Marketing Metrics

These are two words that many managers never see together, yet they are of vital importance in today’s hyper-competitive marketplace.  After all, how can you possibly know for sure what tactics are driving  sales and what you can do to improve performance?


In my experience, Marketing is often viewed with skepticism by upper management as something that has to be done – but often done reluctantly and as a cost-center that can be cut when times are tough.  These beliefs are usually self-supporting because upper management does not implement mechanisms to track or analyze marketing metrics, and can thus never truly understand what is actually happening in the Marketing department or in the market they sell in.


Take this example:

David was a successful entrepreneur in the executive search market.  He started his company during the heady 90s and grew very quickly.  Due to his runaway success, David spent most of his time on growing sales and this was the direction he gave his managers as well.  This strategy seemed to pay off, as the business continued to grow by leaps and bounds.  All that started to change, however.


At first it was a “weakening” of their growth rate, which he attacked in his usual ferocious manner by putting pressure on his managers to increase sales and also by spending more time on the road himself, something he thought he was done with.  As the growth rate continued to decline, David became increasingly frustrated and kept ratcheting up the pressure on his staff.  Stress levels climbed and turnover, something that had been very low, started climbing.  David started losing some of his previously best performers, and started hiring people who promised quick sales turnarounds.  None of this seemed to work, and David became almost intolerable with everyone in his company.  However, David was convinced they just needed to be pressured more and to “make more calls.”


This continued, as David made more expensive and desperate decisions, until he was forced to shut the business down and go work for another search firm.  This was the catastrophic end to decades of his hard work, and the end (or postponement) of his dream business.


What David experienced is not uncommon.  Many businesses that experience early success do not build a framework that will allow them to adapt to changing times, and the cornerstone of such a framework is data analysis.   Only by correctly capturing and analyzing business data can a business make the correct strategic and tactical adjustments necessary to navigate today’s rapidly changing and exceedingly competitive marketplace.  Now, let me add here that such data capture and analysis can sometimes be done by “gut” or by gifted leaders – but these individuals are rare to come by and can always make mistakes.  The only consistent approach is to establish clear methods for data capture and ongoing data analysis.  Continuous data analysis can uncover hidden threats and opportunities and provide an ongoing clear picture of how a business is actually doing.

Getting back to David…

“I just don’t understand why this isn’t working like it used to!”

David was what would today be called “old school.”  He was a great salesman that enjoyed great success mainly through determination, instinct, and not a small amount of luck and timing.  When the market was growing so was his business, and he attributed that growth almost completely to his own skill and leadership.  While there was some truth to that, it also covered up the fact that David had not created a truly effective organization that could survive the tough times.  In this specific example we look at David’s Marketing engine, which in David’s mind really was just “Sales.”  Marketing is actually much broader than just sales.  Marketing purists hold that Marketing is involved in any activity that will touch the customer and is summed up by the 4 Ps:  Product – Price – Promotion – Place.  David’s “Sales” only offered a one-dimensional view of his Marketing and because of this he was unaware of certain facts.


Although there was a great deal of buzz about the slowing economy, David firmly believed that by working harder (he and his staff) he could overcome this hurdle.  This could be called a strategy of hope based on his understanding of prior success.  The truth was that David never captured or analyzed his sales data to identify where most of his sales came from, which actually was from one industry in specific.  A simple ROMI (Return on Marketing Investment) would have highlighted the breakdown of sales revenue sources.  Not knowing this, David did not focus his efforts to establish a leadership position in that industry, and when that industry declined the ensuing shakeout left him out in the cold.  IF he had realized how dependent he was on this one industry early enough, he could have created strategies to expand into other industries BEFORE the hard times.  David simply was not aware of his tenuous situation and believed that if he just kept doing what had worked for him in the past he would continue to succeed.  This trap is all too common.  The truth is that business must continually evolve to survive, and unless a data analysis methodology is in place, the necessary changes are likely to be missed.


A proper Data Analysis Framework should incorporate data from all business functions, including Marketing.  Contact us today to learn how KZ Management Advisors can help you create such a framework.

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