Identifying Metrics

Goal-Guided Metrics

There are many metrics that marketers can use to measure whether they are making progress towards their objectives. Let’s begin by going over some of the most common metrics that marketers use.

How do you know if your marketing campaigns are working? The way to ensure this is to have the right metrics to measure your performance. This is the final component for creating your marketing plan.

At the simplest level, you need to measure what you set out to achieve with your marketing objectives. Certain metrics will be more relevant for specific stages of the funnel.

For example, if OOFOS's goal is to achieve a certain level of brand awareness, it could use surveys to measure aided and unaided awareness. It might also measure impressions, or the number of times an ad was displayed. To measure the efficiency of their impressions, it might measure CPM or the cost per mil or cost per thousand impressions.

When a company's focus is on consideration, it might measure what actions potential customers take as a result of its digital campaign. It can start by measuring the number of clicks, or it might monitor Click-Through Rate (CTR), which is the ratio of clicks to impressions. It might also measure Cost Per Click (CPC) to measure what it costs the company for each click on its ad.

When a company's goal is to drive conversion to reach a revenue target, the obvious answer would be to measure its revenue. However, the company might also monitor other metrics, such as the conversion rate that measures the ratio of consumers who bought its product after clicking on their ad. Or it might measure Cost Per Order (CPO), which measures the marketing dollars spent to get an order.

In addition, companies often measure Return On Ad Spend (ROAS), that is, the revenue generated for each dollar spent on ads. While ROAS focuses on revenue generated from each dollar spent on marketing, you can go to the next step by measuring Return On Investment (ROI), which measures the profit, not revenue, from each additional marketing dollar.

Another metric relevant at the bottom of the funnel is Customer Acquisition Cost (CAC), which you were introduced before. To measure long-term profitability, companies often look at customer lifetime value, which measures the money that the firm earns from a customer over a long period of time.

We'll also discuss all these metrics and how to measure them in more detail later. Here, our focus will be on strategically aligning your metrics to support your overall marketing plan.

Using Metrics to Improve the Marketing Plan

If you are trying to meet a revenue objective, it makes sense to measure revenue or ROAS. But often, it pays to monitor other metrics to understand potential bottlenecks that might be preventing you from meeting your goals.

Why should you measure anything other than revenue if your objective is to achieve a certain revenue target?

During your monthly review, you find that your marketing plan is not meeting its monthly revenue goal. What do you do to adjust and improve your plan? It is hard to know what to do without diagnosing the problem first.

There are many potential reasons why your marketing dollars may not be effective in reaching your sales goal. Measuring intermediate metrics can provide some insights into the problem and offer potential solutions.

For example, you may not be getting enough impressions in some of your media channels due to their high CPM rates. Why might the CPM rates be higher than expected? This can happen due to increased competition.

In the case of OOFOS, as the "recovery" footwear market grows, major competitors like Nike and Adidas may decide to enter this market. Since these competitors have bigger ad budgets, they're able to bid higher on Google and Facebook ads that would make it more expensive for OOFOS. In this case, either OOFOS needs to increase its ad budget, improve its targeting, or choose less competitive channels.

However, the problem may not be higher CPM rates. Instead, only a small proportion of impressions may actually lead to a click. In other words, you may be getting a lower Click-Through Rate (CTR) than expected.

Perhaps you are not reaching the right audience, or maybe consumers are not finding your message compelling enough. If target audience is your problem, you may have to either reexamine who you are reaching or choose another media channel that is more appropriate for your audience.

If messaging is your problem, you may have to refine your value proposition or experiment with different creatives.

If consumers are clicking on your ads but still not buying, then the problem is not your ad campaign. Your website may not be easy to navigate. Consumers may be struggling to find what they're looking for. Or the price of your product may be too high, and it could be time to consider a promotional offer for your consumers.

Acquiring new customers is expensive. So every company hopes that its current and past buyers come back to buy again.

If you're not getting enough revenue from current and past customers, then you may need to lean on an email marketing campaign to remind them of your brand and make product recommendations based on their purchase history.

In sum, it's not enough to measure the final outcome alone. You also need to track intermediate metrics to understand where consumers might be getting stuck - essentially, bottlenecks in the marketing funnel.

As you understand these bottlenecks, you will be able to adjust your plan to make it more effective.

Let’s observe how OOFOS is considering intermediate metrics such as brand awareness in order to address its funnel bottlenecks and balance multiple objectives.

We don't give them a specific brand awareness number. If we're at 8% today, obviously, we want to increase it.

But what we do is there's a marketing mix model, and then we have them stop and do some consumer research on where do we stand with brand research twice a year. So we'll stop in June, and then we'll do it again in December for brand awareness measurements and see where we're at that point.

The goal of the marketing team: Number one is to build brand awareness, and we'll measure that twice a year to see where we're at.

We use two agencies. We use our media agency, but we also use another agency that's local who also looks at the specific consumer groups.

So that running, fitness, outdoor group, but as well we measure a much broader group: demographics from 18 to 25, 25 to 35, 35 to 55, and 55 and above. We'll measure it that way.

But the marketing group here focuses on making sure that we build that brand awareness with those consumer groups. They also have revenue targets at the end of the day.

They know what it is on a high level both for e-commerce, our US retail, our international business, and then Amazon as well.

So we make sure that all of those channels are aware of those targets and that we are driving our overall internal return on ad spend combined with our external media.

As Steve mentioned, OOFOS is monitoring brand awareness closely. Let’s say that it finds that brand awareness is falling well short of what Steve had hoped.

Considering this discovery, do you think that OOFOS should re-evaluate its goals and allocate a greater portion of its budget to building brand awareness instead of to conversion (revenue generation)? Remember that OOFOS also has the goal of increasing revenue by three to four times.

This is not an easy question and requires a tradeoff between short-term and long-term goals. Allocating more marketing dollars to create brand awareness, i.e., filling the top of the funnel, would eventually lead to revenue growth at the bottom of the funnel in the long run. It would also help OOFOS build its reputation in the new, emerging category of recovery footwear.

However, shifting more money to brand awareness and brand building would hurt revenues in the short run, which is a significant risk for a small company like OOFOS.

Later, we will continue to revisit the challenge of effective budget allocation.

As mentioned previously, several of the OOFOS and Rain team members advocate a full funnel strategy rather than prioritizing one part of the funnel. However, this approach is not without its challenges. Robin Cohen, whom you met earlier, and Robyn Wysk, Director of Media Planning at Rain the Growth Agency, discuss the challenges of using a full funnel strategy to increase revenue as well as brand awareness.

Robin Cohen:
So when we think about the short-term and long-term impacts of advertising, we always want to maximize those opportunities to convert someone who's in the market.

But given the really aggressive growth goals that OOFOS has of 3 to 4x, it's really important to think about whether we are reaching enough people in that target audience to hit that objective. And so it's always a balance.

Robyn Wysk:
The way that we think about an overall media budget and where we're placing those dollars is building from the bottom up.

So making sure we're fully funding our conversion channels like search, retargeting, prospecting (if it has a conversion strategy), and ensuring we're hitting the point of diminishing returns on those types of channels. Then, starting to stair-step up into reach media.

And it's a constant stair-step in the sense that as you start to spend more in reach media, it allows for your conversion channels to also be able to scale more efficiently than they had previously been able to.

So making sure you're still fully funding your conversion channels, even though you're starting to also spend in other channels as well.

Sunil Gupta:
As Robin Cohen and Robyn Wysk described, companies often face a tension between brand building for the long run (brand marketing) and immediate return on ad spend (performance marketing).

Focusing on awareness through what Robyn Wysk refers to as reach media may help you in the long run but will give you lower returns in the short run. This tension is not easily resolved.

As you balance multiple goals, the metrics you use and the data you get should influence where you put your marketing dollars.

As you measure the effectiveness of your current efforts, these data can be a powerful tool to help inform where you should focus next.

Keeping your goals at the forefront and monitoring appropriate metrics will help you make these difficult decisions and, in turn, make your plan more effective.

Remember, it's important to consider both the short-term and long-term goals as you analyze your metrics.

Keep in mind that there might be tension in meeting these multiple objectives. For example, brand marketing may not lead to immediate sales, so it might lower your ROAS in the short run.

However, if your awareness is rising, and you are still feeding those consideration and conversion channels, you might likely get a significant return in the long run.

The important thing is to continually align your metrics with your goals and use them to improve your marketing plan.

Let’s summarize what we’ve covered in "Crafting a Digital Marketing Plan" article series.

We have discussed how to craft a digital marketing plan by focusing on its four components: marketing objectives, target audience, value proposition, and metrics.

We have followed OOFOS as it charts a path towards growth in an increasingly competitive category. Its team shared how they are identifying priorities along the marketing funnel and how they are working to define their customer segments.

By defining its marketing plan, OOFOS is better prepared to identify which marketing approaches to use, which channels to prioritize, and where to spend those marketing dollars to achieve its goals.

As you prepare to create your own marketing plan, you can optimize the funnel and choose media channels when you have a clear understanding of the target customers you're trying to influence and the compelling value proposition that will make these customers buy your product.

When you have clarity on your product-market fit, you will have a clear view on how to allocate your marketing budget.

Determining your marketing goals, who you are reaching, understanding the uniqueness of what you have to offer them, and how you will measure the value of your marketing efforts isn't always easy.

However, as you clarify these components and create your plan, you will have a much clearer path ahead towards identifying, acquiring, and retaining customers.

Now that we’ve learned the basic building blocks of a digital marketing plan, we’re going to make a thorough investigation into the methods that companies can use to acquire customers.

As we do so, we’ll continue to follow OOFOS’s journey. With a vision toward creating a new sub-category in “recovery”—and aiming to get there before other bigger players step in—OOFOS has established its value proposition as a recovery shoe with a proprietary foam technology and hopes this approach will help the company stand out when big brands enter the recovery space.