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Why marketing metrics matter

When it comes to measuring marketing success, there’s no doubt that marketing metrics are crucial.

Every company will have its own specific marketing metrics requirements. Analysing what these should be, and then having them delivered in a timely and reliable fashion, is vital for the success of every marketing department – and ultimately the company that it is serving.

To show the value of marketing metrics, let’s compare the fortunes of two different companies. Company A had a good set of accurate marketing metrics and used them well, while Company B had some faulty metrics and decided to be guided by them, with unfortunate consequences.

Company A

This company makes its own products and sells them directly to consumers globally. When the Covid pandemic hit they found that there was a massive upsurge in demand. By the end of 2020 they had sold 2.09 times more than the previous year. By the end of 2021 that had risen to 2.24 times.

However, their top priority was to manage supply and demand to keep the time lag between orders and delivery as tight as possible. This meant managing the amount spent on recruiting new customers and on communicating with existing ones.

Fortunately, they had historic marketing metrics that went back five years. These reported month-on-month sales from existing customers compared to new recruits, and which previous years those customers had come from. Once they knew how much the effects of Covid-19 was uplifting existing customer sales compared to previous periods, they could accurately forecast demand from existing customers for the rest of the year. This gave them a clear indication of the level of new recruits required to fill the factory capacity.

The net result? They were able to fill the factory whilst minimising their marketing spend and achieve a very strong ROMI (return on marketing investment).

Company B

This company also manages their own production, but they had a faulty metric. This was the sales value they were getting from customers to whom they had sent a catalogue. There were two reasons for this:

  • the lack of an accurate single customer view, which led to multiple duplicate records, and

  • an inaccurate match-back of those mailed to people ordering.

The result was that their metrics were reporting a much lower return – in fact, one-third of what it should have been on catalogue campaigns.

This led to a decision being made to abandon catalogues in favour of email communications. However, the company had not been particularly successful at collecting email addresses, and as a result there were only 14% of active customers for whom they had email addresses and who had not opted out.

Despite a very high volume of emails being despatched, the overall order rate in each year, from existing customers began to decline. Over a five-year period, it had sunk to a half of what it had been at the start.

However, because they were successfully recruiting new customers, the actual order value from existing customers kept going up, so nothing was noticed. In other words, instead of using the right metric – i.e. what proportion of the customers you start the year with go on to order in that year – they used the wrong metric, which was simply the absolute number of existing customer orders.

The net result was that Company B lost several million pounds worth of potential sales from existing customers, whilst not even understanding that this opportunity had been missed.

So, the value of accurate marketing metrics is clear. Analysis of those metrics is crucial to the success of your marketing activities – and your bottom line.

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