As a marketer, you’re challenged to use metrics to drive strategy, performance and continuous improvement. To succeed, you need not only the right data, but also a dashboard view that enables key stakeholders to understand the meaning of the data and make informed decisions.
Surveys conducted by Forrester, ITSMA and Vision Edge Marketing revealed some shocking results regarding marketing’s relevance to the business. Here are just a few highlights:
- Most Marketers don’t know which metrics their stakeholders care about
- Less than 10% of senior leadership relies on marketing data to make decisions
- The C-suite can’t relate marketing activity-based metrics to business outcomes
In Short, when it comes to metrics, there is a serious disconnect between marketers and other stakeholders.
So what are marketers measuring, and why?
It varies, but marketing metrics tend to come in four flavors, each serving a different purpose:
- Forecasting Metrics. Predicting the future is tough. Most retailers would be happy with 60% forecast accuracy, even though such imprecision is hardly ideal. Forecasting metrics often deal with turnover and inventory requirements, which are critical to avoiding stock-outs or overstocks.
- Media Metrics. Which marketing channel does more for your sales: TV or Facebook? The objective of media metrics is to determine the value of each media channel in driving sales. And, with the many and growing number of media channels available to retailers, tracking your ad-to-sales ratio to help you decide which media to invest in based on your objectives is an imperative. For instance, digital channels can cost one-tenth to one-hundredth the amount for tradition channels like print and may yield the same outcome.
- Operational Metrics. When you take a more sophisticated view, you track your market basket. You want to know your average basket value and what drives customers to your store. You may also look at lift metrics, which can be measured in multiple ways, to clarify what actions drive results in a particular promotion.
- Brand metrics. Brand people look at market share. If you’re interested in these metrics, you may also measure brand to increase customer loyalty and improve long-term company health.
What’s wrong with metrics and measurement today?
The big issue is inconsistency. Rather than continuous improvement against a clear, defined benchmark, marketing departments relentlessly change benchmarks in pursuit of the perfect metric. But every time you change the metric, you start over in terms of trend analysis. Each new metric means a new set of data, which makes long-term analysis impossible and defeats the purpose of measurement in the first place. Measurement that continually shifts from sales to margin to turnover rather than focusing on one factor, will overturn the results of your performance history. And, while it’s useful to track them all simultaneously, it’s also important to remain consistent in terms of how you weight these benchmarks. Shift your focus too severely and there’s no historical pattern to track, and the future becomes completely unpredictable.
Of course, most retailers can’t live off just one measure. Market share is a long term measure, while promotional and event metrics have more immediate impact. You need different types of measures, but the key is consistency. It’s best to be clear on what you need to measure and stick with it over time.
So back to that surveys…
What did the marketing performance management survey find? It found that the “A” marketers are actually moving two of the most important business outcome needles: market share, and customer satisfaction and loyalty. Successful marketers measure these factors by establishing clear data chains between marketing activities, objectives, and business outcomes to produce actionable dashboards.
Why do you need a scorecard or dashboard view of your metrics?
This is the job saver! Dashboards and scorecards capture and present your retail key performance indicators (KPI). But more importantly, they tell you where you stand and where you are headed, and they help everyone understand marketing decisions. The C-suite needs these dashboards to feel confident that the marketing department is making great decisions and investing efficiently. Provide clear, actionable dashboards and win the hearts and minds of the C-suite.
Here are a few things to consider when creating a dashboard:
- It should update automatically, ideally in real time. While some companies rely on a combination of Excel, PowerPoint, Word files and SharePoint to make their measures accessible to key decision makers, it’s clear this approach has severe limitations in terms of keeping measures updated and accurate.
- It should be visually clear and easy to understand. Advanced scorecarding revolves around providing a visually rich and easily revised presentation of KPIs. For Instance, Crosscap dashboards used in conjunction with our Digital Wall provides retrospective views of past performance lined up against prospective forecasts. These tools will enable you to easily and clearly compare performance in different channels.
- It should include all the metrics that matter. Of course, it also provides a compelling venue for other metrics — be they market basket analysis or lift models and measures. Even brand metrics can be vividly laid out for active consideration.
Ultimately, rigorous management of marketing metrics enables you to enhance forecast accuracy — increasing inventory turns while reducing your ad spend. You can isolate promotional effects such as halo, cannibalization, and pull forward. You can ensure you are taking the necessary steps to maximize traffic and sales. You’ll have an effective media mix that strikes the right balance between attracting new customers and deepening loyalty with existing ones.
Whether you’re a marketer for Walmart, Kohl’s, GAP, or a smaller retailer, the ability to optimize your marketing spend comes down to consistent measurement, analysis, and action. Our experience with retailers indicates that marketing organizations can go from a disjointed and uncertain state to one in which they have clarity and confidence. Indeed, if you can create an executable dashboard that provides both short term insights and long-term perspective, your entire company benefits.