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Kpis To Measure Marketing Effectiveness

Posted by Anonymous on 10/14/2005 at 6:00 AM ET 125 Points

I would like to understand how other organisations are measuring the effectiveness of their marketing departments. We are in a position like many other companies where we need to demonstrate the impact of marketing on the business overall which of course includes the bottom line. What approach has your organisation adopted and what are the metrics being used?

Posted by blanalytics on 10/14/2005 at 9:49 AM Accepted

I don't mean to be critical of Douglas, but the 5 points he listed are sort of like being evaluated for how many times you can hit a wall with a rock. None of that has anything to do with results. Leads are only relevant if they are closed...so close ratio is more significant.

Now if you are in a BtoB enterprise, what I am going to say here is difficult to do. But if you are in a BtoC firm, this is imminently feasible.

Marketing can and should be measured relative to the ROI and incremental revenue per marketing expenditure. That can be done for each marketing initiative. Thus, it is almost always feasible in a BtoC enterprise to measure incremental sales relative to any marketing initiative. Once that is done, you can tie costs and margins to that to derive ROI.

If I could be a little bit mercenary here, this is what my company does. It is called marketing effectiveness modeling and there are some papers on the website www.bottomlineanalytics.com to learn more about it.

The benefits of the exercise are usually substantial. That is because marketing mix spending usually is not allocated in the most effective fashion. We have found substantial evidence through experience that companies can gain or save the equivalent of 20% or more of their total marketing budget just by doing a little due diligence here and going through the process.
Posted by wnelson on 10/14/2005 at 9:49 AM Member
My experience has been in Product Marketing in the B2B world (similar to brand management in the B2C world). Marketing has been measured on:
- Revenue (meeting plan)
- Margin (meeting plan - given we control price too)
- % new product revenue of total revenue (this is a indicator of product definition and launch success
- Design wins (a design win is when a customer specifies the product for use in their product and buys over $1000 - presumably for prototype build. This minimum buy is to ensure the customer has actually committed to the design and is something we could measure versus just a paper with our product on it)
- Staying within the department budget
I hope this helps.

Wayde
Posted by RafeVDB on 10/14/2005 at 11:52 PM Member

Hello - Seems to me a lot depends on the structure and scope of responsibility. I've seen organizations where "marketing" is nothing more than a support organization for sales. I've seen other organizations where marketing is responsible for the full scope of real marketing - from segment targeting to product definition to product management to pricing to promotion to sales training and incentives. In still other organizations, marketing means communications and advertising. Still others, product development.

Certainly, marketing departments can't be measured by the same metrics - they aren't responsible for the same things. Measuring a support group by revenue metrics would be interesting indeed!

:-)
Posted by jlevin on 10/15/2005 at 12:05 PM Member

One way I have seen clients do this is to run programs concurrently in test and control groups. You expose one group to a promotion, campaign, discount, etc., and observe their behavior over time as compared with consumers who were not exposed to it. This can be most easily done, for example, with direct mail campaigns. However, it can be applied to other programs as well, for example trade shows, by observing the behavior or customers brought in by the show compared with others. A few rules of hand -

1) Objective metrics should be set up ahead of time.
2) One of the challenges in these campaigns is to fight the instinct to apply the campaign to all eligible - some execs will feel that they are losing an opportunity by not exposing control group customers, but the gains can be well worth it.
3) I argue that it's not so much a matter of holding managers accountable, as it is developing an understanding of what really works and what gives the business the greatest benefit - similar in a sense to what some of the others have said.

Good luck,
Joy Levin
Posted by st on 5/13/2009 at 8:41 AM Member

I agree with your above responses but if you could begin to track measured KPI's of specific campaigns as well as brand engagement and general profile raising, you can start to gather some benchmark stats on your marketing efforts. These could include measurements such as (monthly reporting of):
- No. of leads generated - has this increased over time
- Lead to opportunity conversions - is the lead quality effective
- Cost per lead
- Number of website hits (unique and returning) to cater for both new (hunting) and existing clients (farming)
- ROI - Value of sales against spend of campaign
- Newsletter subscriptions - has this increased
- Newsletter click throughs (increase) and unsubscrobe (decrease)

I hope this helps.

Sarah
Posted by John.m.barton on 7/23/2009 at 9:25 AM Member

Marketing should be responsible for awareness of the advertising, awareness of the brand, brand image, purchase intention, attitude toward the brand as “aalzu3by” said, but I also think that marketing is in the business of generating qualified leads, at least with most of the work I do.

Therefore a key metric should be number of qualified leads generated by a campaign. This is a measured marketing philosophy. Ideally, those leads are passed to Salesforce.com, or something similar, and the eventual close rate can be determined. Bonuses should reflect both qualitative feedback on marketing efforts that can only be measured indirectly with market research, but a good part of bonuses should be based on number of qualified leads, or accepted leads.
Posted by dwain on 10/18/2010 at 7:40 PM Member

hey guys, i am currently setting up the marketing & public relations department for a financial service provider here in Fiji.

now considering that the company is a government enterprise - the HR department have no clue on KPI's & KRA's - can someone please help me out in terms of what real measurements i can include in the contract as well as KRA's for a senior marketing officer

thanks

www.housingfiji.com
Posted by wnelson on 10/18/2010 at 8:00 PM Member

dwain,

This question has been raised by someone else and that person received an answer for which they were satisfied. The original author closed the question. Because of this, you probably won't receive much attention on your "add-on" question. I recommend you start a question of your own. All the experts of this sight will read it and you will recieve much good advice and helpful suggestions.

I hope this helps.

Wayde Nelson

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