Commentary

Measuring What Matters Most

What is the most important thing in your marketing plan to measure?

A) Campaign response.
B) Customer satisfaction.
C) Brand value.
D) Media mix efficiency.
E) All of the above.

The fact is that there are so many things to measure, more and more marketers are getting wrapped around the axle of measurement -- and wasting time, energy, and money chasing insight into the wrong things. Occasionally this is the result of prioritizing metrics based on what is easy to measure in an altruistic but misguided attempt to just "start somewhere." Sometimes, it comes from an ambitious attempt to apply rocket-science mathematics to questionable data in the search for definitive answers where none exist. But most often it is the challenge of being able to even identify what the most important metrics are. So here's a way to isolate those factors that are really critical -- and, thereby, the most critical metrics.

advertisement

advertisement

Let's say your company has identified a set of five-year goals, including targets for revenue, gross profit margin, new channel development, customer retention, and employee productivity. The logical first step is to make sure the goals are articulated in a form that facilitates measurement. For example, "opening new channels" isn't a goal. It's a wish. "Obtaining 30% market share in the wholesale distributor channel within five years" is a clear, measurable objective.

From those objective statements, you can quantitatively measure the size of the gap between where you are today and where you need to be in year X (the exercise of quantifying the objectives will see to that). But just measuring your progress on those specific measures might only serve to leave you well informed on your trip to Nowheresville.

To ensure success, you need to break each objective down into its component steps or stages. Working backwards, for example, achieving a 30% share goal in a new channel by year 5 might require that we have at least a 10% share by year 4. Getting to 10% might require that we have contracts signed with key distributors by year 3, which would mean having identified the right distributors and begun building relationships by year 2. And of course you would need all your market research, pricing, packaging, and supply chain plans completed by the end of year 1 so you could discuss the market potential intelligently with your prospective distributors.

Metrics Insider

When you reverse-engineer the success trajectory on each of your goals, you will find the critical building block components. These are the critical metrics. Monitor your progress towards each of these sub-goals and you have a much greater likelihood of hitting your longer-range objectives.

Kaplan and Norton, the pair who brought you the Balanced Scorecard and Strategy Mapping, have a simple tool they call Success Mapping to help diagram this process of selecting key measures. Each goal is broken down into critical sub-goals. Each sub-goal has metrics that test your on-track performance. A sample diagram follows.

Metrics Insider

By focusing on your sub-goals, you can direct all measurement efforts to those things that really matter, and invest in measurement systems (read: people and processes, not just software) in a way that's linked to your overall business plan, not as an afterthought.

6 comments about "Measuring What Matters Most".
Check to receive email when comments are posted.
  1. Jeffrey Fry from Profit Prophet, December 22, 2009 at 2:45 p.m.

    Nice beginning on how to measure the intangibles of getting to where you want to be.

  2. Kevin Horne from Verizon, December 22, 2009 at 2:51 p.m.

    Someone please tell me where I submit Pat LaPointe's name for consideration for "top bloggers of 2009"...

    What a way to cap off the year. Maybe MediaPost should run this article every quarter so no one misses it...

  3. Seth Leeds from SPONSORIUM, December 22, 2009 at 2:57 p.m.

    This is ROO at its finest, and it encompasses everything on a marketer's toolbelt. More brands need to subscribe to this philosophy. And, oh by the way, Sponsorium markets the web-system that measures ROO.

  4. Matthew Smyers from RedShift, December 23, 2009 at 9:22 a.m.

    Well done. If more marketers applied a proven system of defining specific objectives and aligning those objectives with corresponding metrics to their digital campaigns, the industry would be much further along. Thanks for the Kaplan and Norton resource links.

  5. George Ayres, December 23, 2009 at 11:38 a.m.

    Thanks Pat. Very insightful as always. I enjoy reading your columns and find they can be applied to my clients immediately. Keep up the good work.

  6. Mike Einstein from the Brothers Einstein, December 24, 2009 at 10:16 a.m.

    Brand's don't survive on the basis of how they interpret data about us. They survive on the strength of how we feel about them.

    Any advertiser (a word conspiculously missing from this article) who would pay for this folly deserves exactly what they won't get.

Next story loading loading..