Challenger Marketing Part 5: Driving Success for Challenger Brands
First Published: 04
The Art of Effective Measurement: How a strong culture of measurement will help you drive better results faster.
Establishing a robust measurement framework is crucial for driving long-term marketing productivity and understanding success. Many clients allocate marketing budgets as a percentage of sales without knowing which elements contribute to improved performance, resulting in a scattered approach. There is no marketing silver bullet; instead, a sound marketing strategy and understanding of effectiveness are essential. A strong measurement platform is vital for challenger brands to achieve better results. The platform consists of three levels: business metrics (e.g., sales, revenue), core marketing fundamentals (e.g. brand measurement, direct performance metrics), and detailed marketing measures (e.g. audience reach, channel engagement, website analytics). By tracking progress, businesses can optimize their marketing efforts, linking performance back to business results and avoiding executive loss of confidence.
This is the fifth article in our Challenger Marketing series you can find article four, ‘How starting dumb helps set you up to finish strong’ here.
To develop a culture of high performing marketing, one of the early tasks is to establish a measurement framework to understand what constitutes success and how to drive long-term marketing productivity. Many clients allocate their marketing budgets as a percentage of sales without truly understanding which elements contribute to improved sales performance. We often see clients come to us with activities organised by channel or seasonality rather than by objective. Without objectives and a measurement framework they aren't able to determine which tactics they need. This approach often results in a jumble of activities attempted in the hope of finding a magic solution to fix everything.
Let me be clear: there is no marketing silver bullet. For those still searching, there is no Santa Claus and the Tooth Fairy is real either. What works is a sound marketing strategy and a good understanding of what is effective. Both of these can be developed in tandem, but starting a marketing transformation without a robust measurement platform in place carries the risk of losing support and leaves you lacking any means to defend progress.
As a challenger brand having a strong culture of measurement will help you drive better results faster. So let's begin by understanding what makes a great measurement platform.
1. Business Metrics - Exec Level
A great measurement platform consists of three levels. At this top layer are the hard business metrics that determine success and can make you a star if your marketing plans can be attributed to them. Examples include Sales, Revenue, Churn, and Profit.
The next level involves measuring core marketing fundamentals. These are indicators that marketing is successful in driving business results. These metrics may vary depending on factors such as the type of business (B2B or B2C) and product or service focus. Every business needs to measure brand and performance, but the specific elements within performance measurement will differ based on the sales orientation of the business.
Below the core marketing fundamentals is a group of detailed measures. This is too detailed to go into here but this would include measures that you would use to monitor what is happening within your marketing, how specific advertising campaigns are engaging audiences, what channels are working best, how the website is working, how different pages or traffic is performing etc. These measures should be aligned to different responsibilities within your team to allow them to own and take responsibility for improving.
The most important level to really nail is the Core Marketing Fundamentals, so let’s look at this in more detail, starting with brand measurement. Building brand equity is a key priority and value driver, but there is often a lag between efforts and results, which leads to uncertainty. This can result in premature cuts to brand building initiatives due to a loss of confidence from the executive team.
There are two ways to measure and track brand equity. Direct tracking involves traditional brand equity research, historically conducted by medium to large businesses due to the significant cost (typically $100k - $150k+). Recently we have seen the development of new low-cost brand tracking which has made real brand equity tracking much more accessible. Tools like Tracksuit, are now available, providing monthly tracking at a fraction of the cost.
Indirect measurement methods include tracking Share of Search in combination with a customer measure like satisfaction or NPS (Net Promoter Score). Share of Search gives you an indication of whether the marketing activity you are doing is creating interest in your brand or product. It tells you whether you are getting noticed or not. A Customer Satisfaction or NPS score tells you how happy your current customers are, a measure of brand love. Together these two measures give you a sense of whether you are building brand equity.
The other side of core marketing fundamentals is focused on direct performance metrics. These metrics represent the measurable outcomes of marketing efforts in the marketplace. Monitoring and reporting on these metrics can help drive real time, short term performance.
Reach: Tracking the audience size reached each month across different media channels (e.g., Digital - Impressions, TV - Tarps, Outdoor - Traffic, Radio - Audience).
Prospects: Measuring and tracking audience engagement throughout the funnel, from initial awareness to lead generation and sales progression (eg engagement, clicks, sales progress).
Conversion Rate: Measures how appealing your offers are. Track the success of converting aware prospects into customers.
ROI: Measuring return on investment by calculating either true ROI (Sales minus Costs of Sales or Gross Profit divided by Marketing Costs) or ROAS (Return on Ad Spend) to assess relative performance across different advertising channels. Consistency in measurement is crucial.
Customer Satisfaction: Measuring customer satisfaction through standard satisfaction measures or NPS, along with monitoring churn
The final measures in this list shouldn’t be extensive. It should contain the 3-4 key measures that drive success in your business. Everything else goes into the detailed marketing measures list and can be managed by your marketing team leaders.
Marketing Measurement Framework
Business Metrics - Sales, Revenue, Market Share, Churn, Profit
Core Marketing Fundamentals
Or Share of Search and Satisfaction
Pick 3-4 measures only.
Detailed Marketing Measures
The detailed measures for each different marketing responsibility
We know that an investment in marketing, and an investment in brand building, if done well will have a significantly positive effect on sales and profitability. If you have put the tracking in place to demonstrate you’re making progress you will know if things are working or not. And if they’re not then you will have the opportunity to fix it. That's much better than the CEO and CFO deciding it’s time to get someone new in to try something different!
At University I did a BCom with majors in Accounting and Economics. Once I started working in finance I realised very quickly that I’d made a major mistake. I did manage to make the move into marketing and I’ve never regretted having that accounting grounding. While numbers aren’t always fun they can be powerful.