Artificial intelligence and big data have solved a longstanding problem in the field of marketing and advertising: lack of knowledge about customers and about the market as a whole. It used to be very costly, if not prohibitive, to acquire this knowledge. Nowadays, however, the abundance of information makes it incredibly difficult to take measurements that provide accurate and useful knowledge for businesses.
This new problem has arisen as a consequence of disruptive technologies. Solving it requires a proper methodological approach and an understanding of the true meaning of two key terms: key performance indicators (KPIs) and metrics.
It is essential to focus on the goal of achieving different impacts on customers. The maelstrom of big data requires a proper approach, knowledge, and most importantly, well-timed measurements.
Analytics in marketing: complex but necessary
Analytics and measurement affect a wide variety of sectors and management areas. Consequently, they have emerged as powerful allies of marketing departments, but their use is not always straightforward. In marketing, the application of these tools is trickier than in other fields because a stronger interrelationship is required between data and exogenous factors.
Marketing is a jungle where countless aspects requiring careful measurement converge. Despite falling outside the usual scope of marketing, these exogenous variables can have a major influence on marketing campaigns. The economy, the climate, actions taken by the competition, and the behavior of sales representatives are just a few such factors that must be taken into account. Likewise, it is essential to focus on the goal of achieving different impacts on customers. The maelstrom of big data requires a proper approach, knowledge, and most importantly, well-timed measurements.
Even in tech-savvy organizations, a lack of analytical talent creates the risk of leaving lots of high-potential data in limbo.
Don’t measure just for the sake of measuring
Before initiating the process of collecting and processing data, organizations must decide what information is most relevant for their decision-making purposes. If you measure just for the sake of measuring, you are not using information technologies to their fullest potential. The most effective approach is to measure things that will help you make decisions. To do this, you need analytical talent aligned with a data-management strategy. Even in tech-savvy organizations, a lack of analytical talent creates the risk of leaving lots of high-potential data in limbo. It is essential to professionalize this area for strategic as well as tactical reasons.
The difference between KPIs and metrics can be described in the same terms: KPIs are strategic, while metrics are tactical. All KPIs are metrics, but not all metrics can be KPIs. A KPI is a quantifiable value associated with a specific strategic business objective, whereas a metric—also a quantifiable measure—allows us to understand, in comparative terms, what is happening in a particular process.
Recipes for marketing success in today’s world
Without a doubt, a better understanding of these two concepts is currently the best recipe for success in marketing. However, the relationship between metrics and KPIs is dynamic and potentially confusing. Depending on the characteristics of the business, a metric can become a KPI. It is important to revisit this issue on a regular basis in order to generate new impacts on the bottom line.
Information about the economic performance of a marketing action or program is always highly valuable to executives. Therefore, marketing return on investment (MROI) is a KPI that will always be of interest. MROI measurements are essential in justifying investment and resource-allocation decisions to the management team. Similarly, this KPI makes it possible to compare expenditures with those of the competition. In short, planning for MROI in various scenarios takes marketing management to the next level. When this is not the case, they can only be considered simple measurements.
All KPIs are metrics, but not all metrics can be KPIs.
KPIs that add value
Besides measuring return on investment, KPIs possess various attributes that add real value to the decision-making process: alignment with strategic objectives, accessibility, precision, practicality and simplicity of the data, continuity over time, and “actionability” for business purposes.
Gathering this information requires skill, plus a technical and strategic vision. Fitting all the puzzle pieces together inevitably requires the investment of financial resources, the strategic use of time, the recruitment of talent, and the development of appropriate measurement models. Organizations that follow this roadmap will bring their marketing departments that much closer to success. Analytics promises to end the crisis of credibility in marketing while also challenging companies to develop this discipline with disruptive rigor.
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