TOP-LEVEL reasons we want to measure marketing performance
The first set of reasons to use marketing metrics is to increase the skill level and experience of the marketing team.
To understand what works
The field of marketing is often a complex and challenging profession. Because most firms/brands are in unique market positions, the most logical marketing strategy and tactical approach cannot be sourced from a marketing textbook.
Instead a marketer needs a good understanding of the industry, the firm’s competitors, and the firm’s own capabilities. Therefore, ongoing evaluation of marketing results will increase the market’s understanding of the key success factors in the marketplace
To improve marketing performance
Probably the main goal of using marketing metrics and analytics is to progressively improved the marketing performance of the brand.
This is achieved over time as experience, knowledge and insights grow through the action of various marketing programs and feedback mechanisms. A structured analytical approach will leverage this knowledge into future marketing programs.
To get value from marketing experiments
Due to the dynamics of most industries, the ongoing changes by competitors, consumer preference, and the external environment – it is often a prudent and professional approach to trial and test various marketing programs before they are implemented on a larger scale. This is known as conducting marketing experiments, in much the same way as a scientist would conduct experiments to see what does and doesn’t work.
Because of this increased investment in marketing experiments, it is also necessary to increase analysis and understanding of the outcomes of experiments to generate greater insight and value.
Budget and responsibility reasons
The second set of reasons for utilizing marketing metrics is to communicate and demonstrate reasons the marketing actions to the balance of the organization – particularly the executive team and maybe making decisions in regards to budgets, resources, and even key marketing decisions.
To support a business case
The business case is often needed when embarking on new initiatives – such as, new product development, market expansion, brand repositioning, and so on.
As you can see, this list includes a number of strategic items that would need to be justified to convince the decision-makers that it is the right approach. Generally, in many organizations, this requires a financial and analytical approach to demonstrate that this is the right direction of the organization – rather than gut-feel or intuition.
To win suitable marketing budgets
Marketing needs reasonable resources – financial investment in particular – to achieve its results. Communication campaigns, market expansion, new products, competitive battles, brand building, sales training, and so on – are all expensive exercises.
Most organizations look at the marketing budget from an investment point of view – what will be the financial return on this investment? Therefore, marketing analytics and the use of metrics is becoming increasingly required to justify the marketing budget expenditure.
To justify marketing actions
Marketing is a very visible activity, which means that other people in the organization will make comment or critique various marketing actions. In particular, advertising campaigns, website design, new products, special offers, and so on – will draw potential criticism from time to time.
Questions like: Why did you produce the ad like that? Why didn’t that new product have this particular feature?
Marketing metrics and analytics will assist in justifying why certain decisions were made.