Agile Marketing Alliance logo

Our Point of View

Developing a Common Marketing Measurement Architecture

Marketing Dashboard

In a previous blog post, we discussed why marketing measurement is difficult and why organizations must establish a common marketing measurement architecture to avoid the ‘tyranny of random facts.’ 

In this post, we’ll discuss an approach to developing a common marketing measurement architecture and provide examples for both B2B and B2C organizations.

People Believe What They Help Create

In many cases, other departments don’t trust and sometimes don’t understand marketing’s numbers. Form a working group that includes people from finance, sales, and operations in addition to marketing to develop a common marketing measurement architecture. This increases the likelihood that the departments they represent will both believe and understand the numbers.

The CMO, or someone they designate, will be responsible for driving alignment in the working group. Ultimately, it’s more critical that other groups trust the chosen metrics than marketing choosing their preferred metrics.

Start With Questions, Not With Tools

It’s tempting to start with the metrics that your tools can provide today. However, all metrics should provide insight and be actionable. For that reason, it’s better to start with the questions that both marketing and other parts of the organization need to be answered to make strategic, tactical, and operational decisions.

Here are a few example questions. Each organization should come up with questions specific to their business.

  • How is marketing contributing to sales?
  • How is marketing contributing to gross margins?
  • How is marketing contributing to the company’s share of market?
  • How is marketing contributing to key strategic initiatives?
  • Are we spending marketing dollars in the right areas (product lines, channels, brand vs demand generation)?

Timeframes and Types of Decisions

Metrics must also be chosen to inform different timeframes and decisions. Strategic decisions will generally be made on an annual or quarterly basis. The metrics to support strategic decisions may be difficult to measure more frequently than yearly or quarterly. Tactical decisions may be made on a monthly basis and require a different set of metrics. And operational decisions can be made daily, in some cases hourly through programmatic advertising.

Here are some example metrics for a B2B business. B2C businesses will have different metrics, as will non-profits, educational institutions, government organizations, and others.

Strategic Metrics (Yearly, Quarterly)

 

  1. Customer Lifetime Value (CLV): Measures the total worth of a customer over their entire relationship with the company. This metric is crucial for understanding the long-term value of marketing strategies and customer relationships.
  2. Brand Equity: Assesses the value of your brand in the market, including brand recognition, reputation, and customer loyalty. This is a more qualitative metric and can be gauged through surveys and market research.
  3. Market Share Growth: Tracks changes in your company’s market share, indicating the effectiveness of long-term marketing strategies in comparison to competitors.

Tactical Metrics (Monthly, Quarterly)

 

  1. Marketing Qualified Leads (MQLs) to Sales Qualified Leads (SQLs) Conversion Rate: This metric evaluates the quality of leads generated by marketing and their conversion to sales opportunities.
  2. Customer Acquisition Cost (CAC): Measures the total cost of acquiring a new customer, including marketing and sales expenses. This is critical for understanding the efficiency of your marketing spend.
  3. Return on Marketing Investment (ROMI): Assesses the profitability and effectiveness of marketing campaigns.

Operational Metrics (Daily, Weekly)

 

  1. Lead Generation Metrics: Number of new leads generated, tracking the effectiveness of short-term marketing campaigns.
  2. Engagement Metrics: Includes website traffic, social media engagement, email open and click-through rates, indicating how effectively your content is engaging your target audience.
  3. Sales Pipeline Contribution: Measures the contribution of marketing efforts to the sales pipeline, tracking the immediate impact of marketing activities on sales.
  4. Delivery Metrics: Is the marketing team delivering content and campaigns on a frequent and sustainable basis? Whether the metric is Throughput or Cycle Time or Average Age of WIP, you need some metric to measure delivery efficiency.

Implementation Considerations

  1. Garbage In, Garbage Out: How clean is your data? How integrated are your marketing systems with other systems of record (ERP systems of Finance, CRM systems of sales)?
  2. Consistency: Are your metrics consistent across campaigns, product lines, brands, departments, channels? Ensuring consistency makes reports easier to understand by other departments and helps your marketing team when they begin reporting in new areas.
  3. Timeliness: Is the data available in a timely fashion to inform decisions when the decisions need to be made?
  4. Experimentation and Innovation: If your organization is a learning organization, learning through forming hypotheses, testing those hypotheses, drawing conclusions, and iterating, do your metrics support this process?
  5. KISS: Keep it simple. Your strategic and tactical metrics should fit on a single, one-page report that goes out quarterly and monthly. Your operational metrics can be on a different page, but be wary of too many operational metrics. If a metric isn’t used regularly to make decisions, it isn’t useful, and it should be cut from the marketing measurement architecture.

Final Thoughts

Putting together a common marketing measurement architecture is time-consuming and takes a lot of negotiation and alignment with other parts of the organization. But the benefits are potentially enormous, aligning both marketing and other parts of the organization on trusted, well-understood metrics to measure the impact of marketing.