Why We Need to Use Marketing Metrics

Updated May 2023

Key Reasons that Marketers Need to Measure and Justify Marketing Performance

When it comes to marketing analytics and marketing metrics (please see this article on the difference), as marketers we have two main objectives, namely:

  1. To understand what works – and how and when it works – in order to improve our marketing decision-making, and
  2. To explain, justify, and demonstrate our performance to senior management – often as part of a marketing planning and/or budgeting process

Let’s work through these reasons in a little more detail.

Key Reasons to Evaluate Marketing Performance for

To Understand What Works in Marketing and Why

The field of marketing is often a complex and challenging profession. Because most firms and 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 improve 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 Learn 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.

To Support a Business Case

A business case for marketing activities  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?
  • Why not expand the brand to new segments?

To Demonstrate Marketing’s Impact on Bottom-line Results

Highlighting the bottom-line profit impact of marketing is very important to firms in today’s environment. This is usually demonstrated using return on marketing investment (ROMI), customer lifetime value (CLV), customer equity, and various brand health metrics.

By more directly connecting marketing activities to profit outcomes, marketing will be prove their value to the firm’s stakeholders.

To Optimize Resource Allocation

Marketing performance metrics provide insights on which marketing activities are performing well and which ones aren’t.

This information is quite helpful for determining where to allocate resources in order to get the most return. With these insights, marketers can shift budget and time from low-performing to high-performing marketing actions and campaigns.

To Create Accountability in Marketing Teams

In larger marketing teams, perhaps across various functional areas, marketing a performance metrics can help establish “a culture of accountability”. This is where each team understands the impact of their actions on the overall marketing performance.

To Better Predict Trends

By tracking marketing performance over time, marketers can identify patterns and predict future trends. This can help them to be more proactive and make strategic decisions that will give them a competitive advantage.

To Enhance Customer Understanding and Gain Market Insights

Metrics such as customer satisfaction scores (CSat), net promoter scores (NPS), and customer lifetime value provide insights into customer behavior and preferences.

This knowledge can then be used to enhance the user experience, customer journey, personalize marketing mix elements, all of which should lead to enhancing customer engagement and loyalty.

To Mitigate Risks

Marketing involves risks, such as investing in a new marketing channel or launching a new product. By using metrics to evaluate past and current performance, marketers can make informed decisions that reduce these potential  risks.

To Enable Better Marketing Decision Making

Data-driven decision-making is the norm in today’s business world. By measuring marketing performance, marketers can make more informed decisions based on data, rather than relying on intuition or guesswork. This leads to more effective and efficient marketing campaigns and strategies.

To Drive Continuous Improvement in Marketing

The regular use of marketing performance metrics establishes a culture of continuous improvement within marketing teams. It encourages teams to continually evaluate and optimize their marketing strategies to achieve better results.

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