"You can't manage what you don't measure" is a saying that will never go out of style. It's timeless. In 100 years, it will still be applicable and relevant. Measurement forces us to be clear and specific and to crisply define our terms. It is the great clarifier in a world of ambiguous and imprecise language.
A new book from professors out of the Universities of Pennsylvania and Virginia is all about metrics, marketing metrics to be exact. The book is titled Marketing Metrics: 50+ Metrics Every Executive Should Master and authored by Paul W. Farris, Neil T. Bendle, Phillip E. Pfeifer, and David J. Reibstein. It is a type of cookbook with recipes for helping marketing managers or executives to design a scorecard, evaluate their business, or better assess market, competitive, and company trends.
According to the authors, the objective of the book is to take a step "toward clarifying the language, construction, and meaning of many of our important metrics." Given the drive toward making marketing more quantitative, analytical, and accountable, this book is an important work. As the authors point out, marketing is one of the least understood and least measurable functions at many companies. Frankly, marketing often doesn't get a lot of respect and is seen as "soft," especially compared with operations, sales, finance and accounting.
The book's 11 chapters consist of an introduction, nine chapters on particular metric categories, such as pricing or promotion, and a final chapter on how to conduct a marketing metrics X-ray. It is not a book you would read at one sitting or as you might a novel, but it's a great reference book for when you are thinking about metrics and what to measure.
The chapters are titled as follows:
- Share of Hearts, Minds, and Markets
- Margins and Profits
- Product and Portfolio Management
- Customer Profitability
- Sales Force and Channel Management
- Pricing Strategy
- Advertising Media and Web Metrics
- Marketing and Finance
- The Marketing Metrics X-Ray
Rather than go through all 50+ metrics, I'd like to review some of the key definitions and complications, along with some key metrics from chapters 2-10.
Defining Your Terms
Most languages, and especially business buzzwords (e.g., empowerment, alignment, synergy), are not as precise as they could be and are often open to numerous interpretations. As such, it's important to define some terms up front. The authors clarify a number of questions/terms in their introduction.
Michael L. Perla is a principal consultant at a sales and marketing consulting firm. He can be reached at firstname.lastname@example.org.