WORKSHEET

A Credible Framework for Marketing Measurement

Marketing suffers from a crisis of credibility. Often, executives outside the marketing department perceive that marketing
exists solely to support sales, or is an arts-and-crafts function that throws parties, churns out tweets, and puts logos on
pens. Either way, marketing often does not command the respect it deserves.

What can marketers do to be seen as part of a machine that drives revenue and profits? How can marketers take more
control over the revenue process, gain the respect of their organizational peers, and earn a seat at the revenue table? Use
metrics that matter to company leadership.

Where Metrics Go Wrong

Marketing can choose hundreds of different metrics to measure, but this doesn’t solve the outstanding problem that very
few of these metrics concern a CFO, CEO, or a board member.

• Vanity metrics. Too often, marketers rely on “feel
good” measurements to justify their marketing spend.
Instead of tracking metrics that measure business
outcomes and improve marketing performance and
profitability, they opt for metrics that sound good and
impress people. Common examples include number of
social followers, impressions, or net-new names in the
marketing database.
• Measuring what is easy. When it is difficult to
measure revenue and profit, marketers often end up
using metrics that merely stand in for those numbers.
This works in some situations, but the executive
team may question whether those metrics accurately
reflect the financial metrics they care about. This can
strain credibility because it forces marketing to justify
their approach reactively, instead of proving their
approach proactively.
• Focusing on quantity, not quality. It’s a common
mistake to focus on lead quantity rather than lead
quality. This can result in programs that look good
initially in terms of volume, but don’t deliver profits.
Low quality leads provide a false sense of saturation,
and ultimately end up cluttering your database.
• Activity, not results. Marketing activity is easy to see
and measure (costs accrued), but capturing marketing

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 results is a more difficult endeavor. In contrast, sales
activity is hard to measure, but sales results (incoming
revenue) is easier to track. Is it any wonder that sales
tends to get the credit for revenue, while marketing is
perceived as a cost center?
• Cost metrics. The worst metrics are “cost metrics”
• Efficiency instead of effectiveness. In a related point,
Kathryn Roy of Precision Thinking suggests paying
attention to the difference between effectiveness metrics
(doing the right things) and efficiency metrics (simply
doing things—possibly the wrong things—well).
For example, a packed event is of no value 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, and there will be no defense against efforts to
prune your budget in difficult times.
because they frame marketing as a cost center. If
marketing only talks about cost and budgets, no doubt
others will associate marketing activities exclusively
with cost as well.
Consider this example: A marketer improved his lead
quality and simultaneously reduced his cost-per-lead to
$10. Thrilled with his results, he asked the CEO for more
money to spend on this highly successful program.

The Right Metrics

If activity, cost, and quantity aren’t the right metrics to use, what are the right metrics? Anything that speaks to the CFO’s
areas of primary concern: revenue, margin, profit, cash flow, ROI, and shareholder value. In other words, any metrics that
demonstrate your company’s ability to generate more profit and faster growth than your competitors.

The time dimension. Lenskold Group underscores metrics related to time:

PAST: How did we do?
PRESENT: How are we doing?
FUTURE: How will we do?

These questions break into three corresponding metric categories:

1. Business performance metrics and KPIs 3. Leading indicators

How did we do last week? Last month? Last quarter?
These mostly BACKWARDS-looking metrics are the most
common one that you share with fellow executives,
often on a dashboard.
2. Diagnostic metrics
What is working, and what can work better? These
metrics deliver insight into your CURRENT performance,
often by comparing against historical data trends, and
competitor and marketplace benchmarks.
How will we be doing in the future? These metrics help
you look FORWARD and forecast future results.
Set goals. Make sure you set goals for each of the key
metrics you choose to track. Your goals will put your
performance into context, and help you and your fellow
executives see if your results are on par with what’s
expected—or better, or worse.

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Measurement Framework Worksheet
To determine how well you are using metrics that matter, answer the following questions that the C-suite and board
wonder about marketing’s impact.

Revenue Growth

• How are we performing at each stage of the lead-to-revenue cycle?

• How is marketing contributing to pipeline and revenue?

Revenue Forecast Accuracy

• How much revenue can we confidently forecast for current and future quarters?
• How predictable is our pipeline performance?

Profitability

• Are we reducing SG&A?

• How can we Improve margins and depend less on discounts?

Return on Marketing Investment

• What’s the return on the money we are investing in marketing?

• What would happen if we increase (or decrease) marketing spend by [x] percent?
• Is marketing continuously improving to optimize spending?

Market Position

• What is our relative market share?

• Are we increasing or decreasing relative to competitors?
• What is our reputation?
• Is it getting better or worse?

Customer/Account Growth

• What is our customer retention rate? Is it increasing or decreasing?

• How does customer loyalty translate into account growth and upsell opportunity?

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If you can confidently answer these questions, you are on the right track. If you struggle to answer these questions, adopt a
step-wise approach to maturing your metrics by aligning with the table below.

Learning question Metrics

• Did marketing drive short-term • CLV

revenue growth?
• What was the long-term impact
of marketing on my key metrics,
like shareholder value and
customer lifetime value (CLV)?
Business
impact
• Shareholder value
• Incremental revenue
• EBIDA
• Return on investment
(ROI)

• How did specific channels drive • Incremental sales

net new acquisition? conversion
• Did my channel impact brand • Brand awareness
Channel awareness?
performance • Reach
• What channels drove net new • Cost per action
website conversions?

• How affection was my • Sales lift

campaign? • Average order value
• What is the cost per action? • Cost per action
Campaign
performance • What types of customers did • Return on marketing
I acquire? investment (ROMI)

Source: Collaborate with Finance to Prove Marketing’s Business Value, Forrester Research, 2017

Find out more about how to make your marketing measurement more effective, more
credible, and more sellable. Visit marketo.com/bizible.

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