Martha Bush
When organizations begin to standardize marketing measurements across their sales channels, business units and media, the closer they will come to the more complex process of tracking corporate Brand Equity, Market Share, Marketing ROI, and Product and Customer Profitability.
The top measurements:
- Multi-channel marketers are tracking the costs to generate traffic to their sites from all possible sources. These often include the costs to complete the transaction, which can include a call center or the technical support of the site itself.
- Marketing Spending Metrics are often looked at to try to establish the ROI value of incremental spending. Some of the measurements in this area include cost per impression, reach, frequency, share of voice.
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Visitor Acquisition KPIs are used to understand the health of the sales funnel. Definitions begin to get very important here – what is a visit, what is the source of the visito
r, what is a return visitor, what is a unique, etc. Tracking sources often requires the integration of multiple reporting tools – the ad serving provider, the web tracking tools, the ad tracking tools, etc. - Site Effectiveness Measurements look at the conversion effectiveness of the site. The sales funnel is critical here – how efficiently can a visitor be turned into a customer?
- Definitions are critical in conversion metrics – especially if the conversions of one channel are to be compared to others. What does a conversion mean? The problem of properly attributing conversions to their sources is common and must be consistent across each channel.
- Buyer Metrics includes the frequency of purchases, or the retention rates of customers that can be rolled up to overall market share, brand equity and/or customer lifetime value. The most quoted Buyer Metric is typically the Average Order Value, or the AOV, which is used to understand and compare different groups of buyers.
- Revenue — Multi-channel and e-commerce marketers track revenue carefully to compare the margin generated from each channel, to determine the value of incremental sales, and to guide pricing and promotion decisions.
- Customer Loyalty and Customer Profitability Metrics — Companies use these metrics to understand the value of their individual customers, regardless of which sales outlet they have chosen. Again, this is an area where definitions are critical from one channel to the next. The methodology for the measurement of loyalty and customer-level profitability can vary considerably from company to company, depending upon the purchase dynamics of the product.
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Profitability and ROI — Each of these categories of metrics can include components such as:
- Channel margin – From each channel selling different products
- Performance compared to a sales target – How close is the sales performance to a target that generates the profit requirements for the channel?
- Net Profit – Sales revenue less total costs
- Return on Sales – Net profit as a percentage of sales revenue
- Return on Investment – Net profits over the investment needed to generate the profits
- Net Present Value (NPV) – The value of a stream of future cash flows after accounting for the time value of money
- Return on Marketing Investment (ROMI) – Incremental revenue attributable to marketing over the marketing spending.
Any one of these metrics can be challenging to reach without integrated databases and marketing technology. Creating clear definitions across departments and channels is critical. As data and tools begin to converge, more and more marketers are building their ability to measure these key performance indicators and use them to make smarter decisions across the marketing organization.
About the Author:
Martha Bush is SVP of Strategy & Solutions at SIGMA Marketing Group. Follow Martha on or connect with her on .
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