Measuring marketing plays a role beyond making organizations more accountable. Effective marketing measurement initiatives enable organizations to use marketing metrics to guide scenario modeling, planning and investments. An integral part of such an initiative is establishing key performance indicators (KPIS). KPIS should indicate a change in performance and provide you with insight in how to influence success. All marketing metrics should help marketers assess their performance but it is the KPIs we deploy that should provide us with leading insight into the future impact of marketing efforts on the business outcomes.
Measuring marketing plays a role beyond making organizations more accountable. Effective marketing measurement initiatives enable organizations to use marketing metrics to guide scenario modeling, planning and investments. An integral part of such an initiative is establishing key performance indicators (KPIS). KPIS should indicate a change in performance and provide you with insight in how to influence success. All marketing metrics should help marketers assess their performance but it is the KPIs we deploy that should provide us with leading insight into the future impact of marketing efforts on the business outcomes.
As you think about your KPIs, select those that will help you understand the market causes that will influence or effect change in the business outcomes you are trying to drive. Before you can determine your KPIs you must first know how the organization is going to measure success. This information is the foundation for establishing your organization’s business outcomes. Once you have identified the business outcomes, the metrics to measure success, whether that’s market share gains, improvements in customer value, etc. will become clear. Armed with how success will be measured each part of the organization can define appropriate KPIs, that is measures that marketing can use to help determine whether an initiative is/will have an impact on the success of the outcome. You want to select indicators that have the most influence on the outcome.
We are often asked, “How many marketing KPIs do we need?” The number of KPIs depends upon the number and variety of business outcomes and metrics. The key question rather is what performance indicators will serve as a signal of future performance. For example if share of preference has been determined to be an indicator of sales and ultimately market share, then an increase in preference would be expected to generate increase in market share and vice versa, a decline would signal that advances in market share are in jeopardy. Your goal in selecting a KPI is that it should correspond to a change in the outcome.
Once you have the KPIs and begin to monitor them on a regular basis, you can use the data to support predictive and scenario modeling which are essential for business planning and resource allocation. What are you looking for when you monitor your KPIs? You are looking for changes in your KPIs and the corresponding outcomes in order to develop norms and benchmarks. This information when tracked over time serves as a gauge that when numbers are outside the norm the corresponding outcome will be affected. For example if you see a change related to customer behavior it may be signaling a shift in the market, whereby enabling the organization to mobilize in anticipation of the change and adjust accordingly in terms of product, channel, pricing, and segmentation strategies.
