Creating metrics that matter
Creating metrics that matter
Insight

Creating metrics that matter

Marketing has access to more data, but struggles to get actionable insights. Determining the right metrics requires collaboration.

Marketing has access to more data than ever, but struggles to get actionable insights. Determining the right metrics requires collaboration between marketing and finance.

More metrics don’t translate into better metrics. In fact, tracking too many KPIs can degrade an organization’s ability to identify value as the most relevant information can get buried beneath an avalanche of results. If KPIs aren’t defined and measured the same way across an organization, results will not be accurate or reliable. At the same time, if metrics only measure short-term financial impact (e.g. cost/lead, marketing spend/revenue), longer term benefits can be overlooked. The same challenge can arise from using KPIs from outside suppliers or industry groups – without an agreed-to definition and method for tracking, metrics are not comparable.

The challenge of defining accurate marketing metrics is one that many of the world’s biggest brands, such as PepsiCo and Sky, have grappled with for years. And the impact of uncertainty can be considerable. Procter and Gamble cut $200 million of digital ad spending in 2017 because it could not be certain of the validity of the metrics provided by its digital agencies and suppliers.

To make their suite of marketing metrics more effective, Chief Marketing Officers need to work collaboratively with their Chief Financial Officers to agree on a set of firm-wide marketing metrics that are relevant, insight-driven, and reliable.

Getting started

  • An effective CMO-CFO working relationship requires a mutual understanding and appreciation for each other’s role and responsibilities. Both marketing and finance can provide significant value and insights into the definition or redefinition of marketing KPIs.
  • When it comes to defining and rationalizing marketing metrics, CMOs and CFOs should work together to determine the right mix of measures that tie marketing activities to short-term performance and to long-term value creation.
  • Rationalizing marketing metrics is an ongoing process – not a project with a defined end-date. To be agile and effective long-term, CMOs and CFOs are advised to revisit the agreed upon set of metrics yearly and make changes if required.

To establish marketing metrics that can truly help drive an organization’s financial and business performance forward, CMOs and CFOs must work together. To learn more click here.