The task of building reliable and meaningful marketing metrics presents a significant challenge. David W. Stewart, professor at the Marshall School of Business at the University of Southern California, offers a timely perspective on how to make marketing metrics relevant. Last week we looked at his first six guidelines for metrics. This week, we’ll address the last six.
1. Measures of effort cannot be confused with measures of efficacy: Often marketing departments look to number of phone calls, frequency of contact and other numbers to measure their progress. Although these numbers should help inform decision making, they shouldn’t stand alone as indicators of marketing success or failure. There must be some indication of outcome, either directly or indirectly tied to financial performance.
2. Metrics must cross geographic and political boundaries: As more companies enter the global economy and manage an increasingly diverse portfolio of products and services, metrics must be adapted to be more universally meaningful. All stakeholders, from CEO’s to shareholders, should be able to understand the application of marketing metrics and use them to compare performance across industries or demographics.
3. The purpose, form, and scope of metrics should be transparent: Companies use an arsenal of tools to measure their financial performance. Although the tools may vary by industry, the meaning and application of each tool is clear to all parties. Necessary marketing metrics may also vary, but it is important that they clearly serve the stated purpose, be consistently applied and have specifically delineated applications and limitations.
4. Marketing departments must thoroughly document details: Any knowledgeable user should be able to examine a firm’s metrics and understand three things: precisely what is being measured; how the metric works; and how the data can be compared to comparable information from other companies. The last component tends to be overlooked, as marketing departments concentrate on specific internal measures of success.
5. Like any other measure, marketing metrics are subject to standards of development and validation: Just as scientists must follow certain procedures and validate their data by using standard methodology, marketing professionals must adhere to rigorous guidelines for measurement. Following industry standards for best practices lends validity to marketing metrics. This standard probably represents the most challenging one for the marketing community, since no consensus yet exists for effective measurement techniques in each marketing platform.
6. Marketing metrics must be viewed as an investment: Ultimately marketing metrics should serve as a tool to support sound decision making, improve accountability and reinforce continuous improvement efforts. Thoughtfully, thoroughly applied metrics give marketing professionals the evidence they need to create and fulfill goals—both short- and long-term.
Dr. Stewart’s academic approach to marketing certainly gives marketing professionals high benchmarks for implementing effective metrics. Yet the community tends to lose sight of the vast applications of accurate measurement. How have you put metrics to work in your marketing firm or department?
David W. Stewart is a professor at the Marshall School of Business at the University of Southern California and current editor of the Journal of the Academy of Marketing Science. Dr. Stewart is also past editor of the Journal of Marketing.