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Building SMEs Into Thought Leaders

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Without metrics to track performance, marketing and business plans are ineffective.

Businesses need to know which success factors require measuring, and they must understand the differences between measurements (the raw outcomes of quantification), metrics (ideal standards for measurement), and benchmarks (the standards by which all others are measured).

For marketers, three primary metrics constitute a starting point for tracking their performance. Once companies are aware of their competitive position, their desired outcomes, and what it will take to achieve those outcomes, companies will be better able to identify the success factors, benchmarks, and appropriate metrics to meet their target.

Why Measure?

Metrics are a part of our everyday lives: from our heart rate, to our bank balances; from our weight, to the gas mileage on our cars. If we don't pay attention to these numbers, we create a risk for getting a heart attack, being overdrawn, or running out of gas.

The same is true in the business environment. If a company doesn't identify and track important performance measures, it increases its risks.

Metrics provide a means to assess progress; they provide valuable data points against which the marketing organization can track its progress. Metrics demonstrate accountability and allow marketers to better know, act upon, align efforts, and reduce market exposure. Metrics enable the marketing organization to truly serve as the eyes and ears of the company.

And, more importantly, establishing and tracking metrics will have a positive influence on the leadership's satisfaction with Marketing and the marketer's ability to secure funds. Only 38% of US executives say their companies are now measuring the results of their marketing efforts, according to a study of senior business executives conducted in the second quarter of 2004 by Blackfriar.

Will measurement actually change investment in Marketing? Blackfriar compared planned marketing spending for companies that measure marketing with those that don't. The result? Firms that measure marketing planned to spend an average of 41% of their annual marketing budgets during the second quarter. Those that don't measure planned to spend only 33%; apparently, they felt more comfortable planning to spend their marketing dollars than those that don't measure.

Measuring marketing also has an impact on the satisfaction of senior executives regarding their investment in Marketing. Some 16% of executives at companies that measure marketing said they were dissatisfied with their marketing efforts. But at firms that don't measure marketing, 28% said they were dissatisfied.

The simple act of measuring marketing results reduced the dissatisfaction of senior executives significantly. In other words, measurement allowed Marketing to prove its worth.

Defining Metrics

The world of metrics can be confusing for people new to these concepts. To better understand metrics and how they work, several terms must be defined:

  • Measurements are the raw outcome of a quantification process, such as a company's numbers, ratios, and percentages.
  • Metrics are the standards for measurement, providing target values that a company must achieve to reach a certain level of success.
  • Benchmarks are the best measurements to aspire to, the standard by which all others are measured. Companies that set benchmarks in their industries are the ones often lauded in "Top Ten" and "Most Admired" lists and articles.

A good example of a marketing benchmark can be traced back to the early 1990s. Over a decade ago, market research firm IntelliQuest (now Millward Brown IntelliQuest) conducted a customer satisfaction research study for the personal computing industry.

The firm spoke to customers who rated the companies in the industry, which resulted in a measurement on a one-to-nine scale. It then learned that 84% of users who rated their satisfaction as a seven, an eight, or a nine would consider the same brand for their next purchase. Seven, eight, or nine became the metrics that companies aspired to attain. The benchmark was nine.

Three Metrics Gauges

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ABOUT THE AUTHOR

image of Laura Patterson

Laura Patterson is the president of VisionEdge Marketing. A pioneer in Marketing Performance Management, Laura has published four books and she has been recognized for her thought leadership, winning numerous industry awards.