What to Measure and Why
I was invited to present to a group of Honors MBA students at Ben Gurion University last week. Because my month of June had been incredibly hectic (note the distinct lack of blog posts in the last several weeks… sorry, folks), I was severely tempted to simply recycle one of my old lectures – I mean, none of the attendees would ever know unless they checked out slideshare, right? But repetition gets boring, and besides, I believe in practicing what I preach, and that means: ITERATE! In other words, I’ve given my “marketing 101 for high tech entrepreneurs” lecture a bunch of times, so I must have learned something from that…now it’s time to put it into practice.
I may be displaying a personal bias, but my sense has been that my audience tends to perk up when I start talking about how to measure the effectiveness of marketing. And since this MBA class has already done an intro marketing class, I decided to attempt to take their knowledge of marketing one (or maybe even more than one) step forward by discussing some practical ways they can and should be measuring what they are doing.
The presentation on “Meaningful Measurements for Marketers”– embedded below – is divided into two main sections – pre-launch and the promotion phase. Pre-launch measurement is usually centered around researching what customers want, what they will actually pay for, what the competition is doing, etc. Lots of this can be done through Web research, talking with people, and various types of surveys, either online, on the phone, or even in person if you’re meeting with prospects, or at an industry trade show.
Once you’re into the promotion phase, every little thing you do can theoretically be measured, and these measurements will help you improve your marketing as you go along. As I was conceiving of the lecture, I came up with a tidy little model that can be applied to the measurement of nearly every type of promotion. I only applied it to a handful of promotion types – Web sites, events, twitter, media relations – but truly you could apply it to anything; of course PPC and Facebook pages which I didn’t even begin to touch on. The concept is to identify what are the most valuable metrics for a particular campaign that will help you make decisions or take action? Often times what is measured – for example how many press releases were announced – is just the easiest thing to keep track of, and probably not the most valuable for the organization.
My model is based around two axes – the X-axis is the difficulty of obtaining a particular metric. Sometimes you really want to measure something but it’s just so hard… is it worth the effort? usually, yes. And then the Y-axis is the value the metric has to the organization.
If you look through the slides you’ll see that there’s a consistent theme, which is that the more difficult it is to gather the metric, usually the more valuable it is for the organization. And that holy grail of metrics usually is revenues generated per marketing expenditure. In products with very long sales cycles (and I’ve marketing products that have 3 months to 2 year long sales cycle) you need to be able to take the temperature of deals as they progress throughout the pipeline, and track those deals to the original marketing campaign(s) that led to their becoming an opportunity. If you wait for them to become sales, you may have to wait 6 months to a year (or longer!) to calculate the effectiveness of a campaign, and by then you’ll have wasted a lot of budget.
The best way to figure out what you should be measuring and how often is to think about the questions that you want to know most about your business, the figures that would express to management the overall health of the business, and then think of what is the best way to measure that. And then you should start measuring and trying to improve these results over time.
Of course, if you discover something is working – do more of it. And if it’s not working, chuck it out. No sentiments. Just cut it out of your budget and use that money for something more effective. OK OK maybe there are some small exceptions, usually under the heading of “branding.” But if you find yourself justifying every marketing expense with “it’s important for our brand exposure” you eventually will run out of money and find yourself with no deals to show for it.
I can’t count the number of marketers I’ve heard say “well, if we just close one deal out of this trade show (or PPC campaign, or whatever) it’s paid for itself.” But our goal as marketers is not to cover our expenses. It’s to generate growth. If you are just covering your expenses, or even covering expenses plus a little bit more, this is not a success.
Image credit: http://gnomecoder.wordpress.com/screenruler/ – too bad I can’t use this screenruler since I don’t have an Ubunto desktop. Looks adorable.