In Marketing, everything is measurable

When I was heading the marketing function at a well-known Internet company, my team followed a strict code for measuring every single marketing $ that was spent and thus, the words "Everything is Measurable" became a part of the way we evaluated our marketing campaigns. 

The belief that every single marketing $ should be and can be measured, is at the core of how an organisation views and evaluates the performance of its marketing strategy and plans. And this becomes doubly important for a start-up - funded or non-funded - because ill-advised marketing investments can really hurt a company.

Here are a few best practices I have experienced while putting in place a process for evaluating marketing investment.


1. Set a quantitative goal for every single marketing activity

The fact that an activity should be measurable makes it mandatory for the goal to be 'quantitative'. "Post this marketing campaign, we would like the brand to be seen as a role model for environmental initiatives" is not a quantitative goal. "We would like the festival promotion campaign to deliver 12% more sales than the last festival season from our exclusive stores" is more like it.  

2. Define the goal

Different companies have different objectives for different marketing campaigns and in each of the cases, the definition of goal might differ. Let's take the example of a Bank. For one online marketing campaign, the goal is to double the number of leads over previous quarter, where the lead is defined as "a form that is filled up online with all requisite fields completed". For another campaign, the goal could be to "increase the loan disbursement by 50% over the same quarter last year". A lead can mean different things to different companies and hence, it is important to define one's own in very clear terms. 

Besides, every marketing campaign should be viewed as a stand-alone activity if we are to evaluate its performance dispassionately.

3. Even brand campaigns and not just tactical campaigns, should be measured

There are marketers who will argue that brand campaigns are to be evaluated for 'emotional connect with the consumers" and that 'numbers cannot measure this phenomenon". Fair point. But ultimately, if the campaign has clicked, this emotional connect should pay off for the brand in some measurable way. 

a. The brand should register a higher Top-Of-Mind salience / Unaided awareness post-campaign as against its pre-campaign scores and this is easily measured in a brand track. 

b. The success of the campaign should show higher sales for the brand, if not immediately but over a period of time, which can be defined at the time of goal setting. Here again, with planning it would be possible to isolate the effect of a particular campaign.

4. Focus on key business metrics

In one's zeal to be competitive, some companies try and chase too many goals as a result of which limited marketing resources get spread out too thin and the goals remain as distant as ever. Ideally, marketing should be given that one key metric that will impact the business the most. For example, if there's a definite co-relation between number of test drives and the sales of a car brand, then marketing should be judged by the number of test drives initiated by its campaigns and the resultant sales. A content website could potentially have tens of metrics to measure but it would do well to focus on the ones most likely to impact its revenues - for e.g., # of daily / monthly unique visitors - new and repeat, # of pages consumed and time spent on the site.   


5. Integrating marketing goals with business objectives
How integrated marketing is with the business objectives would be evident in how they set goals for themselves. For example, while organising a prospective customer event, should the marketing goal be the number of event attendees or the sales generated from attendees of the event, 30 to 90 days from the event? A good marketing leader would choose the latter for the simple reason that seats filled does not impact the business whereas actual revenue does. Marketing heads should resist the temptation of giving themselves a goal that is multiple levels away from creating positive business impact and aim for tougher goals that are closely linked to business objectives.    


6. Setting benchmarks
A learning organisation keeps setting new benchmarks for performance as it gets equipped with more data and more knowledge. For example, let's assume that an online marketing campaign costing Rs.200,000 (approx.US$4,400) delivered 100 test drive request for a passenger car brand. The first level data that marketing should be tracking is the cost per test drive request which in this case is Rs.2,000 (approx.US$44). The second level data that marketing should track is the sales metric i.e., how many cars have been sold from the test drive requests that came from this particular marketing campaign. Let's assume that the test drives helped sell 5 cars at an average price tag of Rs.360,000 (approx US$7,800).

Now, we have two sets of new data - cost per car sold and Return on Marketing Investment (ROMI). The cost per car sold is Rs.40,000 (US$880). And the ROMI factor for this campaign is {(sales generated/cost of campaign)-1} = {((360,000x5)/200,000)-1} = 8.0. A simple way of saying that the campaign delivered 8 times more than the campaign cost in sales, after covering for the cost of the campaign.

Whether the cost per test drive request, the cost per car sold or the ROMI factor are good numbers or not depends on the benchmarks the company sets for itself based on how the category data stacks up.

Very clearly, for marketing, these data throw up new challenges. Can we drive more test drive requests for the same money (and therefore, reduce the cost per test drive request)? Can we get higher quality leads or improve the test-drive fulfillment process in the showroom so that more test drive requests convert in to sales (and thereby, reduce the cost per car sold and the increase the ROMI factor?)

In my view, as marketing becomes more data oriented and starts believing in the code of "Everything is Measurable", it not just helps in taking better marketing decisions but takes it closer to contributing handsomely to the business objectives.