Following my previous article titled War between Marketing and Finance: Banal Praxis or Constructive Tension, this article seeks to highlight how marketers can take an active role in the C- Suite by taking a quantitative rather than qualitative approach. The battle for recognition of marketing in the boardroom continues.
marketing insights with Africa MAKASI
The solution, I suggest, is for marketing practitioners to start learning to speak more in quantitative than qualitative terms. The often exaggerated chasm between accountants and marketers can be made narrow through speaking a language better understood by all; and it is the language of numbers. This can be done through the use of marketing metrics. These are a set of measures that help firms to quantify, compare and interpret their marketing performances. The quantification of marketing strategies and looking at how marketing actions have an impact on financial statements will help create audience in the boardroom and once again help strengthen the strategic significance of marketing in the success of any organisation.
Why marketing metrics?
When establishing any marketing strategy, you need to be able to quantify the information at your disposal to make better decisions. To do this, they need to put together a case for their spending and why it is justifiable. Good metrics help drive the strategy and direction of the organisation, help make decisions and drive performance. Metrics are the new world. Any debate punctuated with statistics makes interesting listening than a long qualitative narration. While the role of marketing in any organisation remains unquestionable, marketers remain criticised for their fear of numbers (numerophobia); often describing their strategies and expected outcomes in qualitative terms. Some critics put the blame on adopted traditional practices of marketing where the profession has long been defined in the narrow sense of managing the 4Ps of marketing. However, the modern world of marketing requires “marketing-all-rounders” with a holistic in-depth knowledge of the contemporary marketing world.
Some important marketing metrics:
Return on marketing investment (Romi)
It an important metric which measures the financial return of a company’s investment in all marketing activities. The cost side of the equation must include all marketing programmes, salaries and expenses. The return side of the equation must show direct marketing contribution to revenue. A positive Romi means your marketing strategy is effective, while a negative Romi indicates a serious need for adjustment. Regularly checking these metrics will provide you with an accurate pulse of the health of your marketing campaign. Over time, you will be able to refine your tactics, closely examining which strategies work best and why, and end up with a steady marketing rhythm that can generate more than enough leads to cover your marketing costs and deliver a significant profit.
Customer life time value (CLTV)
This is defined as the present value of all current and future profits generated from a customer over the lifetime association with a company. This can be calculated from spreadsheets of customer behaviour in an organisation through the use of the principle of net present value; calculating the current value of the future profits to be gained from a customer. Knowing such information will allow organisations to manage businesses different. Using a lifetime value calculation helps sharpen your marketing department’s efforts and keeps your organisation focused on those clients that are most valuable to your company.
Measuring customer satisfaction: The net promoter score
Faced with the current intense competition in all sectors of the Zimbabwean economy, perhaps it is more prudent that organisations assess levels of satisfaction of their customers. As a metric, customer satisfaction is a measure of the percentage of total customers whose reported experience with a firm, its products or services exceeds specified satisfaction goals. It is typically measured on a five point Likert scale where respondents generally fall under three broad categories namely promoters (highly satisfied), passives (neutral) and detractors (not satisfied). The key measure is those whose reported experience exceeds specified goals. Net promoter score equals to percentage of promoters minus percentage of detractors. This measure can be compared with industry standards to assess if the company is doing well or not.
Digital media metrics
In the digital marketing age, measurable metrics and other analytical data are as essential as the marketing strategies used. Marketers might be too engrossed in vanity metrics, such as the number of Facebook “likes” or YouTube “views”, which are metrics that are merely “nice-to-have”, unless these figures can be effectively monetised and translated into revenues. Some digital marketing metrics include the following:
Your main website should be a primary target for your customers and potential customers, but you can also measure total visits to any location relevant to your strategy, such as a landing page for a pay-per-click campaign. Measuring your total number of visits will give you a “big picture” idea of how well your campaign is driving traffic.
Conversion rate (CVR)
Measuring how many website visitors actually get converted into leads or a sale is a valuable and tangible metric that defines your digital marketing success, whether your goal is to gather valuable information about your website visitors and potential customers, or convert site visits into sales.
As a metric, the total number of new sessions will tell you how many of your site visitors are new and how many are recurring. It is a good metric to understand because it tells you whether your site is sticky enough to encourage repeat customers as well as how effective your outreach efforts are.
The bounce rate shows you what percentage of visitors leave your website before further exploring your website. This is used as an indicator of the site’s relevance or lack thereof to visitors. Generally, you want the bounce rate to be as low as possible because the more time someone spends on your site, the more likely they are to convert and perform meaningful action.
In order to traverse from the back room to the boardroom, marketing must move from a tactical function to a strategic one; leveraging, but not solely focused on marketing metrics to become the catalyst for organisational change and achievement of outstanding corporate performance. The field of marketing has shifted from a feel-good field of branding and awareness where success was measured by vague measurements, to a more scientific field based on precise metrics and optimisations where measurements and insight are now mandatory tactics.
Africa Makasi is a business consultant, entrepreneur and university lecturer. He can be reached on email@example.com.