Metrics, Metrics, and More Metrics…..

Too much sugar can contribute to diabetes… too much oxygen can cause confusion (huh?)… too much saturated fat can cause high cholesterol… too much television can cause blindness… too much ice cream causes nightmares… too much exercise can negatively affect your mental health (Zeltner, 2012)… too many metrics can ruin a strategy and cause confusion.

When does too much of something become uncontrollable and get out of hand?  The article, Managing the Marketing Metrics Portfolio, gives future marketers guidance regarding uncertainty and its relationship to existing metrics, effective metrics, and development of the portfolio. A great rule of thumb that I found in the article is as follows: 

"No single silver metrics can tell a firm everything it needs to know to evaluate and plan its marketing. A good metrics portfolio uses between five and 15 indicators of where it is and how well it is now traveling. Optimizing the portfolio involves different processes, depending on whether an organization has very little measurement or a great deal." (Clark & Ambler, 2011)

Knowing that the origins for “the rule of thumb” vary and really cannot be pinpointed because the terminology was applied in many different ways (measurement, brewing, and even art) and can be considered more of a heuristic than anything else, we are going to suggest that for this conversation, the “rule of thumb” is “15.” 

This does not mean that all metrics beyond 15 are invalid and it does not mean that anything less than 15 is incomplete.  It’s just simply a rule of thumb.  The actual number of metrics that should be used in each strategy is dependent upon the business model and the type of product that is being marketed, which is dependent upon the organization’s strategy.  But we will warn that in most cases, simplicity in metrics often rules.

Let’s say that we own a Yo-Yo Company.  Our strategy is pretty basic because we are targeting children, primarily over the age of three years old.  In reality, we also have to target the parents of these children, but for conversation sake, let’s keep the focus on the kids.  So, our Yo-Yo company’s metrics regarding marketing would probably include sales figures, competitor markets, sales to toy retailers, and other basic figures.  Pretty simple stuff.

Now, let’s say that we are a fancy international hotel chain called King’s Gate and have many locations all over the world.  Our clientele is considered to be the upper crust of society.  Our marketing strategy would tend to be much more in-depth and include the likes of:  market share, marketing productivity, customer loyalty, operational effectiveness, brand management,

employee satisfaction, revenue maximization,

operational effectiveness, and many other metrics that are measured at different levels of the organization all of the way down the softness of the bed linens.  It would probably also have tendencies to be segmented within each geographical market and in accordance with local culture and customs.  Pretty complex stuff.

On the Pharmasim dashboard, we found that the highest weight was placed upon the share of unit sales and average marketing efficiency index.  Why?  Because the market efficiency index is the measure of the return on marketing expenditures and the share of unit sales represents the number of units that are sold as a percentage of total market sales.  At this stage in the game, that is where the emphasis is.  We also need to consider, keeping in mind the 15 "rule of thumb" rule, that this is a singular product (with possibly a product extension into a children's product) and that all metrics, including cumulative manufacturers sales, gross margin percent, and cumulative return of sales are also important as they are measurements of activities that relate to the overall marketing strategy of the company.  The way that I have chosen to manage Pharmasim and the metrics involved is by keying in on only a few particular metrics and then monitoring changes and outcomes, such as stock price.  I guess you can say that I have taken the yo-yo philosophy and utilized it to fit within the simulation.  So far, so good.

I reviewed Mindy's blog which began by speaking of metrics and the non-lack there of.  (Or shall I say the overabundance of...)  She is so correct on that statement.  I think that many companies may have a tendency to track all kinds of trends that end up not even being applicable to the situation and they end up in the space junk program.  In other words, they end up sitting on someone's computer buried deep in an analytical program just patiently waiting to see the light of day. But in the end, they become victims of deletion . I did enjoy her views regarding the level of teamwork that she is currently experiencing. I am not sure how larger team is and what her input is or has been, but it is pretty obvious that she has been able to capitalize upon the strengths of the team.  I then looked at Alexis's blog.  It was definitely fun to read.  It seems that so far, the primary challenge that she and her team have been experiencing is setting up times where they can communicate.  That issue seems to be pretty common in the business world.  I work in a smaller office and to find time to set up a meeting with two sales people who work out of the same office and myself is quite a difficult task, let alone with a larger group of people.

I then took a peek at Kristen's blog.  Interesting how it seemed that her experience was so similar, but yet so different from mine especially regarding the interaction with her team.  I know that my stress level was high to when we first began.  But just as Kristen explained, once my team began to pool strategies it all seem to flow together.  I figured that I would throw in David's blog as good measure.  David has built a great discussion around data and the use of that data as well as pointing out just how reliant a company is upon the data.  P.S.  I do enjoy the Dilbert comics.