Measuring matters

KPIs should track progress towards your objectives, not your tactics.

This is an extract from?IMTW Issue № 83.

Read on?to learn why:

①?Ideally, a CMO would be given one KPI:?profit growth.

②?You should?tell your marketing team?what?they need to achieve, not?how.

③?Growth continues to elude?post-Brexit Britain.

④?What makes CBDCs better than the money we have today?is programmability.

⑤?Advertisers are expected to return?to Twitter.

⑥?Social capital can be earned, invested and spent, just like any other currency.

⑦?Income inequality?threatens the future of the world’s most famous tech hub.

What's new

If you’re not following consultant?Tom Goodwin on LinkedIn, you should be. He has a fresh, thought-provoking take on most things and this week?he really struck a chord with me on the topic of what key performance indicators to measure.

① In short:

• “The approach in the image [above] is entirely wrong. People at the most, should be given the highest order KPIs possible for the role, and the fewest. They should never be proxies for things that matter, but what actually matters. Ideally a CMO would be targeted by one KPI, profit growth. That's all companies really care about. And the person would have total freedom to accomplish that how they see fit.”
• “Since they may not have control over the costs, or sales teams, it's more likely they'd be given KPIs on: brand awareness, price elasticity, value sales growth, customer lifetime value, market share. Add more than this and you're not measuring success, you're telling someone how to do the job.”
• “As the industry has become lost, as trust in marketers has decreased, we're seeing KPIs being build from tactics up. We're seeing people measure utterly meaningless tiny things, and spent time in the pointless chasing of numbers for defensibility of action, not what we know to be best for our company.
• Hitting these KPIs?becomes?the job.”

Why it matters

Management guru Peter Drucker famously told us that “[only] what gets measured, gets managed.” What he forgot to warn us about was that as soon as you start measuring something, it can all too easily become your sole focus.

As Tom says in his post, give them the wrong KPIs and your marketing team will soon be spending their days figuring out how to get people to spend longer on websites, how to increase open rates of newsletters, how to increase futile NPS scores, how to decrease CTR rates for ads, despite the fact many of these don’t contribute to what really matters: increasing your profits.

We should be setting long term goals and measuring metrics that may, therefore, be slow to change, hard to measure, and difficult to attribute.

What to do about it

Take action

When setting your marketing team’s KPIs, disregard what is fast, cheap or easy to measure and identify instead the metric(s) that matter. They should relate to your objectives, not your tactics.?

As Tom says, ideally - and at its most simplistic - marketers should be set a KPI related to profit growth. But there will also be times when your objectives are more specific - such as transitioning from a wholesale to a retail model, for example. If so, it makes sense to measure your marketing not merely on profit but also where it comes from.

② I urge you to to spend 20 minutes on Monday reviewing your marketing team’s KPIs. Are you measuring their progress towards your strategic objectives or the results of their tactics? The former means they’re focused on serving your business, the latter means you're telling them how to do their jobs; and you’re likely wrong. Your marketing team should be told?what?their need to achieve; leave the?how?to them.

Get help

• Visit InMarketing, my resource library?for leaders in finance or technology who want to innovate, interact and influence.
• Join the InMarketing community, either?on Twitter?or on Substack (you’ll need to?download the Substack app?and head to the chat tab). Either way, you can ask questions of me and fellow senior marketing practitioners.

Help me

If you found this useful?or know someone who would, please share it. It would really help me to grow the community of regular IMTW readers.

More...

For the rest of this issue, including points ③, ④, ⑤, ⑥ and ⑦,?visit my Substack >

About

Written for CEOs, marketers and other leaders in the financial sector,?InMarketing This Week?is a showcase for news likely to impact them - delivered with insight on why it matters and ideas on what to do about it. It’s published every Sunday to give you a head start on the week. Read it?here, or?subscribe?to?have it delivered straight to your inbox at six, before it's available anywhere else.