• by Martha Bush , April 6, 2012

As the number of sales channels continues to increase, so has the need for organizations to get a strong, metrics-based grip on all that data to maximize their successes and learn from their failures. When organizations begin to standardize marketing measurements across their sales channels, business units and media, they will come closer to the more complex process of tracking corporate brand equity, market share, marketing ROI, and product and customer profitability. The alternatives -- misspending, poor targeting and losing competitive advantage -- make this concern a priority.

Here are 9 metrics that every marketing organization should be measuring.

Tracking fully loaded demand generation costs

Multichannel marketers are tracking the costs to generate traffic to their sites from all possible sources. These often include the costs to complete the transaction, which can include a call center or the technical support of the site itself.

Marketing spending

Marketers are always trying to establish the ROI value of incremental spending. Some of the measurements in this area include cost per impression, cost per response, reach, frequency, and share of voice.

Visitor acquisition

KPIs are used to determine the health of the sales funnel. Definitions are very important here, and the critical questions include: what is a visit, what is the source of the visitor, what is a return visitor, and what is a unique. Tracking sources often requires integrating multiple reporting tools such as the ad-serving provider, Web tracking tools, and ad tracking tools.

Site effectiveness measurements

Site effectiveness measurements analyze the conversion effectiveness of the site. The sales funnel is critical here –- how efficiently can a visitor be turned into a customer?

Conversion

Definitions are critical in conversion metrics -- especially if the conversions of one channel are to be compared to others. What does a conversion mean? An important challenge is to properly attribute conversions to their sources, and this must be consistent across each channel. The easiest answer is often “last touch” conversion, which gives credit to the last interaction -- but this can be very misleading and off by as much as 50%. Fractional attribution that gives partial credit to all known interactions is a better practice, but this can also be a challenge.

Buyer metrics

These include the frequency of purchases, or the retention rates of customers that can be rolled up to overall market share, brand equity and/or customer lifetime value. The most-quoted Buyer Metric is typically the Average Order Value, or the AOV, which is used to understand and compare different groups of buyers.

Revenue

Multichannel and e-commerce marketers track revenue carefully to compare the margin generated from each channel, in order to determine the value of incremental sales, and to guide pricing and promotion decisions.

Customer loyalty and customer profitability metrics

Companies use these metrics to understand the value of their individual customers, regardless of which sales outlet they have chosen. This is another area where definitions are critical from one channel to the next. The methodology for the measurement of loyalty and customer-level profitability can vary considerably from company to company, depending upon the purchase dynamics of the consumers for different products.

Profitability and ROI

Each of these categories of metrics can include components such as:

• Channel margin – From each channel selling different products
• Performance compared to a sales target – How close is the sales performance to a target that generates the profit requirements for the channel?
• Net Profit – Sales revenue less total costs
• Return on Sales – Net profit as a percentage of sales revenue
• Return on Investment – Net profits over the investment needed to generate the profits
• Net Present Value (NPV) – The value of a stream of future cash flows after accounting for the time value of money
• Return on Marketing Investment (ROMI) – Incremental revenue attributable to marketing over the marketing spending

Any one of these metrics can be challenging to reach as a goal without integrated databases and marketing technology. Creating clear definitions across departments and channels is the first step.

As data and tools begin to converge, more and more marketers are building their ability to measure these key performance indicators and use them to make smarter decisions across the marketing organization.