Metrics for Managing Marketing Performance

'Classic Truths': If You Don't Measure, You Can't Manage: The Best Metrics for Managing Marketing Performance


October, 2007.

Without metrics to track performance, marketing and business plans are ineffective.
Businesses need to know which success factors require measuring, and they must understand the differences between measurements (the raw outcomes of quantification), metrics (ideal standards for measurement), and benchmarks (the standards by which all others are measured).


For marketers, three primary metrics constitute a starting point for tracking their performance. Once companies are aware of their competitive position, their desired outcomes, and what it will take to achieve those outcomes, companies will be better able to identify the success factors, benchmarks, and appropriate metrics to meet their target.

Why Measure?
Metrics are a part of our everyday lives: from our heart rate, to our bank balances; from our weight, to the gas mileage on our cars. If we don't pay attention to these numbers, we create a risk for getting a heart attack, being overdrawn, or running out of gas.

The same is true in the business environment. If a company doesn't identify and track important performance measures, it increases its risks.

Metrics provide a means to assess progress; they provide valuable data points against which the marketing organization can track its progress. Metrics demonstrate accountability and allow marketers to better know, act upon, align efforts, and reduce market exposure. Metrics enable the marketing organization to truly serve as the eyes and ears of the company.

And, more importantly, establishing and tracking metrics will have a positive influence on the leadership's satisfaction with Marketing and the marketer's ability to secure funds. Only 38% of US executives say their companies are now measuring the results of their marketing efforts, according to a study of senior business executives conducted in the second quarter of 2004 by Blackfriar.

Will measurement actually change investment in Marketing? Blackfriar compared planned marketing spending for companies that measure marketing with those that don't. The result? Firms that measure marketing planned to spend an average of 41% of their annual marketing budgets during the second quarter. Those that don't measure planned to spend only 33%; apparently, they felt more comfortable planning to spend their marketing dollars than those that don't measure.

Measuring marketing also has an impact on the satisfaction of senior executives regarding their investment in Marketing. Some 16% of executives at companies that measure marketing said they were dissatisfied with their marketing efforts. But at firms that don't measure marketing, 28% said they were dissatisfied.

The simple act of measuring marketing results reduced the dissatisfaction of senior executives significantly. In other words, measurement allowed Marketing to prove its worth.

Defining Metrics
The world of metrics can be confusing for people new to these concepts. To better understand metrics and how they work, several terms must be defined:

• Measurements are the raw outcome of a quantification process, such as a company's numbers, ratios, and percentages.
• Metrics are the standards for measurement, providing target values that a company must achieve to reach a certain level of success.
• Benchmarks are the best measurements to aspire to, the standard by which all others are measured. Companies that set benchmarks in their industries are the ones often lauded in "Top Ten" and "Most Admired" lists and articles.

A good example of a marketing benchmark can be traced back to the early 1990s. Over a decade ago, market research firm IntelliQuest (now Millward Brown IntelliQuest) conducted a customer satisfaction research study for the personal computing industry.

The firm spoke to customers who rated the companies in the industry, which resulted in a measurement on a one-to-nine scale. It then learned that 84% of users who rated their satisfaction as a seven, an eight, or a nine would consider the same brand for their next purchase. Seven, eight, or nine became the metrics that companies aspired to attain. The benchmark was nine.

Three Metrics Gauges
To determine which success factors to measure and the appropriate metrics for each, marketers must have a clear understanding of the company's goals. A young company looking to gain traction in the market is focused on factors different from those of a more established company wanting to improve its customer relationships.

For those beginning to use metrics, listed below are four key performance indicators that support three metrics gauges: market share, lifetime value, and brand equity.

These gauges are directly linked to the three specific performance areas that Marketing can impact: acquisition, penetration, and monetization.

The first responsibility of Marketing is to identify and enable the organization to acquire customers, without whom there is no revenue, without which there is no business. Acquisition enables the company to increase its market share.

Although Marketing may not close the deal, marketing strategies move the customer through the buying process, from awareness to consideration. Four key performance indicators enable you to address market share:

• Customer growth rate
• Share of preference
• Share of voice
• Share of distribution

The second responsibility of Marketing is to keep the customers that the company acquires and increase the value of those customers. It is expensive and ultimately disastrous to have customers coming in one door only to go out another. High customer churn signals a variety of problems and hinders your ability to create leverage.

The following performance indicators will help your drive these penetration-related metrics:

• Frequency and recency of purchase
• Share of wallet
• Purchase value growth rate
• Customer tenure
• Customer loyalty and advocacy

The third responsibility of Marketing is monetization. Up until the 1970s, a company's value was determined by its book value. Over time, intangible assets, such as a company's intellectual property, customer value, franchises, goodwill, and so on have had an increasing effect on a company's market value.

Marketing professionals can improve the market value of their company by improving their performance in four key areas:

• Price premium
• Customer franchise value
• Rate of new product acceptance
• Net advocate score

A recently published report, "Measures + Metrics: Assessing Marketing Value + Impact," by Glazier, Nelson and O'Sullivan, corroborates these gauges and performance metrics. In their report for the CMO Council, the authors specified four performance metrics:

• Business acquisition/demand generation, which can include such metrics as market share gains, lead acquisition and deal flow
• Product innovation/acceptance, which can include market adoption rates, user attachment and affinity, loyalty and word-of-mouth
• Corporate image and brand identity, which can include growth in brand value and financial equity, awareness and retention of employees
• Corporate vision and leadership, which can include share of voice and discussion, retention and relevance of messaging, and tonality of coverage

Regardless of which model companies choose to deploy, to fully capitalize on the benefits of metrics they should consider establishing a continuous process in which metrics are collected, analyzed, and reported on a regular basis.

Over time, metrics can reveal valuable information about which marketing tactics are most effective, what types of prospects are most likely to buy, which customers are most profitable, and how the market in general develops over time.
Also important to remember is that metrics themselves can change over time. As the market and the company evolve, marketers must diligently review and adjust their metrics.

Innovative competitors will continue to set higher benchmarks, ratcheting up the acceptable range of metrics. The airline industry's 45-minute airplane turnaround time was considered standard until Southwest Airlines decided to do it in 15 minutes. Some metrics may become outdated, and newer metrics and methods of measurement will require attention.

To work without metrics is to work blindly. A lack of metrics makes it extremely difficult to assess whether a course of action is working or needs adjustment. The proper use of metrics can provide guidance to help a company expand market position, lower costs, and retain the best customers so that the company can ultimately set the benchmarks in its industry.

Advertising's Most Important Word

What Is Advertising's Most Important Word?

October 30, 2007.

If you had to guess the single most important word in advertising, what would it be? Free, special, discount, sale, new, improved, bigger, better...?

So many words have lost their meaning or been corrupted by misuse or abuse that it is not an obvious choice.

The terms "luxury," "exclusive," and "world-class" have been rendered meaningless after being applied to everything from 800-square-foot condos to restaurants that serve microwave frozen dinners. We can't even rely on "light," "diet," or "low-carb" to actually describe what's inside a package.

What advertisers have done is create a hyper-cynical marketplace, where the audience for whatever you sell has lost faith in what is being said.

But the Web with its emphasis on content gives advertisers an opportunity to redeem themselves and to deliver meaningful information to its audience.

All Content Is Advertising, All Advertising Isn't
Some may cringe at the thought, but in the final analysis all content is a form of advertising. Content is rarely if ever neutral, even if it doesn't overtly promote a product or service. Content always has a point to make, or an idea, concept, or position to advance.

If content doesn't provide some perspective, some meaningful knowledge, then does it really qualify as content?
The same can be said for advertising, if it doesn't explain, enlighten or engage, it is just noise.

What Is Advertising's Most Important Word?
My vote goes to the simple, innocuous word "like": a nondescript word that carries with it all the conceptualization power you need to create a business identity, to form a brand personality, and to position your product or service in the mind of your audience.

My vote goes to the simple, innocuous word "like": a nondescript word that carries with it all the conceptualization power you need to create a business identity, to form a brand personality, and to position your product or service in the mind of your audience.

Metaphor, Analogy, Stories: The Adman's Best Friends
A metaphor explains complex concepts and hard-to-comprehend processes by comparing them to common, everyday knowledge. We use metaphors every day without even realizing we're doing it. We "race" to the office. We work "like dogs." And we all know, it's a "jungle" out there.

Metaphors are critical to the way we communicate with each other and to the success of our marketing communication and advertising.

Metaphors can be extended into analogies, and analogies into stories, and stories into campaigns. And campaigns developed in this manner have a higher probability of achieving the elusive status of meaningful content that embeds your message in your audience's collective consciousness.

There is no better way to overcome a client's objection than to put that objection into perspective with an appropriate allegorical story.

Overcoming Objections: How Long Is Too Long?
We've all heard the constant bellyaching from impatience Web users about how long they have to wait for everything on the Web. Every time I hear this from somebody, I am reminded of the story (perhaps apocryphal) of the early introduction of the Polaroid Land camera.

Before the days of one-hour photo shops, digital photography, and instant video feedback, people had to wait up to a week for their pictures to be developed by the local pharmacy or camera shop. When Polaroid came out with a camera that delivered a finished photograph in sixty seconds, people were amazed; the era of instant gratification had begun.

And, so the story goes, a group of adventurers traveled deep into the Brazilian Rainforest to learn about the indigenous people. When they came across a tribe who had never seen outsiders before, they befriended them and took pictures of them with the Polaroid cameras they brought along. The natives loved the pictures since they had never seen anything like this before, but they did have one complaint, "Why did it take so long for the pictures to develop?"

The problem is not technology; the problem is one of perception. Like the natives who perceived the 60-second developing of photographs to be slow, so to do many Web users perceive the Internet to be slow when in fact it is an incredible technological achievement where anyone with a computer and Internet connection can access information from all over the world in seconds or, heaven forbid, minutes.

The Better the Story, the Better the Communication
The solution to the problem is better communication to make yourself and your message instantly understood. People who are truly interested in what you have to say will wait for your Web page or video to load. What gets them frustrated is that when they wait—and instead of getting a meaningful message they get a bunch of nonsense that is irrelevant, self-congratulatory, or completely incomprehensible.

A video or audio message on your Web site is more easily grasped than a page full of densely written text or cryptic bulleted points. But you will loose your audience quickly no matter what the form of your message if it's confusing, muddled, overly complex, or buried in b-school platitudes and industry jargon.

You need your message to be understandable, engaging, and memorable. And one of the best ways to convey that message is to compare it with something your audience can relate to.
It's like teaching your kids a life lesson by reading them one of Aesop's Fables.

Finding Your Metaphor
Some people have a knack for expressing things in a way that an audience will instantly grasp and, more importantly, remember.
For those of us in the communication, marketing, advertising, and creative-development businesses, it is a necessary skill learned over the years. But for those in the day-to-day grind of business's nitty-gritty, it is rarely an ability that ever gets developed.

Creating a Web video campaign that your audience is going to watch, remember, and pass on to colleagues requires a commitment of time and money, and you'll want to make sure it communicates your message effectively. Rather than using your traditional-approach concentrating of features and facts, try something different: Try developing a campaign based on a metaphor that delivers your brand's personality and emotional value-add.

Where to begin? You need to set yourself free from the concrete and concentrate on the conceptual. If this seems like a difficult thing to wrap your head around, start with baby steps.

Concentrate on the Conceptual
Any effective marketing campaign—whether it's a series of Web videos, direct emails, magazine display ads, banner ads, outdoor billboards, television and radio spots, or any combination thereof—will work only if it focuses on a single message.
At the heart of all advertising is the promise you commit to delivering to your clients. No matter how clever or memorable your marketing, if you fail to deliver on that promise, you will fail.

Learn a lesson from the politicians. The general publics' opinion of politicians is about on a par with having a prostate exam. Politicians can't help themselves; they promise the electorate what the electorate wants to hear, and then fail to deliver on promises that can never be kept. Consequently, people become cynical and distrust everything politicians say.
Failure to deliver on your promise to be the cheapest, the best, or the guy with the most features, is like a politician promising no new taxes. Read my lips! Those kinds of promises are a prescription for marketing disaster.

Taking the conceptual approach requires a certain degree of confidence and an understanding that you are going to have to give up something to get something in return.
If you present your identity as the Timex of widgets, inexpensive and ubiquitous, then you are giving up the audience looking for the Rolex of widgets, expensive and exclusive.

Audience Resonance: It's All About Striking a Nerve
One of the most memorable commercials ever to appear on television was the 1985 introduction of the Apple Macintosh computer. The anti-Big Brother message said nothing of bits or bytes, or anything else computer-related, but it did establish Apple's character and personality with its allegorical message, which is still valid today.

If your marketing message lacks this kind of power and personality, if your advertising is getting lost, or drowned-out by the competition, try finding a metaphor that instantly tells your audience who you are and why they should care.

Marketing to Women - Nike

How Nike Women's Marathon Wins the Gold in Marketing to Women

October 23, 2007

On October 21, Nike hosted its 4th annual Women's Marathon in San Francisco... and, friends, this is no ordinary marathon.
Yes, it's still 26.2 miles of courage and pain, but this course is also full of female-friendly delights and surprises. Specifically designed with women in mind, the Nike Women's Marathon motivates women to bring their body, mind, spirit, and camaraderie to run their best race.

Let's take a look at the core marketing-to-women strategies that Nike is using to elevate the impact of this event: Surprise & Delight, Community, Corporate Halo, Storytelling, Emotional Connection, and Inclusiveness.

Surprise & Delight

Random acts of kindness are wonderful ways to connect with your female audience, create a great memory, and give them something to tell their friends about. In fact, in this age of word-of-mouth marketing, the Surprise & Delight strategy is consistently the most effective way to create positive word of mouth—your most powerful marketing multiplier.

From the spectacular views along the course to the sweet treats during the Chocolate Mile to the foot-pampering pedicure stations, Nike has designed every detail of the Nike Women's Marathon to delight the women runners.

On Thursday night before the big weekend, participants are invited to the Ladies Night happy hour, featuring drinks, appetizers, and special raffles, including a chance to win diamond earrings from Tiffany & Co. At the Nike Expotique, the racers can indulge in free massages and manicures, tune up with Nike+ trials, fitness consultations, training and nutrition seminars, and have some fun at the hair and make-up stylist stations. Post-race, there's a big party at the finish line with music, more free massages, and lots of good food.

At the end of the 26.2 miles, each runner gets a Finisher's necklace from Tiffany, a little bit of bling that serves as a badge of honor for every woman who fights her way to the finish line. As one blogger put it, "Crossing the finish line and having a tall, handsome man in a tuxedo hand you a little blue box makes it worth all of your hard work!"

And picture this the day after the race: 20,000 runners fan out from San Francisco, returning to their homes across the country and across the world exhilarated by the experience and singing its praises to everyone they encounter.

With this event, by showing its commitment to women, Nike has in effect created a corps of brand ambassadors visibly and publicly committed to the brand.

Men aspire to be at the top of the heap, the King of the Road. Psychologists have found, however, that women generally don't want to be looked up to, any more than they want to be looked down on. Female gender culture operates within the worldview of a peer group, and women like to look across, to feel a sense of bonds among equals. Women want to be a part of a community, to be with people with whom they have something in common.

Nike has figured out how to bring empathy and community to their marathon this year, and it's doing it in a creative "new media" way. In addition to the actual, on-site, physical race in San Francisco, its is also holding the Nike+ Women's Half Marathon, a local counterpart to the real deal that women can run on their own turf.

Women across the country can run 13.1 miles on a course of their choosing on October 21, log their results onto the Nike Web site by the end of the day, and become an official half-marathon finisher. And as the Nike site says, finishing has its privileges: When you cross the finish line on nikeplus.com, you get a virtual trophy in your online trophy case (hey—a trophy's a trophy—I'll take it!). And, not to worry, you too get a box in Tiffany blue—a silver key chain—and in the mail you'll receive your very own Nike Finisher's T-shirt.

Also online, Nike helps women find a support network while training by hosting an online forum. They can meet other women who will run on race day, share training tips, encourage each other, share favorite routes, etc.
Even if you couldn't be in San Francisco next weekend, Nike created a way to engage women all over the world, inspire them to "Run Together!" as this year's tagline goes, and bond with tens of thousands of women across the planet.

Corporate Halo
The "corporate halo" principle—shorthand for companies that dedicate real time, money, and commitment to acts and programs of good community citizenship—is one of the strongest "marketing to women" tools in any strategic plan, because it can help a brand stand out in a meaningful way.

When all other things are equal (and in this era of commoditization, they so often are), a company's good community practices can be the deciding factor that builds a bridge to your brand instead of to your competition. Study after study shows that the majority of men and women care about corporate halo—but the women always care just a little bit more. And since it's the women who buy 80% of everything, that opens up doors of opportunity for marketers seeking to invite their best prospects in.

The Nike Women's Marathon benefits the Leukemia & Lymphoma Society, the world's largest voluntary health organization dedicated to funding blood cancer research. Via a partnership with Team in Training, the marathon raised more than $40 million in its first three years for the Leukemia & Lymphoma Society.

Storytelling, Emotions & Inclusiveness
I do miss one thing from last year's event: the stories featured on the Web site. There were hundreds of them, some serious, some funny, some moving, and all inspirational.
They represented the broad range of women's reasons to run: Some love to run just for the heck of it, some seek goals to accomplish, some run in honor of survivors, some run in memory of loved ones, some run to bathe in the beauty of San Francisco, some run to lose weight and gain a fitness routine for life, some run to be social and to train with friends.

Regardless of the reason, the Nike Women's Marathon fulfills a dream for each of them. This inclusiveness strategy is important to Nike's success with women. Most Nike ads come across as only for serious hard-core athletes. With its marathon communications, Nike recognizes and includes all women, who have many different motivations for running beyond being a hard body.
The hundreds of stories on last year's site were listed as links with a memorable first line for each story. With lead-ins like "Began running in my 70s," "In memory of my son Nick," "To prove a point," and "The Ladies Lunchtime Running Club," who could resist the urge to read them all?

I think I clicked on every one—and it's no exaggeration to say that the whole time I felt steeped in good vibes about the benefits and blessings that the Nike Marathon was bringing to these women in mind, body, spirit, and camaraderie.

Every year, the Nike Women's Marathon has been sold out in a matter of hours—and it's easy to see why. If you were one of this year's runners, I hope you had a great time. If you are a marketer looking for inspiration on how to "just do it" with marketing to women, look to Nike—the goddess of victory, don't you know!

Prepare for an Ad Campaign Success

How to Prepare for an Advertising Campaign's Success

You've done your homework and planned a solid advertising campaign. But, says Elaine Fogel, Vice President of Team Y & R, you need to be sure you're ready for its success. Is your small business really prepared to handle the surge in volume you're hoping for?

Her advice:

Plan for the best-case scenario. If a big response has the potential to overwhelm your staff, hire temporary workers or recruit friends and family to help out. "It's always better to be over-prepared and hire too many people in the short term than to miss out on sound business leads," claims Fogel.

Educate the entire team. Anyone at your company who answers the phone or responds to customer email needs to know about the promotion. Share your objectives and how to handle anticipated questions. Everyone should be prepared to pinch-hit if salespeople are overwhelmed.

Tell the truth. Follow the old maxim of under-promising and over-delivering by giving accurate information about product availability and wait times. Record follow-up requests in a database. Try to be as speedy as possible, but never make an appointment you can't keep.

The Po!nt: "It's a balancing act to have the accurate number of staff and resources to handle increased sales while ensuring that customers have a positive brand experience at every touch point," writes Fogel.

All about being naughty - The Axe Effext

It's Nice to be Naughty!

If you don't make a habit of watching channels like MTV or Comedy Central, it's possible you’ve missed an array of gleefully sophomoric spots for Axe body spray. The usual premise: When an average-looking guy uses Axe, attractive women start throwing themselves at him. Literally. Sometimes—locked in passionate embrace—the lucky lad and a new girlfriend roll down a hill, oblivious to the rocks, fences and cliffs they encounter along the way. It's a none-too-subtle message aimed squarely at adolescent boys, but even those of us outside the target demographic can appreciate its unapologetic cheek.

Now, Axe has gone even further with a viral-friendly video. Approached from the female perspective in the style of a Daily Show satire, this faux news report examines the Axe Naughty to Nice Program for Wayward Girls, which attempts to rehabilitate "nice" young women turned "naughty" by the irresistible power of Axe body spray.
Clocking in at a full five minutes, the video boasts exceptional production values and enough off-color humor to make an FCC censor blush. A special extra for marketers: The riotous send-up of a dim-witted PR director.

Axe delivers its tried-and-true message with the twist so entertaining that the video begs to be forwarded on entertainment merit alone—we call that Marketing Inspiration.
See the Axe clip on YouTube.