Embracing modern relationship marketing means embracing data-- and lots of it.

Along with data comes every conceivable way to measure progress. There are literally hundreds if not thousands of possible marketing management metrics to choose from, and almost all of them measure something of some kind of value.  The problem is that most of them relate very little to the revenue and profitability metrics that concern the CEO, CFO and the board.

Of course, it’s okay to track some of these metrics internally within your department (we call these “boiler room metrics”) if they help you make better marketing decisions.  But it’s best to avoid sharing them with other executives unless you’ve previously established why they matter. After writing the book on marketing analytics, I’ve found these are the six categories to avoid.

Vanity Metrics

Too often, marketers rely on “feel good”  measurements to justify their marketing spend.  Instead of pursuing metrics that measure business outcomes and improve marketing performance and profitability, they opt for metrics that sound good and impress people.  Some common examples include press release impressions, Facebook “Likes”, and names gathered at tradeshows.

Measuring What Is Easy

When it is difficult to measure revenue and profit, marketers often end up using metrics that stand in for those numbers. This can be OK in some situations, but it raises the question in the mind of fellow executives whether those metrics accurately reflect the financial metrics they really want to know about. This forces the marketer to justify the relationship and can put a strain on marketing’s credibility.

Focusing on Quantity, not Quality

The number one metric used by lead generation marketers is lead quantity; too few companies measure lead quality. Focusing on quantity without also measuring quality can lead to programs that look good but don’t deliver profits. (To take this idea to the extreme, the phone book is an abundant source of “leads” if you only measure quantity, not quality.)

Tracking Activity Not Results

Marketing activity is easy to see and measure (costs going out the door), but Marketing results are hard to measure.  In contrast, Sales activity is hard to measure, but Sales results (revenue coming in) are easy to measure. Is it any wonder, then, that Sales tends to get the credit for revenue, but Marketing is perceived as a cost center?

Efficiency Instead of Effectiveness

In a related point, Kathryn Roy of Precision Thinking says, pay attention to the difference between effectiveness metrics (doing the right things) and efficiency metrics (doing - possibly the wrong - things well). Having a packed event is no good if it’s full of all the wrong people. Effectiveness convinces sales, finance and senior management that Marketing delivers quantifiable value. Efficiency metrics are likely to produce questions from the CFO and other financially-oriented executives; they are no defense against efforts to prune your budget in difficult times. 

Cost Metrics

In my opinion, the worst kinds of metrics to use are “cost metrics” because they frame Marketing as cost center. If you only talk about cost and budgets, then no doubt others will associate your activities with cost. Let’s take a look at a real-life example, courtesy of the inimitable Anne Holland:

Recently, a marketer improved her lead quality and simultaneously reduced her cost-per-lead to $10.  Thrilled with her results, she went to the CEO to ask for more money to spend on this highly successful program.

Did the marketer get her budget? No. The CEO decided the reduced lead cost meant Marketing could deliver the same results with fewer dollars - and so he cut the marketing budget and used the extra funds to hire new sales people. 



 What went wrong here?  The marketer performed well, but she made the mistake of not connecting her marketing results to bottom-line metrics that mattered to the CEO.  By framing her results in terms of costs, she perpetuated the perception that Marketing is a cost center.  Within this context, it’s only natural that the CEO would reduce costs and reallocate the extra budget to a “revenue generating” department such as sales.


Published on: Jul 25, 2013
The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.