Measuring Marketing

Evaluating marketing performance and decision making more fairlyMarketing has long been considered an art and not a science, but that perception is beginning to change as increasingly sophisticated methods of quantifying marketing success are developed. In Measuring Marketing: 103 Key Metrics Every Marketer Needs, Second Edition, one of the world's leading experts in the field presents the key marketing ratios and metrics. Applying these metrics will enable marketers to make better decisions and increase their accountability for their strategies and activities.This fully revised and updated new edition discusses the key marketing metrics needed for successfully measuring the performance of an organization's marketing investments. CEOs and CFOs regularly ask for one simple way to assess the efficacy of marketing campaigns, but the fact is that there isn't one single measure of performance. Measuring Marketing helps marketers figure out what they can and should be measuring and when.Marketers are increasingly being held accountable for the corporate bottom line, and this book helps both marketers, as well as the business leaders who employ them, to measure performance fairly and accuratelyMeasuring marketing success is difficult, but this book shows what and when to assessDesigned to increase accountability and improve everyday decisions, the book includes ratios illustrated with actual marketing cases from leading companiesThe first book to address growing demands that marketers be accountable for their strategies and decisions, Measuring Marketing explains how to assess marketing success in more meaningful ways.

"Well organized and succinct, Measuring Marketing is both a comprehensive, prescriptive look at the variety of ways to evaluate the impact of marketing, as well as an excellent reference guide. A practical analytical tool in today's complex, multidimensional business world to help decision makers understand marketing's impact on a business or product line, Measuring Marketing is applicable from start-up to established player. Particularly helpful are the examples of measurement for each metric and the discussion of how each impacts decision making." Brent N. Smith, Managing Partner LevelOne Capital Limited "John has successfully demonstrated marketing has very finite and tangible attributes that are quantifiable and will benefit any organization focused on both value and volume. If we are honest, most global organizations fall short in quantifying the value of marketing. Measuring Marketing clearly defines what is important to measure and why. Both will favorably influence a company's decisions in investing in marketing that will eventually flow to its investors with the realization that the use of capital is being maximized. John has masterfully proven marketing has many more quantifiable components than most recognize. It is a magnificent tool for any organization's marketing department to apply concurrently in discussions with their Finance departments." Kevin Goulding, President and CEO, AIG China "Every CEO has the responsibility of ensuring their company's brand is positively promoted and protected, and effective marketing plays a big part. However, the CEO is frequently asking 'is the money we are spending making a difference?' The question of 'should the company invest more, or less, on marketing' is impossible to answer unless there are specific and tangible marketing metrics that can be measured. Knowing what and how to measure marketing in a data-driven way has been difficult, but John Davis has built on his many years of marketing experience, in both the business and academic worlds, to craft a proven methodology. Now, in this updated edition, John takes his research further to offer new insights and answers to 'how can we be sure our marketing investment is driving the results we want?'" Steven Leonard, President, EMC Asia Pacific/ Japan, EMC Corporation "Measuring Marketing is a comprehensive outline of marketing concepts-from basic fundamentals to advanced, state-of-the-art topics-written in a clear, thought-provoking manner. The examples provided and impacts on decision-making sections draw valuable insights into how the concepts can be leveraged to drive share owner value. It's a must-read reference book for both the marketing professional and the P&L owner." William Brown, President and CEO, Harris Corporation "I have been in marketing for 20+ years and have had to come by this information piecemeal. Measuring Marketing is bound to become as indispensable to marketers as the AP Stylebook is to writers. It is a superb catalogue of KPIs for any business, large or small. John's easy-to-approach explanations of each measurement and its impact on decision-making are ideal for both financially and non-financially oriented managers. Measuring Marketing should be handed out alongside diplomas for all marketing graduates." David Maddocks, founder, The David Maddocks Company; former Chief Marketing Officer, Converse "John Davis's innovative approach to measuring marketing effectiveness is redefining the traditional business process of managing, measuring, and allocating marketing investment. The complexity of the new marketing channels created in the last decade and increased need to differentiate your brand have exposed the need for more product and brand performance metrics. Comparing John's insights to traditional marketing practices is like comparing the MRI to the X-ray." Thomas McCabe, Managing Director and Global Business Head, DBS Bank "John Davis's book Measuring Marketing offers

Acknowledgments xiiiIntroduction xvSECTION I CORPORATE FINANCIAL METRICS 1CHAPTER 1 Revenue 3CHAPTER 2 Gross Profit 5CHAPTER 3 Value-to-Volume Ratio 7CHAPTER 4 Net Profit 9CHAPTER 5 Earnings-Based Value 13CHAPTER 6 Return on Sales 17CHAPTER 7 Return on Assets 19CHAPTER 8 Return on Equity 21SECTION II MARKETING PLANNING METRICS 25CHAPTER 9 Market Share 27CHAPTER 10 Relative Market Share 29CHAPTER 11 Market Growth 31CHAPTER 12 Market Demand 33CHAPTER 13 Market Penetration 35CHAPTER 14 Program/Non-Program Ratio 41CHAPTER 15 Program/Payroll Ratio 43CHAPTER 16 Causal Forecast 45CHAPTER 17 Time-Series Analysis 49SECTION III BRAND METRICS 55CHAPTER 18 Brand Equity 57CHAPTER 19 Brand Scorecards 61CHAPTER 20 Brand Premium 65CHAPTER 21 Brand Contribution and Review Analysis 71SECTION IV CUSTOMER METRICS 75CHAPTER 22 Net Sales Contribution 79CHAPTER 23 Time-Driven Activity-Based Costing 81CHAPTER 24 Segment Profitability 83CHAPTER 25 Customer Profitability 87CHAPTER 26 Share of Customer 89CHAPTER 27 Return on CustomerSM 91CHAPTER 28 New Customer Gains 93CHAPTER 29 Customer Acquisition Costs 95CHAPTER 30 Cost per Lead 99CHAPTER 31 Retention Rate 103CHAPTER 32 Churn Rate 107CHAPTER 33 Customer Losses 109CHAPTER 34 Consumer Franchise 111CHAPTER 35 Customer Equity and Customer Lifetime Value (CLTV) 115CHAPTER 36 Customer Brand Value 119SECTION V PRODUCT/OFFERING METRICS 121CHAPTER 37 Usage 123CHAPTER 38 New Product Purchase Rate 125CHAPTER 39 Marketing Cost per Unit 129SECTION VI PRICE METRICS 131CHAPTER 40 Price 133CHAPTER 41 Markup Price 137CHAPTER 42 Target Return Price 141CHAPTER 43 Sales Price Variance 143CHAPTER 44 Markdown Goods Percentage 147CHAPTER 45 Profit Impact 149SECTION VII ADVERTISING/PROMOTION METRICS 153CHAPTER 46 Share of Voice 155CHAPTER 47 Recall 157CHAPTER 48 Recognition 161CHAPTER 49 Reach 163CHAPTER 50 Frequency 165CHAPTER 51 Gross Rating Points (GRP) 167CHAPTER 52 Cost per Gross Rating Point (CPP) 171CHAPTER 53 Response Rate 173CHAPTER 54 Conversion Rate 175CHAPTER 55 Advertising-to-Sales Ratio 177CHAPTER 56 Promotion Profit 181SECTION VIII DIRECT MARKETING METRICS 185CHAPTER 57 Direct Marketing Revenue Goals 187CHAPTER 58 Direct Marketing Profit Goals 191CHAPTER 59 Direct Marketing Gross Profit 193CHAPTER 60 Direct Marketing Net Profit 195CHAPTER 61 Direct Marketing ROI 197SECTION IX ONLINE/DIGITAL/SOCIAL METRICS 199CHAPTER 62 Gross Page Impressions (or Gross Page Requests) 201CHAPTER 63 Word of Mouth (WOM) 203CHAPTER 64 Total Clicks 205CHAPTER 65 Click-Through Rate (CTR) 207CHAPTER 66 Cost per Click 209CHAPTER 67 Cost per Action 211CHAPTER 68 Pay per Lead 213CHAPTER 69 Activity Ratio for Social Media 215CHAPTER 70 Deductive Social Media ROI 217CHAPTER 71 Resolution Time 219CHAPTER 72 Social Media Profitability 221SECTION X PLACE/DISTRIBUTION METRICS 223CHAPTER 73 Cost per Sales Dollar 225CHAPTER 74 Transactions per Customer 227CHAPTER 75 Transactions per Hour 229CHAPTER 76 Average Transaction Size 231CHAPTER 77 Average Items per Transaction 233CHAPTER 78 Hourly Customer Traffic 237CHAPTER 79 Returns to Net Sales 239CHAPTER 80 Inventory Turnover 241CHAPTER 81 Percent Inventory Carrying Costs 243CHAPTER 82 Gross Margin Return on Inventory Investment 245CHAPTER 83 Sales per Square Foot 247CHAPTER 84 Sales/Profits per Employee 249CHAPTER 85 Retail Close Ratio 251CHAPTER 86 Retailer's Margin Percentage 253CHAPTER 87 Percent Utilization of Discounts 255CHAPTER 88 Shrinkage to Net Sales 257SECTION XI SALES METRICS 259CHAPTER 89 Net Sales Contribution 263CHAPTER 90 Absolute Index (AI) 265CHAPTER 91 Relative Index 267

A second edition of a popular marketing title, this book discusses the key metrics marketing managers need for measuring the performance of an organization s marketing investments. The new edition updates many of the metrics from the first book with new examples and adds new metrics for digital/social/online media.