Introduction

If you ask an executive at pretty much any business, they'll tell you that metrics drive results. The most successful companies typically have a small number of key metrics (sometimes called "key performance indicators," or KPIs) that provide the core focus of the business. The problem is it's not always easy to identify which metrics are the most important ones to track...

Since the late 1990s, I've worked in and around various technology businesses, and I've been struck by how often people get distracted or confused by measurement. So let me share a few things I've learned about what types of measurements are most valuable and how to use them effectively.

The Three Types of Metrics

There are three main types of metrics: Brand Health Metrics, Marketing Metrics, and Media Metrics. These categories can be further broken down into at least half a dozen more specific measurements, but for this post, we're going to focus on the big three.

Brand Health Metrics

Brand health metrics are an excellent way to measure the health of a brand and its reputation. Brand health metrics include:

• Net promoter score (NPS)

• Brand advocacy is the percentage of people who recommend your product or service to others.

• Brand trust is calculated by asking respondents on an index scale whether they have a positive or negative opinion of your brand.

• Brand equity is calculated by examining consumers' willingness to pay for products and services from different companies.

Marketing Metrics

A marketing metric is a number that describes the performance of your marketing strategy, and it can be used to determine whether your efforts are paying off. Metrics should be chosen based on what you're trying to accomplish, but generally speaking, there are three types of metrics:

• Objective Metrics - These track the success of a specific goal or objective, like revenue or number of downloads.

• Impact Metrics - This measure how you're doing relative to other companies in your industry; they show how effective your efforts are at moving the needle on key business indicators (e.g., the share price).

• Output Metrics - These focus on outputs rather than outcomes or results (e.g., impressions or clicks).

To choose which metrics matter most for your business, ask yourself: What am I trying to accomplish? How do I measure success? If it's something tangible like growing revenues, then focus on objective metrics such as revenue growth rates and conversion rates -- this should give you an idea whether what you're doing is working or not. If it's more qualitative, then consider impact metrics like customer satisfaction surveys -- these will help determine if customers like what they're getting from the brand overall before factoring in any monetary gains from campaigns themselves."

Media Metrics

If you’re investing in media, it should be a business decision. It should not be an ad-hoc decision. You need to understand the value of your media spend and measure it. You can do this using various metrics such as Cost-Per-Thousand (CPM), Cost Per Acquisition (CPA), Click Through Rate (CTR), etc., which advertisers use to determine how much they are paying for their campaigns in terms of money spent on ads versus conversions generated from those ads. These metrics help us understand how many people clicked on our Facebook posts, how much we spent on each click etc., but these numbers alone won’t tell us whether we could achieve our business goal with that campaign!

To understand if our campaign was successful or not, we need more context around it, like what is the lifetime value of those users? How many times did they come back after interacting with my ad? How often did they engage with me again after seeing another post from me? These questions help marketers validate whether their ad spends were effective or not.

Defining What Success Looks Like and the Role of Focus

The next step is to define what success looks like.

The executive, data, and marketing teams need to work together to define what success looks like for each of their respective areas.

Good examples of this include:

• The executive Team defines success from a business perspective (i.e., revenue) and an employee satisfaction perspective (i.e., do we have enough money in the bank?). That way, they can report on both at every meeting they attend.

• Data Team defining how well they’re doing against their KPIs every month versus last month or last year so that when someone says, “Wow! You guys are doing SO much better than last year!” then you can show them the data behind it and be confident with your answer that yes - we really are doing better than last year :)

Some Caveats for Avoiding Common Mistakes

• Avoid using too many metrics. You don’t need to track every single number you can find, so avoid creating a data overload for yourself and your team.

• Avoid using too few metrics. You must be able to track the key performance indicators (KPIs) in your business and measure the impact of any changes made. Be sure that as you build out your dashboard, you have enough information for everyone in the organization to make informed decisions about how they spend their time and resources.

• Avoid choosing the wrong metrics for your business or industry—for example, if you run an e-commerce site but use gross profit margin as a performance indicator rather than net profit margin because it makes more sense given how e-commerce companies work; however, this could cause problems later on when investors want more information about how well these businesses perform across industries compared with other types of retailers who do not rely on advertising revenue as heavily as most online outlets do today (eBay being an exception).

Less is More, Stick to a Set of Core Actionable Metrics

A business should have a small number of clear metrics to which everyone in the organization contributes and by which everyone is measured.

Personal accountability and responsibility are essential for any company to succeed. When your success depends on others, you need something measurable to guide them when they get off track or start getting lazy. Metrics provide that critical accountability and responsibility by letting you know exactly where you stand at all times so that you can make adjustments accordingly (or bring someone else down).

Conclusion

As a marketer, it is essential to understand and have the right metrics to measure your performance. Too many metrics or wrong ones will not help you build the right strategy. The trick is not in having more data or more complicated metrics but in finding the right mix of metrics to track. Your job as a marketer is also essential in defining what success looks like for your company and then aligning your marketing efforts with that definition of success so that everyone knows how they are performing and whether they are doing well.