Measuring what matters is a key challenge for companies – too often I find managers scrambling to explain how their metrics translate into market place victories. These metrics include paid search clicks, social media engagement, website visits and word-of-mouth (WOM).
This does NOT mean that we should only chase initiatives with immediate and high ROI ( = high efficiency), as doing so can strongly hurt the brand and long-term gains.
It DOES mean that we need to understand and explain what our metrics stand for and how they ultimately will translate into tangible benefits. From my experience, here are some questions you should ask on these 4 popular metrics, and what research says about the likely answers:
- Paid search clicks: How many of those clicks end up being paying customers? Why is this % so low and how can we improve it?
Research shows that paid search works best for lesser known brands with products of high ‘situational importance’, e.g. refrigerators and office furniture. Customers only need such products once in a blue moon and do not keep track of changes when they are not in the market for the product. However, once in the market, customers need to efficiently search for lots of information, and search engines shine for this job. In contrast, paid search is often superfluous for well-known brands of products or services customers use often, such as eBay. http://eprints.lancs.ac.uk/78859/1/Impact_of_Brand_Familiarity_on_Online_and_Offline_Media_Synergy.pdf
- Social media engagement: Is it positive or negative for your brand? Which topics do engagers talk about? Is there any possibility to gain new customers?
Research shows that the vast majority of people following your brand on social media are already customers. And usually they are a tiny component of your user base – well under 1/10 of one percent. Following a brand on social media is unlikely to improve purchases by the follower – the real benefit may come from her friends being exposed to the brand and the follower’s endorsement. Moreover, user-generated discussions – even mudslinging by your rival brand’s customers, increases the buzz for your brand and shows prospective customers how much your current customers care for you. http://www.msi.org/reports/dancing-with-the-enemy-broadened-understanding-of-engagement-in-rival-brand/
- Website visits: How many visitors are actually in the market for your product? What do they look for when on the website? Do they leave happy or frustrated?
Research shows that most website visitors already bought your product and want specific use information. Therefore, you need different landing pages and/or different ads to pull them in. Moreover, changes to website visits show little correlation with mindset metrics (such as awareness, consideration and preference) and should thus be complemented with such mindset metrics to predict changes to brand fortunes. http://www.msi.org/articles/msi-best-paper-do-online-behavior-tracking-or-attitude-survey-metrics-drive/
- Word-of-mouth: Which reasons do recommenders give for your brand? Which topics do detractors complain about? Do you only measure online WOM or also offline WOM?
Research shows that online WOM sentiment is often NOT predictive of brand outcomes. https://marketingland.com/report-social-media-sentiment-not-predictive-of-offline-brand-outcomes-244256 For instance, both Delta and MetLife saw buzz increase online and offline when they broke up with the NRA, but online sentiment was mostly negative, while offline sentiment was mostly positive. Which one do you think mattered most? Does offline or online WOM matter more for your brand?
Any more metrics you feel are misused? How did you overcome these challenges?
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7 thoughts on “Do you measure what matters?”
Actually, the metric I think is often misused is market share. Market share goals are motivating, but as both research and anecdote suggest can lead to long-run poor decisions (e.g., the easiest way to gain market share is to cut price).
indeed, thanks Bruce! Reminds me of General Motors back in the early 2000s. Top managers wore ‘29%’ buttons to remind and motivate them to return to the old 29% market share. As a result, they focused too much on incentives, training consumers to buy on deal and reducing firm value (see Pauwels et al JM 2004): http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.527.7828&rep=rep1&type=pdf
I think the click-through-rates for display advertising are unreliable. Most of the time you can see that bigger ad-units generate a higher CTR while smaller banners have a much lower CTR. I often wonder how often users are accidentally clicking on the larger units or the obtrusive ones. (ie, interstitial units generate a really high CTR, but is it because people are interested in your banner, or because they can’t find the “x”?). I’ve seen advertisers use the standard 0.02% CTR as a benchmark and if they go above that benchmark a campaign is considered “successful”, but even getting a 0.05% CTR still seems absurdly low to me.
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