7 Essential Marketing Metrics

Across the Pond- Marketing Transformed.

Episode 12. Essential Marketing Metrics

 

Two marketeers walk onto a desert island…

 

SAMUEL MONNIE: 

On this week’s show we’re going to talk about “what does success look like?”. We’ll get specific on how to know you’re succeeding and meeting expectations and we’re going to give you a new perspective on the modern marketing metrics. We had a long debate on whether this show was too early or too late in the podcast series, but we felt it was really important for us; a really strong point of view to have a stake in the ground and go on record for what we believe marketers should have in mind when it comes to metrics. Our perspective is that there are a few key principles that we should have to drive the thinking and influence people out there. Now, there’s a long list of KPI’S (key performance indicators). 

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We’re going to try to avoid acronyms, please do bear with us. We’re going to articulate things that perhaps you know, but we’re going to make sure as we  run them down. There’s a scarcity mindset I think that  helps us, keeps us honest and just have a focused view. 

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So, we’re going to focus on the magnificent seven KPI’s, that we’re going to take with us to our own marketing desert island. So, Chris. We’re going to a desert island, we’re taking seven KPI’s, what rules should we be having in mind? 

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CHRIS LAWSON: 

Ok, so, I think it has to be categories rather than individual specifics, otherwise I think we’ll be here all night if that’s the case or all day, depending where you are, which time zone. I think we’re going to have to reject a couple as well, scarcity, focus, those good things, so either one no or two nos then I think it’s left out.

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SAMUEL MONNIE: 

Agreed. So, the first one: business performance targets that’s going onto our island; these are business growth expectations, growing sales by say three percent or growing e-bit earnings before interest and taxes by two or five percent. It could be to maintain or increase market share, be it dollar sales share or unit share. Market share you could do that on a global, national and  regional level so if you’re an Uber for example, you’re probably looking at data vs Lyft in terms of ride share, if you’re Oscar Mayer, which is a bacon brand in the US, you’re probably looking at market share of the bacon category. And I am bringing it up for a reason, not just to make you hungry but I am going to call out an example later on. 

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CHRIS LAWSON: 

Ok, yeah agreed with that, you’ve got to focus on what keeps the lights on, and that’s where the business measures are most important. I think it’s interesting that different shapes of organisations focus on revenues rather than profit and of course you have to balance the mix, but a number of start-ups, even scale-ups, will be focused on top line revenue growth, overall revenue figures, and that profit or e-bit doesn’t get a mention. Now let’s not get drawn into the WeWork debate as an example here, but you get my point. I think the challenge is:  when you are telling the whole organisation it’s about top line revenue growth and that’s your mantra for months, if not years, its then hard to change that focus. One thing that I do think is important is  average revenue per user, focusing on those metrics, those overall business drivers but customer driven ones are important as well, so I think that definitely needs to be part of the mix. You agree with that Sam? 

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SAMUEL MONNIE: 

Yeah, that makes perfect sense. I think for me it’s also certain companies I’ve worked for. Another way to think about it, or to build upon the impact of top line growth is its impact on profitability. I often use net sales. Net sales is sales minus sales deductions, allowances and returns and that’s what I’m used to in corporate roles.  

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CHRIS LAWSON: 

I’m going to go for a heavy hitter first, the good old classic CPA: cost per acquisition. In its many forms this is the bedrock of most marketing strategies, if not at least the marketing acquisition strategy. You find out your budget, you find out how many customers you need to acquire, and you work out that cost per acquisition or that allowable cost per acquisition. Of course, there’s hundreds of variations that we won’t get into, cost per lead, cost per channel, cost per inbound channel, ROI- that’s return on investment, simply put this is what we need first. Whether it’s an old school direct marketing business or a SAAS software as a service business or  B to B start up, it’s a metric all marketing teams will be familiar with and is pretty much up there at the top, I think. 

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SAMUEL MONNIE: 

Yeah, that’s a good one, I agree that makes it on, my only caveat though is to spend some time interrogating the evidence supporting attributions towards the acquisition. There’s a real challenge to ensure how you attribute the costs is actually legitimate and valid and accurate. I’ve been in situations where originally one hundred percent of the attribution has been given to digital and then later on, say a TV campaign was cancelled the online conversion rates dropped thirty, forty, fifty percent, which was proof that it wasn’t all attributed to the digital activities. There are real flaws in some of the assumptions; you’ve really got to do that well. So, definitely a caveat to that mindset. 

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CHRIS LAWSON:

Yeah, I agree, I think we could probably do a whole podcast to attribution itself if you’re looking at last click attribution, or a blended model, those real performance marketing heavy measures and making sure your absolutely clear on what the contributing factors are to your overall campaign I think is incredibly important. Completely with you in that one.

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SAMUEL MONNIE: 

Yeah so over to me. I’m going to take my turn even though you haven’t asked me because I’m excited about this. The audience, I can feel their energy, they just can’t wait. Well, we’ve got behavioural change objectives, Chris. The key idea here is that behaviour changes are critical drivers of marketing success. I can see so many people nodding their heads, thumbs up, agreeing with me. The promise of getting people to do more of this instead of that.

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For example, you want people to visit your business an extra time a week, or to get a haircut one more time a month, these are the basic sources of growth. The simplest way to do this is to force yourself into a calculation of how many people you’re actually talking about. How many people multiplied by the spend or increase of purchase rate, so it could be ten thousand customers spending ten dollars a year more, which is an extra hundred thousand, or it could be five thousand customers spending twenty dollars a year more. 

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But, if your current customer base is only one thousand, is it really realistic your going to get nine thousand more people? This behaviour change of more frequency, more penetration or increase usage, that kind of back of the napkin calculation forces you back to the drawing board of any planning and any forecasting in any budgeting process. If you can’t really calculate it in terms of numbers of people and how many, and you can’t get a number that is realistic or feasible then you’re back to the drawing board. So, behaviour change is critical, and you should be able to work that out- simply on the back of a napkin. 

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CHRIS LAWSON: 

Yeah, on the back of a napkin is definitely the way to go there. I think unless you’ve got a clear understanding in your own head, using mental arithmetic, you’re over complicating it. I’m a great believer that you try to simplify these things down and then do the more complicated calculations after that. I think the other interesting thing around that is when you’re talking about frequency and recency is thinking around those metrics of the campaign and how that comes into it. So, you might have another multiplication there as well.

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I’m going to go for customer satisfaction. There’s some businesses that chase revenue and there’s some businesses that serve customers. And I know which ones are ultimately successful- it’s the ones that can do both. Now you’ve got a whole load of choices here, net promoter score is probably most famous or NPS as it’s commonly known, a method to really focus on the advocates and promoters of your brand. It’s one simple question, it’s an eleven-point score range with advocates being those that you score a nine or a ten, passives being seven or eight I believe and detractors under seven. You subtract the percent of detractors from the percent of the advocates, simple. You’re going to get either a minus figure or a positive figure up to that. So simple that it’s now being used by over eight thousand companies, and the question they ask is how likely are you to recommend our company or our product to a friend, so that’s the NPS score there, but to be honest I think you can get away with setting your goal as a five star trust pilot rating as well. The point being is that what you’re really judging yourself on is not the averages, it’s not the sixes or sevens or eights, it’s succeeding and delivering a nine or a ten star service and I think that’s the key point there, that you’re really wanting to attract the advocates and the promoters and that’s what you’re aiming for.

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SAMUEL MONNIE: 

I’m a huge net promotor fan and I’ve used it successfully for a number of years now. I will give acknowledgement here that there are some critics of the methodology that its perhaps a bit too simple, and the applicability in a world where people’s decision making isn’t linked to one simple question. However, this one definitely gets added in there because it’s about the customer. It’s about the consumer, about the user and it’s based on the voice of the customer. Too often we rely on inferred metrics, be it reducing wait time on a call at a call centre or page load time, making it faster which means a better web experience. Well we’re not really sure, those are all inferred metrics, let’s not infer, let’s actually get the voice of the customer. There’s nothing more sobering than hearing your customer at the call centre tell you what the issues actually are with the product and the packaging, how it completely missed the mark even though you spent two years falling in love with this great idea that you brought to market.

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The island’s getting a bit crowded so I will move on to my next one Chris. The next one I would add in to this list of desert island metrics are brand equity and brand health. For me its how your brand stands out vs other brands. It could be category or brand specific. It’s what the brand stands for in hearts and minds of consumers and what positive impact this brand has on the world and the community.

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Now I won’t get into too much technicality of brand pyramids and brand positioning and brand personality stuff, but all that stuff is absolutely measurable and linked to business results. There could be points of parity, so things that you do as well as other companies, or things that are different so things you want to own and do better and you want to be superior to your competition. And I mentioned bacon earlier on, and I know that got some peoples attention. 

 

They did what?? And it worked???

 

There’s one story that I will quickly share a few years ago on how this brand called Oscar Mayer, which is a bacon brand in North America. They had a real issue fighting against a private label, they were losing because private label brands were cheaper, they were facing headwinds because consumers didn’t really see them as better quality and they were losing distribution on shelves. So perfect storm, losing space, selling less, consumers didn’t really like them, but they found this bunch of super passionate bacon lovers who were so intense. You know the types of people who were constantly emailing or reading memes about bacon, the types of people who dress up as bacon if they were doing a fun run, the people who were watching bacon videos all the time, you know these very intense, extra people. 

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Anyway, this audience was so passionate the brand came up with this wake up and smell the bacon campaign, yes, it had a limited-edition attachment you plug into your phone, you’d set the alarm clock and then you could wake up at seven am to the beautiful fragrance of bacon in the morning. Completely ridiculous, they had three hundred thousand people trying to get a hold of bacon alarm clocks. Really, why? Well it created a buzz, it created PR and it created this fervour, these people who were so passionate they had to get one of these. And guess what, all of this led to people caring about the brand and it actually boosted the taste credentials, the tasting credentials by about fourteen points, and they increased brand likeability. And I say all that because what it did was drive household penetration two percentage  points, created millions of dollars of extra revenue. 

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Getting people to think, feel and act differently about the brand is all measurable, closing that sales performance gap and growing their business. And so, for me, wake up and smell the bacon is a great example of why measuring brand matters, and you can do that on your brand. 

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CHRIS LAWSON: 

To be honest you completely lost me after hearing about that attachment on your phone, I mean that is one of the most ridiculous things I have ever heard but, hey, you remember it and I think I probably will now. So does its job I suppose. 

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SAMUEL MONNIE: 

Yeah, they were going for twenty/thirty dollars, so, they were basically giveaways and afterwards people were actually trying to get them on eBay and paying hard cash to get hold of them, so they became sought after afterwards, but that’s how passionate people were about this idea, and like I say it all comes back to the brand selling more. 

 

Back to the island

 

CHRIS LAWSON: 

Brilliant, well look after banging on about it last week- it has to be retention measures for me. If you’re not focused on churn rate and your life time value of customers, then you’re falling in to that short termism that we discussed in the rise of the retention figures. It’s easy to say but probably the hardest to calculate, it requires good data and companies with anonymous data really struggle with this and tend to give up, quite often a little bit too easily in my opinion. But saying that, if you have got a customer that has to log in for a product, If you’ve got a product that’s a subscription or recurring revenue, it’s much easier to look at that lifetime value, and it allows so many more opportunities because you can then flex your marketing investment, just not necessarily on the first year of cost, but spread out on the life stages of the customer. 

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If you’re selling physical products in retail or you’ve got anonymous customers using a guest check in, it’s a lot more difficult, a lot more difficult to do that. But you still have to work hard at it. Back in the day, in supermarkets, before we were able to track a huge amount, we worked very hard on looking at the lifetime value of our customers and we managed to do it. So, it is possible you just have to be creative on that. 

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SAMUEL MONNIE: 

So, Chris, my final one (the island’s getting very crowded, we’re going to save a space for the towel and the deck chair and some drinks and sunglasses) internal organisational measures of capability, of mind-sets of the business. So, this could be linked to culture, it could be linked to the purpose to the mission or the values. But you need to be measuring this stuff. Too often stuff lives on a page, on a piece of paper, on a binder, on a website, or worst of all  posters on a wall that you walk by, but nothing ever happens with them. I want to see it happen, and we know that what gets measured matters. 

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Simply put, how are you tracking this? How do they show up in management leader reviews? Is it  promotion compensation? Is recognition tied to it? How much brand advocacy comes from employees? What’s that worth in terms of media productivity. So, if your brand has purpose then it should be brought to life throughout your business and throughout your marketing campaigns. 

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It’s the source of news, the source of PR, it’s a source of catalyst advertising and here I always go to Ben and Jerry’s because I think they do it so well, their purpose is written down and it stands out. They’re founded on a mission dedicated to link prosperity for their product, economic and social missions that almost thrive equally. But they have KPI’s that actually show up in a number of areas that just wouldn’t happen for other brands, and it’s so linkable to Ben and Jerry’s. There’s real dollars they are spending on their products via marketing and employee time and so they have a product in store called Justice Remixed, which is dedicated to criminal justice reform. Yes, criminal justice reform has a taste, and I don’t want to be flippant, but they have Pecan Resist, which is dedicated to  peaceful protests against discriminatory practices. Save Our Swirled, which is dedicated to climate change. They even named the Cookie Dough to I Dough, I Dough, to recognise the rights of all couples to get married. Even their founders got arrested in 2016 and 2020 for protesting, and all of that shows up as actual KPI’s, actual activity that they’re tacking in their business. For me, the culture, the purpose, the missions, the values have to show up, has to have real dollars, you have to be able to taste it- in the case of Ben and Jerry’s- and its an important part of the business, but it’s also measured and tracked on a score card.

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CHRIS LAWSON: 

Brilliant, yeah that’s great. To be fair I think I have a couple of ice cream names I could add in from this side of the pond at the moment, but again let’s not get drawn outside. One final one from me, and that’s about conversion funnel metrics. Whether you’re starting right at the top, whether its measuring the traffic coming into your site, whether it’s landing pages, SEO, the channel, this is the geeky stuff that I get excited about, I know you get excited by Ben and Jerry’s Sam, I just heard you there, but the geeky stuff the performance measuring metrics, these are the ones where if you can fine tune the business, you can have such a significant impact and increase that efficiency, it’s really thinking about it as the engine. 

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Making sure that you’re pulling the right leavers so that it’s so finely tuned and works well. Increasingly, performance marketers have to love Excel, or their analytics suite, even Google Sheets, but there’s not many of them that love that, I don’t think. But their love of marketing come from measuring performance and seeing an impact and quite often that’s more than the creative side of it. I’m really impressed with the analytical skills of performance marketeers that I’m seeing come through the ranks at the moment, and a good product manager knows that he’s got to be hot on every single metric as well. He has to understand the conversion funnel from end to end, so I think that’s got to be in there as well for me. 

 

Trouble in paradise…

 

SAMUEL MONNIE: 

Well Chris, that works then, we’ve got business performance target, I think we called that out first , and then we talked about cost per acquisition which was one of yours, then I added behaviour change, we had customer satisfaction, brand equity and health which is a key one, building the brand is fundamental, we had retention in there, retention measures, internal org measures and conversion metrics … wait a minute, that’s eight Chris, so we got to eight and we promised seven…which one takes less of a priority? 

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CHRIS LAWSON: 

We spent eleven episodes preaching about the need to focus, keep it simple, and prioritise and now to be honest I can’t choose. If I’m forced to then I would argue that perhaps if you have a really strong dashboard, measuring those hard figures round acquiring, conversion, retention, that you could do without customer satisfaction, but then you lose all the colour. It’s sort of like having quantitative research without the  qualitative research, you want that blend…so yeah, you know what, I can’t choose Sam. I mean to be honest I sacrificed yours before mine, but that’s only because I like the black and white hard measures. But, saying that I think you really brought to life some of those organisational measures as well. I think we just need a bigger island.

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SAMUEL MONNIE:

Yeah, because I’m not giving up any of mine, so yeah, I think we do need a bigger island. 

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 CHRIS LAWSON: 

Hah, yeah, I assumed that. So, that’s the easy part, although it didn’t actually feel that easy. Once you know what you’re going to measure, you have to ask yourself again what does success look like, what does success really look like? Not just on the surface level when you really sort of just get down, how does that relate your purpose and core business goal, and then the hard work really starts. How are you going to measure it who’s going to measure it, do you need an army of analysts, how do you communicate that information clearly, is there a simple marketing dashboard, and how much do you spend on analysis results instead of implementing activity. So, a whole load of questions to answer Sam, in fact I think we have enough to cover for a part two of this and times getting on, so why don’t you sum up where you think we are, the three take outs of this episode and then we’ll organise a part two of this one.

 

Summary

 

SAMUEL MONNIE: 

Well, yeah absolutely, we’ve landed on what to measure and what success looks like

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1. It’s tricky, as you heard from us. But you need to be choosy and have a point of view on what you’re going to measure. We landed one eight, perhaps you can get it to seven, but have a point of view and spend the time and effort crafting what your metrics are. 

2. You need definitive measures that can be calculated and some which are perhaps more qualitative. So, in nature, so you’ve got to have that blend and that balance, it can’t all just be stuff that lives in a spreadsheet, and only lives in numbers. There’s got to be some qual as well as quant.

3. FInally,  I think defining what success looks like is only the start of the journey. What you measure is important but the how matters just as much, if not more. And we’ll get into that in next week’s show Chris.

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CHRIS LAWSON: 

Yeah, good, good. And I think that there’s one piece of homework because we did talk about demystifying acronyms, so think about one acronym that actually you think works, one KPI, one measure that you think appears complicated but is actually really powerful, let’s try and bring out killer KPI next week to the show. And on the next show we’ll look at how you measure success, what are the pitfalls to avoid, the tools of the trade and some innovative approaches to measuring success. So, a lot more to cover but I feel it’s been a great show, thanks for bringing it to life Sam. 

 

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