Marketers are often told to avoid using “vanity metrics” to measure marketing performance. Vanity metrics have been described in several ways, but the term is frequently applied to social media and other types of “engagement” and “consumption” metrics – things such as impressions, “likes,” shares, and page views.
The primary criticism of vanity metrics is that they don’t have a measurable relationship to strategic business outcomes. So, for example, the number of shares or likes received by your social media content might have doubled over a given period, but there was no meaningful growth in your revenue or market share over that period.
The real problem with vanity metrics is not with the metrics themselves, but rather with the failure of marketers to place those metrics in the appropriate context. In fact, the need to provide context applies to all marketing metrics, not just those traditionally called vanity metrics.
Marketers need to take two essential steps to create an effective and credible marketing performance measurement system. First, they need to link each of their marketing activities to one or more specific objectives. And second, they need to link their marketing objectives directly or indirectly to one or more strategic business outcomes, typically revenue or market share growth.
These two steps are critical to building a marketing measurement system that will support better decision-making by marketers and produce data that will be credible to senior company leaders.
Objectives, Activities, and Metrics
The three core components of a well-designed marketing performance measurement system are objectives, activities, and metrics. The following diagram depicts a small portion of a marketing measurement system for a hypothetical B2B company. It illustrates how the three measurement components relate to each other.
Marketing Objectives
The foundation of any effective and credible marketing performance measurement system is a set of objectives that collectively describe a company’s marketing strategy. At the most basic level, a marketing strategy is a growth hypothesis that states: “If we achieve these objectives, we will drive revenue and/or market share growth and add value to our company.”
The marketing objective shown in the above diagram is to increase brand/company awareness among potential buyers in the company’s target market.
Marketing Activities
The second element of a marketing performance measurement system is the set of marketing activities a company chooses to perform to achieve its marketing objectives. In a well-designed system, each marketing objective is linked to one or more objectives. The logic of this linkage is: “If we perform these activities well, we will achieve our marketing objective(s).”
The above diagram shows two marketing activities – publishing high-quality blog content and posting engaging content on selected social media networks. The arrows indicate that the company’s marketers believe that performing these activities will increase brand awareness.
The arrow connecting “Social Media” to “Blog” indicates that the company’s marketers plan to use some social media posts to promote their blog content, which they believe will improve the performance of the blog.
Marketing Metrics
Marketing metrics are the third component of a marketing performance measurement system. In our example, a part of the company’s marketing strategy is based on the hypothesis that blogging and being active on social media will increase brand awareness. Metrics are used to test the validity of this hypothesis.
The role of metrics is to quantify the immediate results of performing an activity. Marketers then use those results to reveal the progress (or lack of progress) toward achieving a particular marketing objective. In our example, the company is using blog metrics (views, subscriptions, etc.) and social media metrics (likes, shares, etc.) to show the change in brand awareness.
Connecting Marketing Objectives to Strategic Business Outcomes
Linking marketing activities to marketing objectives, and then using metrics to quantify the immediate results produced by each activity is a fairly straightforward task. But, it’s also important to link marketing objectives (and their related activities) to strategic business outcomes like revenue or market share growth.
Marketing creates business value through activities that operate at different stages of the value-creation process. However, many marketing activities contribute to business value only indirectly, and some will be several steps removed from the strategic business outcomes they affect. This makes it difficult for marketing leaders to show the value of such “remote” marketing activities.
I described how to address this issue in a detailed post several months ago, so I won’t repeat all of that discussion here. However, the solution basically involves describing the “chain” of linked marketing objectives (and the related activities) that ultimately leads to a strategic business outcome.
The following diagram depicts a simplified version of one of these marketing value chains.
This diagram is based on the example I’ve been using in this post. It shows how our hypothetical company’s marketers have connected blogging and social media involvement to the strategic revenue growth objective.
When the link between these marketing objectives and revenue growth is made explicit, blogging and social media metrics that might otherwise be viewed as vanity metrics become relevant and meaningful for measuring marketing performance.
Top image courtesy of ESO via Flickr (CC).
