You Can’t Manage What You Can’t Measure

Posted on January 16, 2009

I had an interesting experience during Q4 2008 in working with an agency who has a client in the services industry.  The client was stuck in a never-ending cycle of throwing together “a quick promotion” to stimulate monthly sales — literally, a new promotion every thirty days.

The agency asked us to develop a long-term marketing strategy for this client that would deliver sustainable sales results over time.  In order to establish a current performance benchmark, we asked the client to provide some details regarding their current marketing spend/activity, performance metrics, customer acquisition cost (online vs. offline), lifetime value of their customer, customer churn, and some other data. Remarkably, not only could the client not answer most of these questions, but the CFO could not understand the value of the exercise.

I later shared with one of the agency partners that this might be the first time we had ever seen an agency propose quantitative accountability and have a client push back.  Without this knowledge, companies have no baseline by which to make decisions about how much to spend in acquisition costs for a new customer.   Further, they have no way to identify their best customers (profitability, tenure, referral) and to shed their unprofitable customers.

While it used to be en vogue for marketers and agencies to dodge marketing metrics, the truth is that without them there’s no way to prove what you’re doing is working — the very ammunition every marketer needs to keep his/her job.

I suggest every company ask the question “what does success look like if we see it?”  Benchmark what you are doing, measure the factors driving performance, and then test, test, test to identify those variables that improve ROI.


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