Friday, November 9, 2007

Guidelines for setting useful Marketing KPIs

I'm doing some KPI setting work for a client at the moment (I do freelance marketing/research/strategy related stuff on the side to support my bad habits) and it got me thinking about Key Performance Indicators (KPIs) in marketing.

Marketing KPIs are different. Many are 'softer' than more common revenue or profit targets. 'Softer' means they don't reflect things that have a direct and consistent relationship with revenue. For example, as a marketer you might be interested in the number of people who know about you (your Brand Awareness). Measuring this is useful because a higher number of people aware of you means your marketing is working. But what does this mean for sales? Harder to say. High Brand Awareness can lead to higher sales, but not all the time. It gets complicated.

This is why Brand Awareness is a 'soft' measures - it's useful to know, but the relationship between awareness and sales/revenue/profit is not always clear.

Marketers tend to live in this murky world of 'soft' measures for many of their efforts. And because of this, they need to pay close attention to how they measure things.

If I had to come up with a framework for Marketing KPI setting, I'd start with two broad areas:

1. Measure Selection - this is really a no-brainer. You have to at some point decided on what you want to measure. This is also hard to give general advice for because it's so situational. As a guide though, pick measures that are the closest things to direct consequences you can find. And if possible, build in feedback loops for these consequences. For instance, you don't want to set awareness targets for a viral campaign, just not going to work. Instead, measure referrals on your website with quick questions at the end of the purchase process - "Did someone recommend our product to you"?. Set baseline and measure the delta.

The general hierarchy of measure selection goes - direct consequences or immediate expected results (something was passed on, taken up); diffusion effects or secondary effects (I heard about that but didn't do anything); and tertiary effects or lingering attitudes (I thought it was good/cool/nice/interesting).

2. Measure Calibration - this is less commonly done well in my experience. The key here is to think about the absolute value of what you are measuring, how its value will reasonably be expected to change based on what you are doing, and if any change you see can be assessed as good or bad.

'Absolute' value (or 'real' value) means try and think about things in terms of concrete numbers, not percentages or in relation to other measures. If your brand awareness is 25% and the market is 100million people, 25million people are aware of you - this is important to keep in mind. Why? Because it affects the second point - how you expect this number to reasonably change. If 25million people are aware of your brand yet you propose tactics that, at most, might affect 500k people, and 25% of those are, on average, likely to be aware of you anyway, how many people can you expect to affect? Not too difficult to work out that you should be looking for less than 1% increase in awareness.

Of course for tactics that small, you're probably not going to have awareness goals - which brings us back to point 1!

In terms of assessing 'good' or 'bad' movements, this comes down to effectively using historical data and trends (although it depends on the measure as well). Markets are very fluid. All the time people are hearing about your brand, contemplating it, buying it, rejecting it, etc. This is all background noise. The general turmoil of life and commerce. You need to filter this out to see whether your tactic had an effect over and above this 'noise'. Admittedly, not always easy to do.
In fact, none of this is easy to do. It requires deep knowledge of many aspects of your market and your brand. And if not done carefully, is likely to get you in trouble as much as it can help you.

To bastardize a classic Simpson line - 'Information, the cause of, and solution to, all the world's business problems"...

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Anonymous said...

I've recently been set to the task of developing and implementing KPIs in regards to the creative execution of our marketing materials. I'm having a hard time with this, both because I've never had to do it before, and this type of analytical thinking is a bit foreign to a graphic designer. Any thoughts?

Paul Soldera said...

Hi, feel free to leave some details of what you are trying to do or drop me an email (paulsoldera at gmail .com), and I will see what I can do.


Anonymous said...


I think this post is good content in internet world.

My questions: can we use KPI and BSC together for marketing?

Other material of this subject: Marketing KPI


Cannavaro said...


I read this post two times.

I like it so much, please try to keep posting.

Let me introduce other material that may be good for our community.

Source: Graphic designer KPI

Best regards