By: Laura Patterson, VisionEdge Marketing Inc.Date Submitted: 7/18/2005

Metrics are part of our everyday lives -- from our heart rate to our bank balances, from our weight to the gas mileage on our cars. If we don't pay attention to these numbers, we create the risk for a heart attack, being overdrawn or running out of gas. The same is true in the business environment. If a company doesn't identify and track important performance measures, its risk is increased.

Metrics provide a means to assess progress; they provide valuable data points against which the marketing organization can track its progress. Metrics demonstrate accountability and allow marketers to better know, act upon, align their efforts and reduce their market exposure. Metrics enable the marketing organization to truly serve as the "eyes and ears" of the company.

More importantly, establishing and tracking metrics will positively affect the leadership's satisfaction with marketing as well as your ability, as the marketer, to secure funds. According to a Blackfriar study of U.S. senior business executives last year, only 38 percent said their companies are now measuring the results of their marketing efforts. Will measurements actually change marketing investments?

Blackfriar compared the planned marketing spending for companies that measure marketing against those companies that don't. The result? Firms that measure marketing planned to spend an average of 41 percent of their annual marketing budgets during Q2 while those that don't measure marketing planned to spend only 33 percent. So we can assume companies that measure felt more comfortable planning to spend their marketing dollars than those that don't measure.

Measuring marketing also affects the satisfaction of senior executives toward marketing investments. When asked how satisfied companies were with their marketing, 16 percent of executives at companies that measure marketing were dissatisfied with their marketing efforts. But at firms that don't measure marketing, 28 percent were dissatisfied. The simple act of measuring marketing results reduced the dissatisfaction of senior executives significantly. In other words, measurement allowed marketing to prove its worth.

Defining metrics. The world of metrics can be confusing for people new to these concepts. To better understand metrics and how they work, several terms must be defined: measurements, metrics and benchmarks.

• Measurements are the raw outcome of a quantification process, such as a company's numbers, ratios and percentages.
• Metrics are the standards for measurement, providing target values that a company must achieve to reach a certain level of success.

• Benchmarks are the very best measurements to aspire to, the standard by which all others are measured. Companies that set benchmarks in their industries are the ones often lauded in "Top 10" and "Most Admired" lists and articles.

A good example of a marketing benchmark can be traced to the early 1990s. Over a decade ago, IntelliQuest (now Millward Brown IntelliQuest) conducted a customer satisfaction research study for the personal computing industry. They spoke to customers who rated the companies in the industry, which resulted in a measurement ranging on a scale from 1 to 9. They learned that 84 percent of users who rated their satisfaction as a 7, 8 or 9 would consider the same brand for their next purchase. Achieving a 7, 8 or 9 became the metric that companies wanted to aim for. The benchmark was to attain a 9.

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