Here’s How Marketers Determine What Metrics to Measure?
A short while ago, a few peers and I sat down via Zoom and talked about what marketers need to be measuring in 2021.
We talked about some different business lines, other lines of thought, and what we thought marketers should be paying attention to when measuring the effectiveness of initiatives. All important topics, and critical ones for business success.
But for someone starting a business, there’s one question that looms like the elephant in the room:
Just how on earth do I determine what I should measure?
It can be pretty overwhelming to try to answer that. One can make a convincing case for measuring just about any metric – and just as convincing a case not to measure that same metric. The token answer is ‘it depends,’ but some general rules can help light the path forward. There is an intelligent way to decide what to measure and what types of things to avoid.
That’s what I’ll talk about here. I’ll approach it from a small business standpoint just starting up – we’ll assume a bakery that sells an assortment of tasty treats (they will sell oatmeal raisin cookies because those are the best kind of cookies). They plan to have an online presence, including on social media, and are located in a populated area that is not a massive challenge for people to get to; they don’t have to go out of their way. I’ll throw in some additional stipulations as we go, but this is our jumping-off point.
To get started, I’ll lay out a general mindset that every marketer should be thinking about:
My colleague Bill Skowronski recently wrote two pieces detailing why marketers shouldn’t use ROI to quantify the value marketing brings. They are excellent reads that you can find here and here. In them, he makes the case that return on improvement – essentially, are you making quantifiable gains in your marketing activities – is the way to go when measuring marketing effectiveness.
I believe something different – that marketers always need to be acting with ROI in mind and articulate how different channels, strategies, and activities contribute to the bottom line. Not every metric can be easily tied to the bottom of the funnel activities and outcomes – this is particularly true of awareness. Still, marketers need to be thinking in terms of financial outcomes when deciding which plans and strategies to execute.
Here’s why: businesses have limited resources, and those resources need to be directed to places that help the business make money in some form or fashion. This is particularly true for our start-up bakery – they have limited staff and budget and need to make sure how allocated contributes to revenue. That way, those resources can grow over time and be reinvested to continue growing the business. I’m not just talking about financial resources either – time for people has limits, and marketers need to direct that time towards revenue contributing activities.
I acknowledge that it can be a real challenge for a small business to tie these activities to revenue directly for some things, like awareness and familiarity. It’s even a challenge for bigger conglomerates who have access to brand trackers. Those are important, even if they do not ladder down to ROI directly. But this is where marketers need to push themselves to ask, are the people who are aware of us likely to buy? Does building a presence with this demographic help us meet our sales goals? If the answer to those questions is no, plans should be re-evaluated.
Think in terms of activities and channels.
Sometimes, businesses can become preoccupied with the big picture in every action they take. That’s not a wrong mindset to have by any means, but when it comes to deciding what to measure, I recommend looking at the activities marketers undertake. These activities all roll up to core goals but taking them in small bites helps make the picture clearer. This is where businesses determine what they need to measure and why those activities are so important.
Let’s think about how our bakery would do this. We mentioned earlier they plan to have a social media presence across a few channels. They’ll want to measure engagement on their posts – particularly comments (their customers talking to them) and shares (increasing reach). Further, they should measure click through rates on any posts with links to their website – an activity that moves people down a little further down the funnel. If they also take orders through their website or make orders for delivery (say through Doordash), they will want to track click-to-purchase as well. This helps quantify the social channel specific impact of marketing efforts.
Taking the concept a little further, let’s say the bakery, as a way to raise awareness, makes some cookies for a local fundraiser. Beyond just donating some goods, it could be worth it to have some coupons printed out that customers turn in to encourage trial. If they do that, establish a way to track how many are handed out against how many are redeemed. There’s certainly value in simply donating goods to the community. Still, if there’s a possibility to take steps to be able to quantify the impact of the marketing, it’s worth considering.
These concepts all contribute – or should contribute – to business success in the financial sense. But measuring them individually makes it much easier to track and evaluate. It also makes it easier to build that bridge to ROI that helps marketers prove the value of their activities and strategies.
Be careful about surveys.
Surveys are a great way to get information from customers. Marketers can get beneficial things from them, including net promoter score, how people get into the funnel, and what kind of things they enjoy – or don’t enjoy. It’s a great way to gather information directly from your customers.
It’s also something I don’t recommend businesses that recently started up to do. For one, putting together a good survey isn’t as easy as people think. Many things can hinder effectiveness, including leading questions, double-barreled questions, and bad samples. Anyone can write a survey but writing a good one is tricky.
It can also be tough to get customers to fill it out, and in some cases, be a turnoff. A once in a while survey ask is probably reasonable. However, asking customers too frequently can result in your emails being filtered into the spam folder or customers flat ignoring them altogether. It’s also challenging to get people to fill them out in person – think of how many times you’ve been to a restaurant and given a survey to fill out with your check. How many times did you give the restaurant some survey feedback?
For our bakery, they may think it’s worthwhile to give customers surveys with their orders on the way out the door. Chances are, they won’t get a lot of responses from that. It’s also not worth incentivizing people to fill out either, as some places do. That unnecessarily eats into profits and could lead to people just filling it out to get the reward instead of giving the bakery meaningful feedback. As tempting as it might be to survey customers regularly, I would shy away from it and do it no more than twice a year.
If all of this sounds like a lot, it is. Everyone talks about data, measurement, and metrics, but they’ve become buzzwords in some sense. Not enough attention is paid to the essential data points, how to collect them and why they make sense to measure for that business. In general, I advise marketers to look at what channels their customers are in, how they want to approach marketing on those channels and let those decisions illuminate what data to collect and how to track it.