Magazine Spring 2016 Issue Research Feature

The Metrics That Marketers Muddle

Despite their widely acknowledged importance, some popular marketing metrics are regularly misunderstood and misused. Here’s how to clear up the confusion that surrounds five common marketing metrics.

Neil T. Bendle and Charan K. Bagga Reading Time: 23 min 

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Marketing Metrics

A big challenge for marketing is demonstrating its business value. As the finance function becomes more powerful within companies, some see marketing’s influence as declining.1 One major reason for marketing’s diminishing role is the difficulty of measuring its impact: The value marketers generate is often difficult to quantify. For example, Target Corp., the Minnesota-based discount retailer, positions itself as fashionable yet affordable. It is difficult to assign a dollar value to the image Target generates in consumers’ minds, and even harder to determine the return on investment (ROI) from a specific advertisement promoting that image.

Although marketing metrics aren’t perfect, they might be more useful if people understood what the different measures actually mean. We have two purposes for this article: First, to clarify marketing metrics so that managers select the right metrics and use them appropriately; and second, to help senior managers understand when marketers are cherry-picking the data or using inappropriate metrics. We believe that marketing’s influence will increase if marketers use metrics more effectively. Fortunately, many marketers are receptive to this view and are doing excellent work in this field, such as new metrics that link customers’ perceptions about products and brands to their actual purchase behavior.2 Our aim here, however, is not to endorse any new approaches — but rather to encourage appropriate and consistent use of popular marketing metrics.

In this article, we assess five of the best-known marketing metrics: market share, net promoter score, the value of a “like,” customer lifetime value, and ROI. To understand how managers view popular marketing metrics, we conducted interviews with marketers and administered surveys to managers. (See “About the Research.”) We found that both marketers and nonmarketers agreed that well-defined metrics are critical to effective marketing. However, despite their widely acknowledged importance, popular marketing metrics are regularly misunderstood and misused.

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About the Authors

Neil T. Bendle is an assistant professor of marketing at Western University’s Ivey Business School in London, Ontario, Canada. Charan K. Bagga is a visiting assistant professor of marketing at Tulane University’s A.B. Freeman School of Business in New Orleans, Louisiana.

References (25)

1. See D.M. Zorn, “Here a Chief, There a Chief: The Rise of the CFO in the American Firm,” American Sociological Review 69, no. 3 (June 2004): 345-364; and F.E. Webster Jr., A.J. Malter, and S. Ganesan, “Can Marketing Regain Its Seat at the Table?” working paper 03-113, Marketing Science Institute, Cambridge, Massachusetts, 2003.

2. S. Srinivasan, M. Vanhuele, and K. Pauwels, “Mind-Set Metrics in Market Response Models: An Integrative Approach,” Journal of Marketing Research 47, no. 4 (August 2010): 672-684; and K. Pauwels, S. Erguncu, and G. Yildirim, “Winning Hearts, Minds, and Sales: How Marketing Communication Enters the Purchase Process in Emerging and Mature Markets,” International Journal of Research in Marketing 30, no. 1 (March 2013): 57-68.

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