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The Role of Metrics in Marketing in the Contemporary World
The role of metrics has become crucial in efficient, effective and targeted marketing in contemporary world. As a result, it has become increasingly important for mangers, marketers and students to learn how to apply metrics in judging marketing results. Metrics has proved to be the key to success for marketing, (Weissbrich, 2009, p. 8). More over, it encourages rigor and objectivity throughout the world of business, science and government. Metrics is a system that quantifies a character, a trend or dynamic. It is used in explanation of a phenomenon, analyzing the causes, sharing the findings and in projection of results of future events. Metrics assists in the comparison of observations across time periods and regions. It provides frameworks for efficient and effective marketing approaches. Consequently, marketers are able to measure the effects of their addresses quantitatively. In addition, through effective and efficient application of metrics, they are able to realize new opportunities, measure them and invest in them. (Hastings & Saperstein, 2008, p. 231)
In today’s world, there has been significant pressure on marketing executives to be account for their companies’ returns on investments. This means that marketing executives who cannot quantify their impact on generating satisfactory returns on investments are vulnerable (Roll, 2006, p. 26). As well, there has been an increase in awareness and stronger motivation among marketing executives to quantify returns on investments. Thus, it will be prudent to focus on framework for marketing measurement and approaches for analysis that can be easily implemented and the extent to which application of metrics can help in achievement of optimal returns on investments in this discussion.
According to Scott, (2010 p. 239), usage of metrics requires specific measurement skills if at all, effectiveness, efficiency and target for a market campaign are to be realized. These skills include identification and tracking of marketing campaign performance of a wide array of marketing communication channels. The mostly used communication channels are radio, TV, direct mail, telemarketing, web marketing, e-mail, online advertising, search marketing, social marketing and podcasts among others. But as, Kumar, (2004, p. 235), indicates, usage of metrics does not necessarily require advanced data mining or statistical skill. Instead, it requires application of hand on experience in all the stages of marketing. Reporting skills such as ability to create reports using standard tools like, EXCEL, ACCESS, OLAP, Business Objects, Crystal Report, and Bio are quite beneficial in identification and measurement of metrics. In addition, a metrics expertise needs to a clear understanding of existing and potential data limitations for deriving metrics. In case data is identified to be poor, the only way out is to seek alternative data sources.
Hutt, and Speh, (2009, p. 449), examines four key categories of metrics for consideration in the absence of research. They include customer metrics, strategic metrics, operational metrics and output metrics. Strategic metrics measure the success of a company’s strategic approach to customer relationship management. Customer metrics measure the value delivered to the customer by the organization as well as the value that a customer delivers to and organization. It helps in measurement of customer satisfaction, customer retention, customer acquisition costs and also the life time value of a customer. Operational metrics on the other hand measure staffs training, career progression, recognition, compensation, and appraisal among others. It also measures product and service development targets and customer service levels. Finally, output metrics measure the effectiveness of customer relationship management strategy on the performance of the organization in terms of customer satisfaction, increase in productivity, reduction in operational costs and increase in level of profits.
According to Chiu and Tavella, (2008, p 8), there are four key stages in marketing efforts which in combination with metrics, help in optimization of returns on investment.These are planning, research, execution and optimization. The planning stage involves definition of the appropriate metrics for measuring market returns. It requires that the number of metrics be kept under control to keep the measurement task minimal. In the research stage, market research is done so as to enhance identification of market opportunities and the competitive landscape. Execution stage includes effective implementation of marketing strategies and tactics. Optimization stage involves optimization of market strategies and tactics on an ongoing basis. However the implementation of these stages involves many steps, which can be summarized by an eight-step process, (Chiu S., & Tavella D., 2008, p 7). The first step is identification of key objective of an organization laid by the major stakeholders. These objectives need to be quantified and set as goals to be achieved. For example, a business goal could be to increase sales revenue by a given percentage over a given time period. This is a quantified objective and can be realized. Hastings and Saperstein, (2008, p 231) explains that, it is difficult to derive an investment strategy for an objective that is not quantified since it is hard to measure.
The second step involves selection of appropriate metrics to measure market success. In this stage, there may be need to examine multiple metrics simultaneously to pick up insights sought. These can be used in validation of one another and to increase the level of accuracy. (Chiu S., & Tavella D., 2008, p 7) for example, a single metrics on revenue growth alone may not provide full information or may not shed enough light than when combined with metrics on market share. The next step involves assessing of market opportunity. This involves determination of available market opportunities, the segments of those markets their size and the rate of growth of each of them. Kirenz, (2010 p. 75), proposes that, such information can be gathered through .............
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