Four Layers of Marketing Measurements
By Laura McLellan | June 07, 2013 | 0 Comments
There are days when all the advice about the metrics marketing should use feels overwhelming. I’m reminded of a quote from Lewis Carroll’s Alice in Wonderland – “If you set to work to believe everything, you will tire out the believing muscles of your mind, and then you’ll be so weak you won’t be able to believe the simplest true things.”
Much has been written about how to measure the effectiveness of marketing, but most of the current literature and research focus on measuring the success of tactical marketing activities or of individual marketing groups. Literally hundreds of measurements are available, but categorizing them in a way that’s meaningful to different stakeholders – that’s the hard part. The metrics that are most often leveraged by marketing managers to track the health of their programs or campaigns will appear irrelevant to the CEO and executive management. That may not be fair, but it is realistic.
You won’t get as much help as you’d like from your agency or technology partners. Marketing automation software has become big business, with many providers offering tools that often measure only tactical activities, with few ties to strategic objectives. Also, each provider offers differing recommendations for effective metrics based on their particular area of expertise, which leaves you responsible for choosing the set of metrics that best meets your unique needs.
Companies are measuring themselves on strategic objectives, such as revenue growth, market share and profitability. Thus, marketing must develop ways to evaluate and communicate its effectiveness and contributions to corporate goals in terms that are compatible with corporate objectives and relevant to executive management. The goal is for CMOs to be able to communicate clearly what value marketing adds to the corporation and how it contributes to overall business success. In coming years, few marketers will rise to senior levels without deep fluency in marketing metrics and the ability to tell marketing’s story through numbers.
Gartner has noted that best-in-class marketing organizations measure around four layers of marketing investment:
- The first layer is your contribution to strategic planning and impact on offering development.
- The second layer is your brand promise, image and reputation.
- The third layer is your sales campaigns.
- The fourth layer is activities included in the marketing mix, either at a program or an individual activity level. For example, many providers have adopted a series of metrics targeted specifically to each marketing communications media or method in layer four.
Gartner conducted research with 383 marketing professionals in 2012 that asked how marketing is measured vs. should be measured. Although the results are specific to high-tech providers in the U.S., Europe and Asia Pacific, the findings are generally applicable to marketers in all industries. Here’s a sample of what we heard:
- The top three metrics that are used to measure the marketing function are increased profitability, improved market share, and positive movement in top-line revenue growth.
- When asked how the marketing function should be measured, respondents generally agreed with the three above. They added customer retention and competitive strength.
- We also asked how marketing measures itself. Revenue and market share were the top two; followed by customer retention and brand strength.
So the next time you review what you’re measuring, think about four layers of marketing metrics so you’ll be able to get others to “believe the simplest true things”. Sure, you need metrics that let you measure performance, fine-tune your activities, and drive desired behavior within marketing. But your credibility – not to mention longevity in your position – is likely to improve when the top-level measurements you communicate match how your company measures success.
[Note: This blog is based on work from my Gartner colleagues Bryan Britz, Dean Freeman and Bob Johnson.]