What is Metrics Driven Marketing?


Metrics Driven Marketing drives strong overall marketing performance by improving predictability of returns on marketing investments.  With a metrics driven marketing approach the majority of marketing funds are invested into proven programs.  Still, 10-20% percent of the monthly marketing budget should be allocated to testing to stimulate progress. Tests should be large enough to give accurate performance insight, but small enough not to burn though a significant portion of the testing budget.  The majority of the marketing team’s time should be spent executing tests.  Proven marketing activities can largely run on autopilot with periodic reviews of the performance reporting.

In an early stage startup it is relatively easy to apply the principles of Metrics Driven Marketing.  That is because the purest form of Metrics Driven Marketing is direct response marketing – which should be a core part of every startups’ marketing arsenal.   Direct response marketing is a low risk approach.  It favors the small budgets available to most startups.  It also supports a startup’s discovery process of identifying the right target customers and developing a powerful value proposition.  Additionally, it allows a marketing team to focus on refining the brand experience and if applicable helps them optimize website conversion rates.  As customer acquisition conversion rates improve, the ROI from the direct response marketing initiatives also improves. 

Eventually a successful startups company will have to complement their direct marketing initiatives with more scalable branding campaigns.  That’s where Metrics Driven Marketing gets really tough.  Fortunately earlier efforts to refine the value proposition, brand experience and conversion metrics will pay dividends in broader reaching campaigns.  To track the effectiveness of these campaigns most savvy marketers use test markets and trend analysis.  Metrics Driven Marketing is not always about perfect ROI tracking – it’s about continuously pushing the tracking envelope and directing marketing funds to the most effective and accountable initiatives.  Rex Brigg’s book “What Sticks” provides excellent guidance for executing a Metrics Driven Marketing approach at scale. 

It is also challenging to analyze the marketing effectiveness of Blogs, viral marketing and word-of-mouth initiatives.  Fortunately most of these activities require relatively small financial investments, though the time investment can be quite large.  These activities require more creativity to determine appropriate measurable ROI targets than others.  For an example on tracking blogs see my post on measuring the loyalty impact of social media.  

What about marketing activities that provide important benefits that can’t be tracked?  I discuss this in another recent article.

Metrics Driven Marketing is surprisingly underused by many experienced marketers.  The marketing leaders who do use it (and succeed with it) generally have a good balance of analytical skills, discipline and a deep reservoir of creativity.  Not just the kind of creativity needed to come up with clever slogans, but rather business creativity to invent new marketing methods and tweak existing methods for cost-effectively reaching their target customers.  If this creativity runs dry, the testing halts and marketing results stop improving (and often start declining).

Of course, Metrics Driven Marketing is just the foundation of a strong integrated marketing approach.  Market research, particularly in depth customer research, is essential.  As is customer segmentation strategies, enhancing the brand experience, PR, mapping marketing objectives/strategies to overall company objectives/strategies…  But, these can all be strengthened by a foundation in Metrics Driven Marketing.

Metrics Driven Marketing can trace it roots to Claude C. Hopkins (1866-1932).   His book, Scientific Advertising, was published in 1923 and was a major breakthrough in testing the effectiveness of advertising (Read it free at http://www.scientific-advertising.co.uk/ ).  Lester Wunderman was also a key driver of Metrics Driven Marketing, primarily through his advancement of direct marketing (a phrase he was believed to have coined in the early 1960s).  More recently Rex Briggs has carried the torch of better marketing accountability to broader reaching brand advertising.  His book “What Sticks” is a must read. 

The uniting goal of all these pioneers is a desire to push the tracking envelope in all marketing activities and drive better, more predictable results.

I am a big believer in the power of Metrics Driven Marketing.  At my most recent venture, my first marketing hire was trained as an actuary (actuaries are the math wizards at insurance companies who calculate premiums based on risks).  This helped create a highly analytical marketing culture from the outset.


Effective Marketing in the Earliest Stage Startups

A few weeks ago Prism Ventures, one of my current VC investors, asked me to present to some of the newest startups in their investment portfolio.  The presentation was on how a new company should try to gain market traction.
Here is a quick overview of what I presented.  Initial success requires combining an urgent quest to discover profitable customer acquisition methods with a fear of wasting marketing dollars.  Ensuring that every dollar counts requires a very disciplined approach to testing.  It is essential that the right measurement and reporting systems are in place before testing begins.  In the earliest stages of a company, you don’t have the luxury to try to develop much brand equity – it’s all about identifying a sustainable high growth business model.  Once you’ve found profitable customer acquisition sources, building brand equity is a critical next step for building momentum.
This is the process that I used to kickstart my current venture.   In my earlier startup, Uproar Inc., we really hadn’t refined the process yet.