Bill Gates once said “I have been struck again and again by how important measurement is to improving the human condition.”

Problem:  Good measurement is mission-critical in marketing Рbut marketers must make sure they are measuring the right things.

This is an important point because currently in marketing and media, we are always in danger of:

  1. Measuring low relevance, poor quality and even misleading metrics
  2. Attaching too much importance to those metrics
  3. Making poor decisions based on 1 and 2 above

The main part of this problem is that we are not measuring incremental gain, we are placing too much emphasis on business as usual metrics – counting the leads and sales that are presenting naturally, rather than those that have been driven as incremental by marketing activity.

MarketingIQ Solution:

  1. Research and identify the metrics that are important to your business; the metrics that will assist you in delivering genuine incremental growth
    • These are likely to be commercial metrics that add value at bord level. Over the last 20 years, marketing and media agencies, platforms and providers have created a massive compendium of meaningless metrics.
    • You must talk about sales, share, volume, customers, revenue, average revenue per user (ARPU), loyalty and retention. Most other metrics don’t matter. If you are not sure, imagine you are presenting your report to senior management. Ask yourselves will they understand the metrics you are talking about. If the answer is ‘yes’, that’s good. If the answer is ‘no’, then think again.
  2. Identify and reduce emphasis on non-incrementality ‘static state’ metrics
    • Businesses grow through incremental gain – gains in sales units, revenue, marketing penetration, purchase frequency or market share. Businesses do not grow by purchasing an action¬† or customer event that was going to happen anyway.
    • Unless you can show that these media buys are delivering incremental gain, they are nothing more than a tax on your own customers. Make sure you are focussing on the incremental growth metrics, not static state metrics e.g. low funnel, pre-purchase cost per click metrics.
  3. Set up experiments that allow us to show cause and effect
    • If you are not sure about which activities are driving incremental gains, set up some simple experiments.
    • It’s useful here to apply a medical analogy. Think of two groups of consumers, one exposed to a new drug, one not exposed. Do the consumers exposed to the new drug recover more quickly?
    • We can apply the same methodology to marketing. Think of marketing activity as the “treatment” and consumers or customers as the “patient”. Do the consumes exposed to marketing “treatment” spend more or buy more often than those who are not?
  4. Design measurement reporting frameworks that capture and report the metrics needed to drive incremental growth
    • When you produce reports, focus on incrementality. It is one of the most important words in modern marketing. As senior manager view spend as incremental spend, and so you must show whether or not that spend is delivering incremental gain.

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