Marketing Metrics: 50+ Metrics Every Executive Should Master
Few marketers recognize the extraordinary range of metrics now available for evaluating their strategies and tactics. In Marketing Metrics, four leading researchers and consultants systematically introduce today's most powerful marketing metrics. The authors show how to use a 'dashboard' of metrics to view market dynamics from various perspectives, maximize accuracy, and 'triangulate' to optimal solutions. Their comprehensive coverage includes measurements of promotional strategy,...
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“Measurement is critical to the health of any business, and Marketing Metrics highlights key tools and techniques across many measurement landscapes–from the consumer, to the sales force, to the ever-changing media environment. It’s a ‘must-read’ for any business leader who wants to optimize the way they measure business activities and results in order to grow their business.” –Kimberley B. Dedeker, Vice President, Global Consumer & Market Knowledge, Procter & Gamble “Why read Marketing Metrics? Because better metrics lead to better decisions, which lead to better outcomes. This book does a superb job of helping marketers, and all executives, understand which metrics to use and how to use them.” –Erv Shames, former CEO, Kraft Foods “Why was this book not written earlier? Marketing Metrics presents an excellent compendium of the metrics you really need to know, along with a structural framework that ties them together and helps you steer your business successfully.” –Dr. Hans-Willi Schroiff, Vice President, Market Research/Business Intelligence, Henkel “Marketing is being challenged, as never before, to be accountable. This book, by describing metric options and their risks, will help address this challenge.” –David Aaker, author of Brand Portfolio Strategy “Measurement is central to our business discipline. What gets measured matters, and having the right measures is key. Marketing Metrics provides an insightful compilation of what to measure and how to measure it for today’s marketing-savvy executives.” –Glenn Renwick, CEO of the Progressive Corporation (Progressive DirectSM and Drive® Insurance from Progressive) “Marketing, as a function, is under increasing pressure to develop business-oriented metrics to justify marketing mix investments. Marketing Metrics offers clear advice on how to develop common marketing metrics that are relevant and accessible to both marketing and non-marketing decision makers.” –Anil Menon, Vice President, Marketing, Systems & Technology Group, IBM Marketers now recognize the importance of metrics, but few understand the breadth, depth, or power of the metrics now available to them. In Marketing Metrics, four leading researchers and consultants systematically introduce today’s most valuable marketing metrics, showing exactly how to use them to maximize marketing ROI and identify the best new opportunities for profit. The authors show how to use a “dashboard” of metrics to view market dynamics from multiple perspectives, to maximize accuracy, and to “triangulate” to optimal solutions. You’ll discover high-value metrics for virtually every facet of marketing: promotional strategy, advertising, and distribution; customer perceptions; market share; competitors’ power; margins and pricing; products and portfolios; customer profitability; sales forces and channels; and more. For clarity and simplicity, this book avoids advanced math: all calculations can be performed by hand, or with basic spreadsheet techniques. In coming years, few marketers will rise to senior levels without deep fluency in marketing metrics. Marketing Metrics is the fastest, easiest way to gain that fluency–and differentiate yourself in a challenging environment. · Measuring share: hearts, minds, and markets Probing the hidden dynamics behind “market share” · Understanding profitability better than ever before Accurately quantifying the profitability of products, customers, channels, and more · Advertising and promotion metrics, in detail From promotional lift and price waterfalls to the latest Web metrics · Linking marketing to enterprise financial metrics Understanding your true return on marketing investment–and enhancing it Soundview Executive Book Summaries Marketing depends on measurements, and many metrics are now available for business leaders to use to make their businesses more profitable. With more than 50 metrics that all marketers should master, the authors have compiled an assortment of high-value measurements that can be used as a dashboard that provides multiple perspectives on market dynamics. With this valuable resource, marketers can measure everything from advertising and pricing to promotional strategy and distribution. Copyright © 2006 Soundview Executive Book Summaries
ForewordForeword\ Despite its importance, marketing is one of the least understood, least measurable functions at many companies. With sales force costs, it accounts for 10 percent or more of operating budgets at a wide range of public firms. Its effectiveness is fundamental to stock market valuations, which often rest upon aggressive assumptions for customer acquisition and organic growth. Nevertheless, many corporate boards lack the understanding to evaluate marketing strategies and expenditures. Most directors—and a rising percentage of Fortune 500 CEOs—lack deep experience in this field.\ Marketing executives, for their part, often fail to develop the quantitative, analytical skills needed to manage productivity. Right-brain thinkers may devise creative campaigns to drive sales but show little interest in the wider financial impact of their work. Frequently, they resist being held accountable even for top-line performance, asserting that factors beyond their control—including competition—make it difficult to monitor the results of their programs.\ In this context, marketing decisions are often made without the information, expertise, and measurable feedback needed. As Procter & Gamble's Chief Marketing Officer has said, "Marketing is a $450 billion industry, and we are making decisions with less data and discipline than we apply to $100,000 decisions in other aspects of our business." This is a troubling state of affairs. But it can change.\ In a recent article in The Wall Street Journal, I called on marketing managers to take concrete steps to correct it. I urged them to gather and analyze basic market data, measure the core factors that drive their business models, analyze the profitability of individual customer accounts, and optimize resource allocation among increasingly fragmented media. These are analytical, data-intensive, left-brain practices. Going forward, I believe they'll be crucial to the success of marketing executives and their employers. As I concluded in the Journal:\ "Today's boards want chief marketing officers who can speak the language of productivity and return on investment and are willing to be held accountable. In recent years, manufacturing, procurement and logistics have all tightened their belts in the cause of improved productivity. As a result, marketing expenditures account for a larger percentage of many corporate cost structures than ever before. Today's boards don't need chief marketing officers who have creative flair but no financial discipline. They need ambidextrous marketers who offer both."\ In Marketing Metrics, Farris, Bendle, Pfeifer, and Reibstein have given us a valuable means toward this end. In a single volume, and with impressive clarity, they have outlined the sources, strengths, and weaknesses of a broad array of marketing metrics. They have explained how to harness those data for insight. Most importantly, they have explained how to act on this insight—how to apply it not only in planning campaigns, but also in measuring their impact, correcting their courses, and optimizing their results. In essence, Marketing Metrics is a key reference for managers who aim to become skilled in both right- and left-brain marketing. I highly recommend it for all ambidextrous marketers.\ John A. Quelch, Lincoln Filene Professor of Business Administration and Senior Associate Dean for International Development, Harvard Business School\ © Copyright Pearson Education. All rights reserved.
Acknowledgments xiAbout the Authors xiiiForeword xvChapter 1: Introduction 1Chapter 2: Share of Hearts, Minds, and Markets 11Chapter 3: Margins and Profits 45Chapter 4: Product and Portfolio Management 89Chapter 5: Customer Profitability 129Chapter 6: Sales Force and Channel Management 157Chapter 7: Pricing Strategy 195Chapter 8: Promotion 239Chapter 9: Advertising Media and Web Metrics 263Chapter 10: Marketing and Finance 305Chapter 11: The Marketing Metrics X-Ray 323Bibliography 335Endnotes 339Index 345
\ Soundview Executive Book SummariesMarketing depends on measurements, and many metrics are now available for business leaders to use to make their businesses more profitable. With more than 50 metrics that all marketers should master, the authors have compiled an assortment of high-value measurements that can be used as a “dashboard” that provides multiple perspectives on market dynamics. With this valuable resource, marketers can measure everything from advertising and pricing to promotional strategy and distribution. Copyright © 2006 Soundview Executive Book Summaries\ \
