Marketing metrics in a time of crisis

Marketing is in a time of crisis, according to one analyst. Organizations need to be innovative and focused on achieving hard, reliable marketing metrics.

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For MercuryMD, a healthcare-focused software company in North Carolina, there are only three things its marketing department needs to measure -- how many leads a campaign generates, how many turn into sales opportunities and how many close.

"The only things that really matter are the lead-to-sale or lead-to-close metrics," said David Levin, director of marketing. "I hear vendors talk about page views on our Web site, and I tell them it doesn't matter if it doesn't make a sale."

But it's not that easy for everyone. MercuryMD, a four-year-old startup, was able to start from scratch with a common goal. However, as the company matures, more departments are placing more demands on marketing, Levin said.

"Marketing is in a state of crisis," writes Elana Anderson, principal analyst with Cambridge, Mass.-based Forrester Research Inc., in a recent report. @7471

There are several factors contributing to the crisis. A recent Forrester online survey found that more than half the respondents said they used spam filters and pop-up blockers and have signed up for the "do not call" list. Additionally, complying with regulations like "do not call" and the EU's Data Protection Directive is forcing marketing to more carefully monitor its data. Marketing departments are also becoming more accountable for the money they're spending.

"We spend the vast majority of non-salary dollars in the company, so we're very respectful of its value," Levin said. "We don't do anything we cannot measure."

What to measure is becoming trickier, however.

"The first thing organizations are doing is trying to settle on what the metrics should be in the first place," Anderson said. "There's not a lot of agreement on that."

Marketers who have traditionally been focused on mass advertising are now being asked to provide ROI and justify their spending. Naturally, the metrics differ by industry. Online retailers are interested not just on click-throughs but how sales might cannibalize the retail store. Financial services want transparency to help comply with Sarbanes-Oxley, Anderson said.

"Traditionally, e-mail looks at opens, clicks and bounces and uses benchmarks such as what are the average rates for retailers," Anderson said. "That's not good enough anymore. The next step of sophistication is what was the revenue? Did the consumer go to the cart? What did they buy? That's challenging when you look at the tools out there."

Agreeing on basic marketing metrics is a challenge, but adding factors like trying to drive a customer into a retail store makes it that much more difficult, Anderson said. Best Buy, for example, has found a short-term solution by offering online coupons that are redeemed and scanned at the local store.

A cohesive set of best practices is just too difficult to define, Anderson said. There are some innovations in marketing metrics, however. Some firms are just now beginning to measure how the frequency and type of contact with customers affects their long-term value. There are also some clear measurements. For example, direct marketers need to measure bounces and click throughs, Anderson said.

Technology plays a major role in transforming marketing into a metric-driven force. According to Anderson, technology needs to integrate programs across channels and lines of business, optimize customer contacts, track customer data and measure performance across the marketing mix.

The marketing mix becomes particularly important in an industry like consumer goods where organizations are dealing not only with direct consumers but retail outlets as well.

There are vertically focused vendors like Veridiem Inc., in Maynard, Mass., and Marketing Management Analytics Inc. in Wilton, Conn. which focus on tools for the marketing mix while larger CRM vendors like Cary, N.C.'s SAS Institute and Unica Corp. in Waltham, Mass. focus on direct marketing campaigns. No vendor addresses all aspects of marketing technology, and there will be a fair amount of consolidation in the vendor arena, according to Anderson.

Organizations are also beginning to see the importance of integrating their service and marketing branches. That integration needs to go across the myriad customer contact channels as well.

"That integration is absolutely critical," Anderson said. "As an organization is talking about an offer, and has an opportunity to push the offer out through channels, the centralized offer management, and campaign management system needs to be aware."

Finally, in order to not only define the correct metrics from the beginning of a project, but ensure they are measured, marketing needs to be at the executive table, Anderson said. A recent surveyed from Forrester showed that only 28% of firms have a chief marketing officer.

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