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Metrics and Marketing
Metrics are an essential
element of modern marketing. The numbers related to the processes of a
business can be useful in a variety of ways, and one of their most
important uses is measuring the success or otherwise of a marketing
plan.
Even small businesses can now
compile and analyze statistics that just a few years ago weren’t even
able to be captured from their manually-kept records. For
example, the ROI of a marketing campaign is now routinely calculated by
many SMEs so they have a better idea of how effective their marketing
expenditure has been and can adjust their mix accordingly for the next
campaign.
Management has to decide which metrics are to be monitored and avoid the
problems created by having too much data to sift through when making
strategic decisions. Some numbers are more important than others and
nominating exactly which ones are right for a particular organization
requires careful consideration.
Let’s say a business determines that there are three primary functions
for its marketing activities to fulfill:
- To acquire new customers
- To retain existing customers
- To provide a high level of customer satisfaction
The next task is to decide which metrics will be the best to use for
evaluating the success or otherwise of the business processes related to
these functions.
To Acquire New Customers
Customer acquisition sounds simple enough, and certainly the basic
measurement of new customers added to the database is important. But to
get a fuller understanding of how successful the business is at
acquiring new customers there are other metrics that can be useful to
monitor.
Share of market – tells management how effective the marketing has been
at influencing new customers away from competitors
Rate of acquisition – should correlate with marketing activity
Cost of acquisition – can be used to compare the effectiveness of one
marketing campaign with another
To Retain Existing Customers
Again there’s a basic source of measurement - customers that subtract
themselves from the database of active purchasers. There are also some
less obvious metrics about individual customers that have a bearing on
how well the business is doing at retaining its customer base.
Value of purchases – measures increase/decrease in customer lifetime
value
Frequency of purchase – tells management if retention efforts are
increasing the attraction of the business to existing customers
To Provide a High Level of
Customer Satisfaction
Every business, regardless of size should conduct regular customer
satisfaction surveys to measure and monitor the metrics that apply to
this important area. This doesn’t have to be a massive research effort
but it does have to be so well thought-out that the questions carry over
from one survey to the next for monitoring purposes.
Some typical questions that lead to useful answers are:
1. On a scale from 1 to 5 where ‘1’ is poor and ‘5’ is outstanding, how
do you rate the service you received?
2. Did our product perform as well as you expected?
3. Do you intend to purchase from us again?
4. If you have made a warranty claim was everything resolved to your
satisfaction?
There are some basic requirements that every metric selected for
measuring and monitoring need to meet:
- It should relate to a driver of business profitability
- It should lead to findings that are actionable
- It should be capable of being accurately measured
- It should be measured in the same way every time
Marketing metrics show management how effective their marketing
strategies and programs are at building the business. They can highlight
deficiencies as well as identify marketing elements that are
demonstrably successful.
By establishing a set of marketing-related metrics that are regularly
measured and monitored a business can obtain a much better idea of how
successful it is at acquiring, retaining and satisfying the most
important person in the organization – the customer.
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