Five Essentials for Marketing Performance Measurement Systems

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Successful marketers routinely capture key performance indicators, or metrics, to assess marketing performance within the allocated budget. This is known as a marketing performance measurement (MPM) system. However, even in companies with a strong measurement culture, metric reporting often remains sporadic and short term and lacks a clear strategic focus. Two recent studies highlight this issue. According to the September 2022 CMO Survey, senior marketers often monitor metrics like sales volume but are less likely to track complex metrics associated with brand and customer equity. And according to the annual survey for Clevertouch’s “State of Martech 2024” report, just 40% of companies actively track metrics linking marketing to revenue generation — and often do so in an ad hoc manner.

Such practices carry two significant risks. First, marketing’s ability to execute depends on budgetary access. Few members of the C-suite will feel confident approving full budgetary requests without seeing evidence from a comprehensive effectiveness analysis. Second, marketers are doing themselves a disservice: A range of activities, from branding to advertising, generate returns that take time to materialize. These returns might not be noticeable within the typical three-month time frame covered by ad hoc measurements.

Identifying and prioritizing important metrics to visualize in a dynamic dashboard is therefore a necessary undertaking for marketing leaders. It’s critical that leaders decide which metrics are optimal for their organization, yet even data-literate companies struggle with this issue. While every MPM system will be different, some essential guidelines can help demystify this important task.

Drawing upon our experience with consulting clients and other examples of good practice, we propose a checklist of five essential actions typically associated with better-assembled MPM systems. If you recognize any of these to be contrary to or missing from your current dashboard, it may be time to revisit your marketing metrics and MPM system.

1. Align metrics with strategy.

This should always be the first step, but in practice, it’s often disconnected from metric selection. Failure to marry strategy and measurement can be catastrophic. Consider the adage “You are what you measure.” When senior leaders endorse a particular metric, it conveys that related activities are mission-critical. This influences the tasks that staff members prioritize. Conversely, activities that aren’t strategically relevant become out of scope, wasteful, and sometimes counterproductive.

Second, when your selected metrics align with organizational or marketing-related goals, you set your team up to achieve several related essentials. For example, on a large consulting project with Fujitsu Europe, the goal was to reduce the number of marketing systems used across the organization. Although the project wasn’t strictly focused on building an MPM system, we concentrated on organizational purposes and priorities, and narrowed down the systems and metrics to those that were strictly strategically relevant. This focus helped the team track and achieve appropriate outcomes (action No. 2), rule out vanity metrics (No. 5), and upskill for the future.

2. Measure desired outcomes, not just financial metrics.

All MPM systems have inputs and outcomes, or outputs. Typically, marketers are encouraged to focus on outcomes that fill the sales funnel or improve financial results, such as revenue growth, gross profit, or earnings before interest and taxes. This focus is useful because it provides clear insight into how marketing investments affect goals that the CEO, CFO, and shareholders care about.

However, not all of the outcomes that marketers should care about are financial. Consider the English Premier League, which oversees the principal soccer league in England. While the organization’s mission is to stage the most competitive and compelling soccer league in the world, a significant portion of its marketing activity focuses on shaping positive fan behavior and curating memorable experiences. For example, ongoing efforts and marketing campaigns have focused on racial equality within and beyond the sport. Thus, while the Premier League cares about financial success, that outcome is only a portion of the marketing team’s remit.

3. Establish cause and effect.

Imagine a basketball game where the players aren’t working together as a unit. As the point forward attacks the opposing team, the shooting guard remains idle. Similarly, when the power forward tracks back, the center turns and goes the opposite way. In a team system, each component needs to work in orchestrated harmony. When this doesn’t happen, everything breaks down. The same rule applies to a system of metrics. Measures need to be inherently linked and bonded in a causal manner. When one changes, the implications should be seen in other metrics. System metrics should be team players, not individual stars.

Living by this rule is easier said than done. While some metrics are intuitively related causally, others may be much harder to affirm without internal testing. But this testing is often necessary. For instance, Adidas wanted to establish how relevant improving the net promoter score (NPS) was to driving sales growth — a strategically important outcome metric to the company. Evidence for this causal relationship was patchy at best.

However, extensive internal testing by Sven Bähre, director of consumer insights and market intelligence at Adidas, Europe, established that while the original NPS metric shouldn’t be given the spotlight, a close alternative that the company had developed called “brand health NPS,” served its needs better. This metric helped Adidas connect customer service investments with revenue in a more transparent manner.

4. Triangulate metrics to establish fault lines.

An effective system of metrics acknowledges that fault lines, such as incorrect readings, can appear in any measurement instrument. Invalid data must always be treated as more dangerous than no data. Thus, establishing whether and where fault lines appear in your measurement system is critical. The solution is a process called triangulation, which requires two separate pieces of information for selected metrics to produce the same outcome. When this is the case, people are naturally more confident in the metric’s conclusion.

In practice, there are two approaches to implementing triangulation: intrinsic and extrinsic. Intrinsic triangulation involves collecting identical data from separate sources. For instance, to identify the best restaurant in New York, you might consult TripAdvisor — and then ask locals for tips. If the responses aligned, you’d be more confident in your choice. Companies can capture satisfaction evaluations directly from customers via questionnaires and average star ratings given in online reviews. You’d expect these data points to be positively correlated; if they aren’t, it could signify the need for further investigation.

Extrinsic triangulation uses separate, but still correlated, metrics to cross-validate performance or enhance decision-making. For marketing technology company Emarsys, one of Clevertouch’s global clients, a key priority was to develop a process for establishing the efficacy of its lead-generation processes. Historically, this had been accomplished in a rudimentary manner using limited inputs. After incorporating additional checks and balances in the form of firmographic and behavioral data, a combination of related customer inputs could be consulted to triangulate the efficacy of the scoring.

5. Reject vanity metrics and seek sanity.

Vanity metrics are scores that flatter the marketer but fail to provide substantive value, either to the marketer or the company (see action No. 1). The vanity metric might reflect something that the marketing department does well, and it produces impressive evaluations (such as growing a social media follower count) — but it fails to drive business outcomes that matter (see action No. 2).

At a project that one of us did, the marketing manager was highly focused on generating online engagement using owned content, especially blogs. Conversations often focused on metrics that could be linked to those blog posts. The blog content was well scripted and engaging. However, there was limited evidence that this investment would lead to financial rewards, which was a desired outcome; audiences could engage with the content and yet not be moved to action. With the company’s limited resources, marketing efforts and measurement perhaps should have been directed elsewhere.

We tend to be predisposed to focus on things we’re good at, which can come at the expense of things we should be good at. Vanity prevails. Unfortunately, in this situation, and in many similar ones, the cycle of standing still repeats.

To avoid vanity metrics (and activities), senior leaders must not only ask difficult questions about what is being measured but also be willing to tolerate lower numbers on the metrics that the business really cares about.

For example, growing customer equity (combined customer lifetime values) may take time to develop and require sustainable investment and sophisticated measurement protocols. If immediate results are demanded, team members may focus only on activities that they know will yield strong absolute numbers (like growing social media followers) so that there’s a good-news headline to report. To avoid this type of outcome, leaders must adjust the organization’s reporting culture.

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Creating a robust MPM system is essential for aligning marketing efforts with strategic goals. Marketing leaders must demonstrate their value to the organization by ensuring that marketing metrics support important business activities and drive meaningful results, both financially and nonfinancially. Only then can leaders provide a balanced view of marketing impact.

Ultimately, a well-designed MPM system is not just about tracking performance but about creating a framework that supports continuous improvement and strategic alignment. That’s hard, long-term work. With these essentials in place, businesses can better demonstrate the impact of their marketing efforts, secure necessary budgetary support, and drive sustained growth and success.