How should you and your CMO judge success? What KPIs should you use? With what frequency should you review them? How do you get the right balance of strategic and tactical focus?
I would argue for three categories of metrics to track for a perfect marketing scorecard:
• Progress versus strategic goals
• Key initiative progress
• Tactical KPIs
Let’s look at these one-by-one:
PROGRESS VS. STRATEGIC GOALS
For the big strategic goals, such as building an awesome CRM database, maximizing customer LTV, or shaping your company’s reputation, you should set BHAGs or “Big, Hairy, Audacious Goals”.
These BHAGs define the desired end state: this could include the database size and quality; market share; customer numbers; revenue per customer that are you trying to achieve in the next 2-3 years. You can then set quarterly milestones, i.e., break your BHAGs into quarterby- quarter goals, so that you can track progress towards meeting your BHAG over multiple quarters.
KEY INITIATIVE PROGRESS
These are related to one-off campaigns or projects, which could be focused on specific marketing goals, or back-end marketing processes and capabilities. Each initiative will have goals that need to be monitored before, during and after the initiative, but at some stage, you will stop tracking and move on to the next initiative, because they will be completed (or killed). This makes a “standard” marketing dashboard—that never changes—a mistake. Examples of trackable initiatives could include:
• Launching a new product or service
• Entering a new market
• Seasonal campaigns, e.g., Christmas or Back to School or the Super Bowl
• Launching new/revamped websites and apps
• Overhauling the creative process to make it more efficient, scrappy and iterative
• Introducing a new platform
• Changing agencies
For each initiative you’re tracking, you’ll have a different dashboard and set of KPIs, and they probably won‘t fit neatly with the quarterly schedule.
If in doubt, for most initiatives, KPIs fit into one of three buckets:
Are the right things happening at the right time to stay on track, as per the plan?
Is everything costing what it should?
Are the outcomes meeting or beating expectations?
These are the KPIs that demonstrate daily impact, and the KPIs around which a lot of marketing activities can be optimized. They fit more neatly into a dashboard, and would typically be tracked daily by the marketing team, weekly by your CMO and monthly/quarterly by you.
They would include things like:
Awareness: Lean back interactions, in which potential customers are reminded who your company is and what you do, but don’t need to do anything. For example:
• The number of target customers reached with your nonengaging messages, such as TV or display ads (“reach”)
• The number of times those customers saw your message (“frequency”)
• Brand awareness survey results
Interest: Lean forward interactions, in which consumers actively engage with your brand content. For example:
• The number of visits to website
• The number of times your mobile app was opened (without purchase)
• The number of videos watched to completion (when skipping was an option)
• Total number of articles read
• The count of other engagements with consumers, like social media shares
Intent: The times in which consumers demonstrate that they’re thinking of spending money with you. For example:
• Mobile apps downloaded (free version)
• The number of appointments booked (e.g., test drives)
• The number of people who submit their details (email addresses, phone numbers) in order to learn more
• The number of samples ordered/coupons downloaded
Sales: Instances in which consumers actually spend money with you.
• The number of new paying customers
• The ratio and number of existing customers upsold/cross-sold
• Revenue and gross profit, broken down by geography, channel, product, etc.
Loyalty: Times in which existing customers extended their relationship with your brands. For example:
• Percentage of customers renewed/lapsed
• Change in customer LTV
Marketing Efficiency: Work out the ROI on your marketing spend to determine:
Marketing costs as percentage of predicted LTV created
• Marketing spend versus LTV created
Taking these three elements of the scorecard into account, each quarter you should set your CMO quarterly MBOs. These are the SMART
(specific, measurable, achievable, realistic, timebound) goals, defined in detail, that you expect the CMO to deliver in the current quarter. They could be related to the BHAGs, key initiatives or optimizing a particular tactical KPI. Likely a combination of all three.
You need to set these to avoid the trap that many marketing organizations fall into, in which the only tracked metrics are tactical KPIs, while the department never transforms marketing or achieves market preeminence.
Your CMO should also set quarterly MBOs for each direct report so that every single person makes tangible progress towards the most important BHAGs each quarter.
Excerpted from "Marketing for CEOs: Death or Glory in the Digital Age" by Ben Legg. Copyright © 2016 by Ben Legg. Excerpted by permission. All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher. Excerpts are provided solely for the personal use of visitors to this web site.