Activities; Dom Bautista; 2004
- Journal of Marketing: Measuring Marketing Productivity: Current Knowledge and Future Directions; Roland T. Rust, et al.; October 2004
