Tale of 2 Books - Marketing Metrics

I read two books this month, both focused on metric marketing issues. The first was "Return on Marketing Investment" by Guy Powell. The second book was "Measure What Matters" by Laura Patterson of Vision Edge Marketing. While both authors share a common goal of guiding CEOs and CMOs to measure marketing more effectively to achieve desired outcomes, the two authors approach the topic in decidedly different manners. Powell argues that marketing investment should be evaluated like any other business investment - calculate the expected return on various marketing investments and compare the returns against defined hurdle rates. Apply high hurdle rates for more risky investments such as advertising versus more known marketing tactics such as direct marketing. While Powell's approach is logical and the quantitative model mathematically correct, he fails to fully address an effective way to set hurdle rates or how to effectivey define expected returns on new marketing efforts, other than to say that the hurdle should be higher for higher risk or less known programs.

In comparison, Patterson breaks the role of marketing into three core performance areas that link to business objectives: acquisition, retention, and monetization. She then proceeds to offer specific marketing metrics for each area that can be measured to determine how marketing programs contribute to these fundamental objectives. I particularly like her reference to those metrics that measure business output versus those that measure marketing activity. See my earlier comments about process v. results marketing metrics.

Both share the goal of linking marketing to business results. Patterson's book is an easier read and will be more palatable to most marketers. Powell's book is more academic and by it's very nature feels more like your Finance 101 text, yet offers relevant thinking. Read both and see what you think. Both believe in my favorite line, "Facts Find Funding"(sm).

Marketing metrics: Process vs Progress Measures

It is amazing to see how often business owners, salespeople, and marketing professionals confuse process with progress, especially when it comes to evaluating the success of a marketing initiative.

One important distinction in the use of marketing metrics that should always be made clear is the difference between process metrics and progress metrics. What does this mean? Process metrics report on either activity generated by the team (e.g. we’ve spent six weeks building the marketing site for the promotion and the will be ready to launch in five days), or on actual consumer behavior change within the total selling cycle. Think of the latter as progress moving consumers or B2B purchasers through the buying cycle, perhaps from an initial prospect to a qualified prospect. Progress metrics are more tightly tied to the business results, and are generally more readily interpreted by those outside the marketing organization. Inquiries generated, sales produced, number of existing customers cross-purchasing the new product line, are examples.

The line between process and progress metrics is not always perfectly clear. For example, increasing the number of qualified customers may be a process metric when viewed as part of the complete customer relationship cycle. In a business with a clearly defined historical conversion rate, this can be treated as a progress metric (really, qualifications x conversion = sales).

When considering measurement of marketing program results, give consideration to the choice of metric to be used. Both process and progress metrics are valuable tools. It is important to understand the distinction, if only to maintain the rigor of your thinking. The closer you can get to measuring progress versus process, the stronger your evaluation of the program.