Meaningful metrics for annual marketing plans


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Meaningful metrics for annual marketing plans

  1. 1. Meaningful Metrics For Annual Marketing Plans Thomas Emrich Managing Director at ValMark Group (401) 450-2841 1
  2. 2. Dilemma and Challenge Marketing Outcomes • Market Metrics • Customer Metrics • Competitiveness Metrics • Marketing Profit Metrics Financial Outcomes • Cost Metrics • Productivity Metrics • Profitability Metrics • Financial Metrics Businesses tend to be obsessed with financial results because they speak to what has happened, but rarely do businesses thoroughly understand the root causes of these results. In many organizations, marketing measurement tends to slant toward short- term payback at the expense of longer- term brand and customer development. And, today, when you add heavy doses of highly measurable online tactics to more quantitatively-elusive offline approaches this slant can become an outright bias. Unchecked, this situation can seriously impair an organization's ability to make smart decisions. 2
  3. 3. Guidance When it comes to developing meaningful metrics for marketing plans, your approach should, in general, incorporate three key characteristics that can easily be customized to specific business need. 3
  4. 4. 1. Linkage Effort to have your plan measures work together to define and quantify the connections between marketing outcomes and bottom-line profitability. Whether your organization uses economic value add (shown here), free cash flow, or some form of ratio analysis to gauge financial performance, your plan needs to reflect a thorough understanding of these calculations and their inputs. Collectively, your plan measures should help you credibly explain how marketing profitability contributes to these calculations and overall financial results. 4
  5. 5. 2. Focus Strategiesto Grow Market Demand Strategiesto Enter or Exit Markets Strategiesto Increase Market Share Strategiesto Grow Customer Purchases Strategiesto Lower Variable Cost per Customer Strategiesto Increase Marketing Efficiency Market Demand Market Share Revenue Per Customer Variable Cost Per Customer Marketing Expense[ x x ( - ([- NetMarketing Contribution = Plan measures should strive to isolate those components of profitability that are largely under the control of the marketing function. Work to correlate market or activity based metrics (such as brand strength or social media counts, etc.) with an order of magnitude change in one or more of the elements that comprise Net Marketing Contribution (shown here). In doing so, you’ll be ready to link marketing outcomes to both short and long term financial performance. 5
  6. 6. 3. Simplicity Use a simple plan-on-a-page approach to highlight the differences and relationships between plan objectives and measures. As stated earlier, keep plan objectives centered on targeted components of Net Marketing Contribution, and use correlated market/activity based measures as leading indicators of how your strategies and tactics are tracking against delivering on those objectives. 6
  7. 7. Example Note how MasterCard maintains metric discipline while contextualizing the numbers to their industry, business, and marketing initiatives. 7
  8. 8. Options Here are some examples of potential marketing measures that might be appropriate for your planning efforts. 8
  9. 9. Call To Action If it’s been a while since you and your team have delved into these key performance drivers, please contact me at anytime. After all, a phone call or email doesn’t really cost anything. I look forward to hearing from you. 9 Thomas Emrich, Managing Director at ValMark Group Phone: (401) 450-2841 Email: