It is a big ask to know and understand the infinite metrics that can exist. So, what are the key areas to focus on?
Every market and business within that market are unique and require different metrics to deliver the information they need for their goals. Instead of narrowing it down to a top 5 list of metrics, I will instead narrow it down to major areas to focus on as recommended by Bendle (et al. 2016).
Share of Hearts, Minds and Markets
This are can provide value in understanding how you stack up against your competition and could consist of market share as the base. Beyond this, it could incorporate customer loyalty, brand awareness and customer satisfaction.
Product and Portfolio Management
This area shifts focus away from the market and towards your organisation itself. Here, you want to be measuring annual growth, market penetration of products and how each segment compares and makes up the whole of your business.
Margins and Profits
It seems mostly self-explanatory but this area can consist of metrics such are profit margin, price per unit, business spendings, revenue and volume targets. The core of most business will involve these metrics and be an accounting heavy area.
Customer Profitability
Here the focus clearly goes onto your customer or target market with metrics aiming to measure things like customer life time value, number of customers, customer retention and how much it costs to acquire customers.
Promotion
Metrics are aiming to measure areas such as baseline sales, coupon sales, cost of coupons/rebates and percentage of sales with a deal or discount.
Advertising
Metrics aim to measure number of impressions, cost per thousand impressions (CPM), frequency, effective reach and share of voice just as a starting base of this area.
Sales Force and Channel Measurement
This are has a bigger picture focus on measurements such as workload, sales goals, total distribution and inventory information.
Pricing Strategy
Metrics should be measuring price elasticity, optimal pricing, price premium and reservation price when used in this area.
Conclusion
While there is no ‘golden metric’ there are plenty of useful ones. They must be used when relevant to your business and business goals but as a starting point, the above 8 areas of metrics are a starting point that can help paint a clearer picture of business operations.
References:
Bendle, NT, PW Farris, PE Pfeifer & DJ Reibstein (2016) Marketing Metrics: The Manager’s Guide to Measuring Marketing Performance, 3rd edition. Pearson: New Jersey.
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