This document discusses key marketing metrics and how to measure success. It recommends focusing on metrics that measure customer response and cash flow, rather than generic reach metrics. The three most important categories of metrics are identified as: 1) response rates, 2) profitability measures like gross and net profit margins, and 3) liquidity measures like days cash on hand. Price increases are highlighted as one of the most impactful metrics within a business's control. The document emphasizes measuring the right metrics to support business strategy and drive desired financial results.
7. What is a Metric? What you measure, not the measure Set against benchmarks, not a benchmark Historical, not a forecast
8. Metric Criteria Metrics drive business results. Metrics reflect business results. Metrics are something you can influence. Metrics are measured accurately. Metrics are measured consistently. Metrics are measured cost effectively. Key stakeholders agree that key metrics meet these criteria.
9. How do I use metrics? Always support strategy Define what to measure (create framework) Compare against past performance Compare against benchmarks Compare against future goals
10. The Keys to Metrics Only a few Cost effective to measure Start at first controlled step End at cash flow Should TELL you something meaningful
31. #3. Only 3% separates the average US profitable and unprofitable transaction.
32. An Example Restaurateur generates $1M with a 67% GPM Increases of 4% COGS & 2% overhead – with no change in price Sales need to increase by $33,400 (or 3.3%) just to compensate This firm will always have to grow to keep up.
40. Others? Profitability: Gross, Net Profit Margin Liquidity: Days, Cash Working Capital Marketing: Expense per Year, Sale, Customer Management: Sales, Net Profit per Employee
51. Big Biz: Our radio ad reached an audience of 500,000.
52. Small Biz: Of the 500,000 reached, 50 responded.
53. How does any of this help? Broadcast TV: $10.25 per thousand Syndication TV: $8.77 per thousand Magazines: $6.98 per thousand Cable TV: $5.99 per thousand Newspapers: $5.50 per thousand Radio: $4.54 per thousand Outdoor: $2.26 per thousand
59. How to Fix Problems Acknowledge you will screw up Tie earnings to employees, not last year Think today like you fired your marketing firm yesterday Stop trying to be like everyone else Do less, create more MEASUREABLE impact
60. To Recap Focus on cash flow We’re only doing this for one reason There is no one metric Price is close Measure customer response, then impact on cash flow Reach is only a number, not a result
61. If I wanted to read just one marketing metrics book, it should be…
Ability to define a desired resultAbility to influence that resultAbility to measure your influence
Metrics are a framework to help us understand the world
Source: MarketingProfs.com
Metric = a standard of measurement, not the measure itself!
Causation, not correlation. (i.e. I believe all tall people I’ve met are smarter than short people. Everyone 5’6” raise your hands. Look around. What you will see is the “tall” population… and that I’m an idiot.)Avoid decision paralysisA wink is not one of the four bases, have to bat first.We’ll never know if that action was good or bad without cash exchanging hands.Paying $3000 to know that “brand recognition” is up 3 points is a waste of money. Ditto for number of media mentions.
I can make more sales in a number of ways, most tend to hurt profitability.
I can put more cash in my pocket by increasing profitable sales. Or selling assets. Or licensing IP. Or refinancing debt. Or raising new equity capital. Or working more than one job.
Result = Value
One metric that covers all areas.
The price measure tells us two things:Costs of goods sold management.Value to the market.
Increases revenue, allows you to extend credit, increases margins, increases perceived value, allows a few screw-ups here and there, etc.
Reducing costs may not be.
How about three?
Consultants – office supplies, printing, utilities, gas, food, etc.
Average firm resets prices only every 36 months.
3-4 tickets/day
Sales increases may not be.Candy, on average, has increased $0.01/year since the 70’s.What money savings is had from a consultant with “less overhead” than the “big guys”?
Raising prices will naturally trim unprofitable customers.
Not talking about pricing out of the market, or not gaining a scalable advantage, just value to the market.Example: Sell to Wal-Mart, every year your price is moved down – and you take it. You deserve to go out of business.
Result = Value
There is a problem with “reach” – we do not control it!
Assumed correlation, not causation. (pageviews don’t magically, or even formulaically, equal sales) This would be like measuring how many times we appeared in search results and extrapolating some meaning from that #.
Result = Value
Who? What? When? Where? Why? How?
Who? What? When? Where? Why? How?
What is “share of voice”? Too many variables…
Good for Coca-Cola, no control for us
Good for Small Business, we can do something starting with response
Source: eMarketerWhat did we talk about when addressing raising prices?
E-mail: $244.69 per thousand prospects, $183.66 per thousand existing (MarketingProfs)35.7% of online budget (MarketingProfs)8.56%(DMA)/22.4% (Bronto) prospect open rate, 14.92% existing open rate (DMA)5.57% (DMA)/4.4% (Bronto) prospect clickthrough rate, 9.36% existing clickthrough rate (DMA)3.15% prospect conversion rate (DMA), 5.26% existing conversion rate (DMA)Telephone2.92% prospect response, 4.41% existing responseCatalog1.85% prospect response, 3.95% existing responseDirect Mail1.65% prospect response, 3.65% existing responseSEO & Paid Search33% of online budget (DMA)Cost per click averages $1.56-$1.98 (DMA)