sixth edition

market-based management

"Without application, the benefits of knowledge cannot be fully achieved." - Roger J. Best

Five Barriers to using marketing analytics and metrics

Usage Barrier I: They Are Too Complex and Difficult To Use

Usage Barrier I: They Are Too Complex and Difficult To Use

If a Marketing Analytic is Too Difficult to Use, It is Not Worth Using: To get started, seek marketing analytics that are intuitive and make sense for your specific business operations. For example, a specialty chemical company selected three marketing analytics to produce the following three marketing metrics because they are meaningful to their business operations and they could be credibly presented to senior management:

  • Net Marketing Contribution = Sales x Percent Gross Margin - Marketing & Sales Expenses
  • Marketing ROI = Net Marketing Contribution/ Marketing & Sales Expenses x 100%
  • New Product Sale: = New Product Sales (last 3 years) / Total Sales (last 3 years) x 100
  • Usage Barrier II

    Usage Barrier II: They Do Not Solve Our Marketing Challenges

    What are your greatest business and/or marketing challenges? This is the place to start. Once you have identified the critical areas for improvement, the question is - which marketing analytics and marketing metrics will help manage solutions to these challenges?

    For example, a Dow Jones company needed a strategy to compete profitably in a price-sensitive segment that was larger than the premium and value segments where they were well positioned. Five marketing analytics were selected and applied to this segment challenge in five country markets. While each country strategy was somewhat different, the collective strategies projected a 59 percent improvement in profits following application of these five marketing metrics.

    Usage Barrier III

    Usage Barrier III: There are Too Many, I Don't Know Where to Start

    Start with these three marketing profitability metrics.

  • Net Marketing Contribution = Sales x % Margin - Marketing & Sales Expenses
  • Marketing ROS = Net Marketing Contribution / Sales x 100%
  • Marketing ROI = Net Marketing Contribution / Marketing & Sales Expenses x 100%
  • Marketing needs credible, financial marketing profitability metrics that hold up under the scrutiny of senior management These three marketing metrics will enable you to demonstrate the contribution your marketing and sales strategies make to the company and the efficiency of these investments with respect to a Marketing ROI metric.

    Usage Barrier IV

    Usage Barrier IV: I Do Not Have the Data or the Budget to Acquire the Data

    Manager Estimates: Management must remove the "fear of imperfect data," by beginning with informed manager estimates.

    Team Estimates: Manager estimates can be revised with a team consensus which allows for discussion and multiple points of view.

    Market Research: Finally, when critical manager or team consensus estimates can be revised when market research is needed for greater accuracy and validation.

    Usage Barrier V

    Usage Barrier V: I Don't Have the Time

    Managing marketing performance and profitability must be an important part of the job and manager responsibility.

    The following quote was taken from a product-manager after using pricing metrics to better manage profitable growth and not just sales growth. "Had we launched at a market-based price we could have increased our gross margin by $1.4 million.

    Marketing metrics are too important to be an add-on the marketing and product manager responsibilities. They should be at the core of what they are measuring and managing.