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Read Professor Moorman’s analysis of key survey results.

Marketing Metrics: What CMOs Report

The August 2010 CMO Survey included a special section on marketing metrics. Seven important facts stood out when I analyzed the responses from the 574 marketing executives who participated in the survey.

1. Revenue metrics dominate: Revenue metrics (sales, market share) are the primary means they use to evaluate marketing activities. Unfortunately, few link marketing actions to critically important firm outcomes, such as customer retention (15%), profits (14%), brand value (11%), net promoter score (7.5%) and stock market performance (2 percent).

2. The quality and use of market insights not evaluated: While market insights are very important drivers of innovation and growth, only 25% of the firms surveyed use metrics to evaluate the quality of these insights, and only about one-third evaluate how market insights influence managerial decision making.

3. Marketing metrics examine the long-term impact of marketing: 72% of marketers report that metrics focus on the long-term impact of marketing. This number is much higher than I expected. Although I don’t have information about this metric over time, I asked this question because I thought it would be lower and a big press splash. Bravo marketers!

4. Marketers fail to account for revenue and cost information across channels: 53% report below average integration of cost information about customers across channels and 33.4% report below average integration of revenue information about customers across channels. It is no wonder marketers also report elsewhere in The CMO Survey that the highest level of marketing spending is going towards integrating what they know about customers.

5. Metrics fail to assess competitor reactions to firm marketing actions: Only 24% of firms use metrics that assess competitor reaction to their marketing programs. The focus is on customer reaction, which I agree is central. However, firms appear to be largely ignoring how competitors’ actions might interfere with customer reaction.

6. Social media metrics focus on hits, page views, and repeat visits: Instead, firms are measuring the number of followers or friends (25.4%), sales levels (17.9%), revenues per customer (17.2%), buzz indicators (15.7%), customer acquisition (11.8%), profits per customer (9.4%), customer retention costs (7.7%), and net promoter score (7.5%). Firms use an average of 2.4 social media metrics.

7. C-suites use an average of five marketing metrics to guide decision making (95% confidence interval around the mean—3.6 to 6.7): This number is higher than I expected and it shows increasing influence of marketing in the firm. The average number of marketing metrics used by the C-suite was highest among companies in the B2C services (10.4) and B2C product (7.4) sector and lower among B2B product (3.9) and B2B services (3.2) companies. C-suites of companies that sell products on the Internet use more marketing metrics (7.4) compared to companies that do not (3.2).

  1. The reason CMO’s seem to fail is that many have never held a SALES position so they have a hard time connecting the dots on what the field sales organization needs to close deals. Unless a marketing activity is directly linked to revenue, it is a waste of time and money. I agree that CMO’s and marketing folks also do not spend time understanding the competition and the competition’s reaction to programs. This point makes me stratch my head in confusion as market share is directly related to taking revenue away from the competition. Programs should be targeted to how your company differentiates itself against your top competitor rather than a “me too” story.

    Marketing’s job is to educate the salesforce on how to win deals based on competitive intelligence, pricing, product development and positioning and effective messaging. Anyone who has carried a quota knows this. Salespeople get to keep their job when they make their number, so their sense of urgency around marketshare and revenue is much higher and usually well honed if they are top performers.

    As a top sales performer myself, the best marketing folks were the ones who called me on a regular basis to find out what was winning out in the field and why. Then they developed product and marketing around that feedback.

    Marketing has to spend more time with the sales organization to increase their 2-year tenure track record. Any responses are welcome.

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