If you're like most marketers, measuring marketing is among your top priorities. With little effort, you have no shortage of things you can measure: budget-to-expense ratios, on-time delivery, people-to-budget ratios, response rates, click-through rates, website traffic and activity, media mentions, article views and shares, fans, followers... The list goes on.
The purpose of measuring, however, must extend beyond just collecting metrics. Measuring for the sake of tracking activity without clarity of the expected impact and value becomes a time-consuming, meaningless exercise.
Instead of measuring for measurement's sake, best-in-class marketers tie metrics to business impact and contribution. The real focus then is to understand the role of marketing in terms of what we bring to the business.
Unfortunately, the discussion around generating revenue has muddied the water. Though every function within an organization must in some way support revenue, sales leadership serves as the chief revenue officer. Where does that leave us in marketing?
Creating Value for Our Customers, Creating Value for Ourselves
As marketers, our purpose is creating value for customers while capturing value for the organization. If we think in those terms and follow the best-in-class marketers, then we should choose to select, collect, and report on metrics that demonstrate how marketing is creating and capturing customer value.
Every marketer, regardless of company size or industry, has the opportunity to measure customer value.
We may inherently understand customer value, but to be on the safe side, let's be sure we're on the same page.
Creating customer value occurs when customers believe they received at least what they expected—if not more—for the price they paid.
Capturing customer value occurs when the value of the customer exceeds the cost to acquire or retain the customer.
Through increased pricing transparency, product commoditization, product/service customization capabilities, and the Internet, power has shifted from sellers to buyers. Therefore, the ability to create customer value is a competitive advantage. A company cannot stay in business if the cost of creating customer value exceeds the value the company receives in return. That is why both sides of the value equation must be included in the metrics Marketing establishes, tracks, and reports.
Value creation and capture metrics enable us to change the focus of our investment conversations from being about marketing activities and outputs to a conversation about outcomes.
Tips for Measuring Value
Ready to take the value creation plunge? Here are some key considerations:
- Define the data. A customer value and capture approach may require more than just changing metrics; it may require changing the types of data you collect.
- Focus on customer intelligence. As you evaluate your data, you may need to address the strength of your customer intelligence, such as customer supplier, touchpoint and channel preferences, buying criteria, buying processes, and buyer personas. A quick assessment will reveal how the extent of your customer intelligence. A "no-lie" assessment by an objective expert may help pinpoint your strengths and weaknesses as well as help you design an effective and efficient approach for developing and measuring customer value creation and capture.
- Establish the right metrics. The right metrics will help you fine-tune your initiatives and ensure you invest your limited resources (time, money, and energy) the best way. Measuring customer value and capture may not be easy, and you may encounter some challenges, but those types of metrics enable you to measure how well you are achieving marketing's purpose.
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Revisit your metrics and examine which ones really demonstrate marketing's ability to create and capture value.
If you are missing these types of metrics, it may be time for a change.
Continue reading "What You Should Measure in Your Marketing—and Why" ... Read the full article
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