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Factfile 50

A process for metrics

In practice, it is very difficult to put ROI systems in place. One approach for making this more achievable is to undertake a pilot benchmarking study looking at, for example, six accounts. When looking specifically at these sample accounts, certain questions should be asked:

• What is their marketing spend?
  
  
• What exactly is this spent on?
  
  
• What might classify as a return?
  
  
• Are the returns tangible benefits such as, actual revenue received, new business brought in from new clients or deepening existing accounts?
  
  
• Or, are the effects less tangible such as strengthening brand identity?
  (Choosing the right measurement tools to evaluate marketing spend is an important issue.)
  
  
• Measurements should be precise and based on empirical data. They should be consistent over time and correspond to the wider business objectives. Various methodologies can be employed.

The Henley Centre believes that 'black box' approaches are rarely sensitive enough to investigate effectiveness across the wide range of marketing communication tools now available.

• As a consequence the Henley Centre takes a consultancy approach - using regression modelling alongside softer information from interviews and internal sources.
  
  
• It is increasingly necessary to look for marketing effect in sales as well as research and other behavioural data: it is impossible to calculate efficiency and payback without coming to a view on the bottom line effect of activity.
  
  
• Information for measurement can be drawn from a variety of sources including sales and research data, client personnel, published data, market research and academic research about market trends.
  
  
• Key market drivers should be identified, prioritised and quantified. These should also look at drivers of sales other than marketing, such as identifying the relationship between communications investment and sales levels.
  
  
• Assessing market drivers also allows for the creation of scenarios, which help grant longer-term strategy flexibility. By running scenarios and changing the strategic and tactical communication levers that drive sales, their impact can be evaluated.
  
  
• The effects of external factors (for example, the economy) and sector or market drivers (for example, new access channels) can then be removed to identify the effect of the marketing activity.

Figure 18: A process for metrics



Source: The Henley Centre, 2001.



Figure 19: Business drivers




Source: The Henley Centre, 2002.

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