Marketing Metrics

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Marketing Metrics presentation for small business owners at the Greater Tampa Chamber of Commerce, July 2009.

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  • Valuable = Willing and Able to pay for
  • Ability to define a desired resultAbility to influence that resultAbility to measure your influence
  • Metrics are a framework to help us understand the world
  • Source: MarketingProfs.com
  • Metric = a standard of measurement, not the measure itself!
  • Causation, not correlation. (i.e. I believe all tall people I’ve met are smarter than short people. Everyone 5’6” raise your hands. Look around. What you will see is the “tall” population… and that I’m an idiot.)Avoid decision paralysisA wink is not one of the four bases, have to bat first.We’ll never know if that action was good or bad without cash exchanging hands.Paying $3000 to know that “brand recognition” is up 3 points is a waste of money. Ditto for number of media mentions.
  • I can make more sales in a number of ways, most tend to hurt profitability.
  • I can put more cash in my pocket by increasing profitable sales. Or selling assets. Or licensing IP. Or refinancing debt. Or raising new equity capital. Or working more than one job.
  • Result = Value
  • One metric that covers all areas.
  • The price measure tells us two things:Costs of goods sold management.Value to the market.
  • Increases revenue, allows you to extend credit, increases margins, increases perceived value, allows a few screw-ups here and there, etc.
  • Reducing costs may not be.
  • How about three?
  • Consultants – office supplies, printing, utilities, gas, food, etc.
  • Average firm resets prices only every 36 months.
  • 3-4 tickets/day
  • Sales increases may not be.Candy, on average, has increased $0.01/year since the 70’s.What money savings is had from a consultant with “less overhead” than the “big guys”?
  • Raising prices will naturally trim unprofitable customers.
  • Not talking about pricing out of the market, or not gaining a scalable advantage, just value to the market.Example: Sell to Wal-Mart, every year your price is moved down – and you take it. You deserve to go out of business.
  • Result = Value
  • There is a problem with “reach” – we do not control it!
  • Assumed correlation, not causation. (pageviews don’t magically, or even formulaically, equal sales) This would be like measuring how many times we appeared in search results and extrapolating some meaning from that #.
  • Result = Value
  • Who? What? When? Where? Why? How?
  • Who? What? When? Where? Why? How?
  • What is “share of voice”? Too many variables…
  • Good for Coca-Cola, no control for us
  • Good for Small Business, we can do something starting with response
  • Source: eMarketerWhat did we talk about when addressing raising prices?
  • E-mail: $244.69 per thousand prospects, $183.66 per thousand existing (MarketingProfs)35.7% of online budget (MarketingProfs)8.56%(DMA)/22.4% (Bronto) prospect open rate, 14.92% existing open rate (DMA)5.57% (DMA)/4.4% (Bronto) prospect clickthrough rate, 9.36% existing clickthrough rate (DMA)3.15% prospect conversion rate (DMA), 5.26% existing conversion rate (DMA)Telephone2.92% prospect response, 4.41% existing responseCatalog1.85% prospect response, 3.95% existing responseDirect Mail1.65% prospect response, 3.65% existing responseSEO & Paid Search33% of online budget (DMA)Cost per click averages $1.56-$1.98 (DMA)
  • Marketing Metrics

    1. 1. Marketing Metrics<br />Daniel James Scott<br />
    2. 2. What is Marketing?<br />
    3. 3. Only Desirable Result?<br />
    4. 4. $$$ INCREASED CASH FLOW! $$$(preferably with less effort)<br />
    5. 5. What is a Metric?<br />
    6. 6. Measurements : Metrics ::Tactics : Marketing<br />
    7. 7. What is a Metric?<br />What you measure, not the measure<br />Set against benchmarks, not a benchmark<br />Historical, not a forecast<br />
    8. 8. Metric Criteria<br />Metrics drive business results. <br />Metrics reflect business results. <br />Metrics are something you can influence. <br />Metrics are measured accurately. <br />Metrics are measured consistently. <br />Metrics are measured cost effectively. <br />Key stakeholders agree that key metrics meet these criteria. <br />
    9. 9. How do I use metrics?<br />Always support strategy<br />Define what to measure (create framework)<br />Compare against past performance<br />Compare against benchmarks<br />Compare against future goals<br />
    10. 10. The Keys to Metrics<br />Only a few<br />Cost effective to measure<br />Start at first controlled step<br />End at cash flow<br />Should TELL you something meaningful<br />
    11. 11. #1 Marketing Metric?<br />
    12. 12. Sales<br />
    13. 13. This metric is not enough.<br />
    14. 14. #2 Marketing Metric?<br />
    15. 15. Cash in Pocket<br />
    16. 16. This metric is not enough either.<br />
    17. 17. The point?<br />
    18. 18. No one metric can do it all.<br />
    19. 19. Typical 3 Categories<br />
    20. 20. Question…<br />
    21. 21. If we absolutely had to pick one, what would be the most important marketing metric for determining value (results)?<br />
    22. 22. Price.<br />
    23. 23. Raising prices solves other issues.<br />
    24. 24. Raising prices is in your control.<br />
    25. 25. Need a reason to raise prices?<br />
    26. 26. How about three?<br />
    27. 27. #1. PPI +3.9% every year<br />10-year average annual growth<br />
    28. 28. CPI only +2.8%<br />10-year average annual growth<br />
    29. 29. #2. Compensation +3.4% every year<br />10-year average annual growth<br />
    30. 30. Employer contributions to health premiums +8.8% (single) to +9.2% (family)<br />
    31. 31. #3. Only 3% separates the average US profitable and unprofitable transaction.<br />
    32. 32. An Example<br />Restaurateur generates $1M with a 67% GPM<br />Increases of 4% COGS & 2% overhead – with no change in price<br />Sales need to increase by $33,400 (or 3.3%) just to compensate<br />This firm will always have to grow to keep up.<br />
    33. 33. Raising prices is in your control.<br />
    34. 34. How?<br />
    35. 35. Focus on serving your best 5% ...rather than 5% of everyone.<br />
    36. 36. Provide that 5% killer customer service.<br />
    37. 37. Less is more.<br />
    38. 38. The point?<br />
    39. 39. Better (financial) results, less effort.<br />
    40. 40. Others?<br />Profitability: Gross, Net Profit Margin<br />Liquidity: Days, Cash Working Capital<br />Marketing: Expense per Year, Sale, Customer<br />Management: Sales, Net Profit per Employee<br />
    41. 41. Typical 3 Categories<br />
    42. 42. Let’s back up for a second and talk about “reach.”<br />
    43. 43. #1 reach metric?<br />
    44. 44. Website pageviews<br />
    45. 45. So, what should we measure?<br />
    46. 46. Typical 3 Categories<br />
    47. 47. Response, not reach.<br />
    48. 48. Response requires a goal.<br />
    49. 49. “Reach” cannot close profitable sales.<br />
    50. 50. Response (possibly) can.<br />
    51. 51. Big Biz: Our radio ad reached an audience of 500,000.<br />
    52. 52. Small Biz: Of the 500,000 reached, 50 responded.<br />
    53. 53. How does any of this help?<br />Broadcast TV: $10.25 per thousand<br />Syndication TV: $8.77 per thousand<br />Magazines: $6.98 per thousand<br />Cable TV: $5.99 per thousand<br />Newspapers: $5.50 per thousand<br />Radio: $4.54 per thousand<br />Outdoor: $2.26 per thousand<br />
    54. 54. Where to invest?<br />
    55. 55. In response!<br />
    56. 56. Response Metrics are Endless<br />
    57. 57. Focus First, then Split<br />
    58. 58. Response Rates<br />Telephone<br />2.92% prospect response, 4.41% existing response<br />Catalog<br />1.85% prospect response, 3.95% existing response<br />Direct Mail<br />1.65% prospect response, 3.65% existing response<br />
    59. 59. How to Fix Problems<br />Acknowledge you will screw up<br />Tie earnings to employees, not last year<br />Think today like you fired your marketing firm yesterday<br />Stop trying to be like everyone else<br />Do less, create more MEASUREABLE impact<br />
    60. 60. To Recap<br />Focus on cash flow<br />We’re only doing this for one reason<br />There is no one metric<br />Price is close<br />Measure customer response, then impact on cash flow<br />Reach is only a number, not a result<br />
    61. 61. If I wanted to read just one marketing metrics book, it should be…<br />
    62. 62.
    63. 63. Thank you!<br />

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