“What Should I Measure First?” A Marketer’s Hierarchy of Needs

January 31, 2018 Sam Melnick

“What should I measure first?”

Imagine you’ve just been hired as VP of Marketing for a division of a Fortune 1000 company, and you’re in the throes of your first week on the job. You’ve met your team and even started to dig into strategy a little. 

One of the next things you’ll want to do is to assess your division’s marketing performance. To do that, you need measurements! Data! Numbers! You draw up a wishlist of marketing metrics and fire it off to the head of Marketing Operations. 

She approaches your desk the next day to tell you the bad news: none of the measurements you’ve asked for exist yet. In fact, virtually no marketing metrics have been regularly captured in an organized way. (She, too, is new in her role and was stunned to find Marketing left in such a state.) 

It’s time to regroup. Clearly, marketing measurement will become a priority for you, post haste. But where does it make sense to start? 

With such a backlog of measurements, you think to yourself: “what should I attempt to measure first?

I’ll approach that question in today’s post.

The Hierarchy of Measurements 

I believe the path to successful marketing measurements can be represented with a hierarchy. 

Like Maslow’s famous hierarchy of needs, the hierarchy I propose involves some base-level measurements at the bottom of the pyramid, since they’re required in order to measure the upper parts. 

I was also inspired by the hierarchy of measurements proposed by Kathleen Schaub of IDC, who is an expert on marketing measurement in her own right.

The measurements on my hierarchy are the ones I believe are essential to helping marketing become a more businesslike, more revenue-driven department, with just as much credibility in the C-suite as Finance or Sales. 

Starting at the base: core investment data

Maslow put physiological needs at the bottom of the pyramid: air, water, shelter, etc. 

I believe core marketing investment (spend) data is just as fundamental. 

Why? First, it’s the simplest and clearest type of marketing measurement — there can be very little uncertainty about methodology or approach. 

Second, having your marketing spend data in order is essential to your organization’s big-picture health. If you can’t answer a simple question such as, “how much have I spent on events this year?” how will you be able to even consider solving more in-depth measurement questions? 

Finally, core investment data is a true prerequisite for any kind of ROI measurement, since it’s the all-important “i” in ROI.

Example measurements:

  • Basic spend metrics:
    • What was spent, on what, and when
    • In order to be useful, this data needs to be easily sliced by the factors that make most sense to your business: by activity, geography, product line, etc.
  • Planned vs. actual 
    • What I have actually spent vs. what I planned to spend?
  • Operational Health Metrics:
    • Program vs People
    • Awareness vs Demand

One up: Tactical Results

One level up from the base of his pyramid, Maslow put safety needs, like personal security and emotional well-being. 

With a solid handle on your core investment data, the next measurement on which to focus should be your marketing organization’s tactical results. Here, you’re taking a magnifying glass to what’s happening at an operational level within your marketing activities. 

Tactical results are essential for your frontline marketers to make day-to-day decisions. These metrics aren’t focused enough on the overall business to be appropriate for the C-suite (some might call these vanity metrics) but without them, marketing practitioners would be flying blind. 

Example measurements:

  • Channel-specific metrics, like deliverability, open rates and click-through rates for email marketing, and website analytics like sessions, conversions, and time-on-site 
  • MQLs, leads, inquiries, etc
  • Marketing attribution data

Moving higher: Advanced Measurements

The penultimate level of the pyramid looks at marketing as a business. We’re now rising above the tactical level to take a broader look at marketing performance. 

Along with business impact metrics, these numbers are perfectly appropriate to include in communications with the C-suite — particularly the CMO, CFO and even the CEO. 

This is the level of measurement that the majority of “advanced” marketing organizations achieve. If you can consistently report these metrics with accuracy, you’re well on your path to the top of the pyramid: business impact

Example measurements:

  • Marketing investment (spend) allocated to buyer journey stage, corporate objectives, region, product line, etc.
  • Pipeline influenced by marketing or sourced by marketing
  • Revenue driven by marketing

At the top: Business Impact

This brings us to the top of the pyramid. For Maslow, it was self-actualization — achieving one’s full potential.

For marketers, business impact is the pinnacle. While they may be more challenging to measure, business impact metrics are the ones that truly establish marketing’s credibility with the overall business and C-suite. 

Unlike nearly all the measurements in the levels, business impact metrics look forward in time, rather than back, helping answer the question, “where should we spend our next marketing dollar?

If you’re not yet equipped for business impact measurements, not to worry. Very few marketing organizations have a strong and confident grasp on this data. It’s a nirvana state for marketing performance measurement.

Example measurements

  • ROI (Returns & Investments)
  • Customer acquisition costs
  • Predictive/prescriptive actions
  • What are the cohort of companies that would drive most revenue/most margin for our business?

Summing Up

Let’s go back to the hypothetical scenario I posed earlier. Hopefully, not many of us will ever be the position of having access to no marketing metrics at all. Still, there’s tremendous value in returning to the bottom of the pyramid to put energy into harnessing your marketing organization’s core investment metrics. Marketers simply can’t afford to ignore the “i” in ROI.

Your next steps

Determine the specific metrics you’d like to measure in each stage, and compare them with the ones you have the current capability to measure. 

The difference between the two lists becomes your marketing measurement roadmap, your path towards the marketer’s version of self-actualization.

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