Marketing metrics are numbers. And Numbers are great. With them, we find a way to count, measure and compare things and phenomena.
In my MBA journey, I came across another great use of numbers. Your level of fascination with numbers determined whether you pick Finance, Operations, Marketing or HR as a specialization.
It’s funny because those who were bad with numbers (and scored bad numbers) invariably took up Marketing and HR. Those who did not share that kind of animosity with numbers found really good options in Finance and Operations.
I hereby proclaim my affiliation to the former group of people.
My daftness at suave methods of number manipulation has always led me to avoid numbers as much possible up till now. The CAT, I thought, was probably the last and final time when I came together with numerical analysis for the greater good.
But if you are also like how I was, who broke into sweat everytime numbers came into marketing, then here’s the thing.
The fact is that you are lazy. And so was I.
You don’t really fear numbers or calculation. You fear the anxiety of being unsure of what to do with those numbers.
What you wish for is if there were set formulas to everything you needed to calculate. And that all these formulas were readily available to you.
In this article, I intend to do just that for you.
Marketers v/s Numbers
I read Paul Ferris’s book on Key Marketing Metrics and came across this quote.
“For years, corporate marketers have walked into budget meetings like neighborhood junkies. They couldn’t always justify how well they spent…or what difference it all made. They just wanted more money – for flashy TV ads, for big-ticket events, for, you know, getting out the message and building up the brand”
This is amusingly true.
However, gone are those days of mindless budgets in favor of the marketing manager.
Today’s companies want marketing leaders who believe in productivity stick to the marketing KPIs. They want those who are ready to be held accountable for all the things that they do.
Moreover, for almost all the other functions like Finance, Operations, Procurement, HR and Sales – their performances have always been seen against the money they made/saved.
With these functions tightening their belts and bringing in strict financial discipline, marketing can’t really leave itself behind like a snooty child.
Therefore, if you are a marketer and plan to go miles up the corporate ladder – there is absolutely no way you can do it without knowing your marketing mathematics.
I present to you a series of posts through on all the marketing metrics that you should know.
In this particular post, I share with you what are marketing metrics, what is their importance.
Further, I discuss how important they are for measuring marketing effectiveness.
After this post, as and when I write about each of the marketing metrics, I will link those posts from this article. Therefore this article will serve as the hub from which you can access most of the other marketing metrics posts.
What are Marketing Metrics?
In simple terms, marketing metrics are computation or measuring systems that help you put a number to everything that you want to measure.
There are tons of things (literally) that you would want to measure once you get at it.
Let’s take an example of Market share, the simplest and the most used of all the marketing metrics.
Market share gives you an idea of how much is your product selling in the market against all the competing products.
Market share can be calculated in terms of the revenue that your product earns in the backdrop of the total market.
Or, it can also be calculated in terms of volume. Which means, how many units of your product are selling as opposed to the total units that are selling.
Let us go to something even simpler.
Users. The number of users that visit a website over a period of time is a metric.
Here’s a screenshot of this blog’s Google Analytics account.
What you see is a part of a dashboard which shows nothing else but metrics.
Some metrics are in the form of numbers, some are in percentages and some are converted into graphs.
If you begin to realize, every marketing decision is taken on the basis of metrics. Or, one can at least say that all the decisions are taken to impact one or the other metrics.
All your marketing decisions will have an impact on some or the other metric.
As a matter of fact, metrics validate decisions.
More the merrier
It isn’t always that one metric would give you a complete and true picture of what you want to find out.
One metric can tell you only about a few things.
Sometimes some marketing metrics can only lead you in the right direction and you will require other metrics to confirm your inferences.
Therefore, it becomes important to use a combination of metrics which would together cover your marketing situation from multiple angles.
Take for example a metric that is at the top of my mind right now – Conversion Rate.
This metric can be applied in different situations and it would tell you how many prospects have fulfilled the goal that you have set for them.
For example, for a retail store, the conversion rate could mean the percentage of people who purchase anything from the store out of all the people who walk-in.
What did that metric measure?
It certainly does measure the effectiveness of the salesman guiding the people inside the store.
But it also gives an idea (not necessarily measure) about the assortment of products in the store.
Is the assortment good?
Are they in the right SKUs?
Is the store stocking the right brands?
The prices, are they too high?
You can go an and on. Just on the basis of a low conversion rate, you can think of many things but you can not conclusively point fingers at any one of those.
As you keep calculating more metrics you will be able to confirm or negate each inference that you thought of.
Now, for your convenience, I have created an infographic below which will serve as a ready reckoner for you to refer to.
I give credits for this infographic to Paul Ferris and his co-authors. In their book Key Marketing Metrics, they share with us all of these metrics in great detail.
It is a brilliant book for a new age marketer to have.
(The link to the book is my affiliate link. Which means if you do buy this through this link, I’ll get a small commission. Just so that you know)
My objective for this post was to introduce to you marketing metrics and to let you know how many of them are there.
Also, I intended to apprise you of the importance of measuring marketing effectiveness and how marketing metrics help you do that.
This is the beginning.
If you are convinced by the importance of the marketing metrics in your marketing pursuits and have started to believe in quantification – then this article has achieved its purpose and you are good to go.