Marketing Metrics: The Definitive Guide to Measuring Marketing Performance

make certain that the negative profit goes away if the relationship is terminated.

In a multi-bonus system, the following formula can represent the compensation structure for a salesperson: Compensation ($) = Salary ($) + Bonus 1 ($) + Bonus 2 ($) In this system, bonus 1 might be attained at a level approximately halfway to the individual’s sales goal for the year. The second bonus might be awarded when that goal is met.

Market share is an indicator of how well a firm is doing against its competitors.

sometimes makes better sense to measure retention in “customer time” rather than “calendar time.” Rather than ask what the firm’s retention rate was in 2004, it may be more informative to ask what percentage of customers surviving for three years were retained throughout year four.

the use of a sales funnel leads to the pitfall of over-prospecting. If the incremental contribution generated by a customer is less than the cost of acquiring that customer, then prospecting for that customer yields a negative result. Salespeople are advised to use customer lifetime value metrics as a guide in deciding the appropriate scale and dir

When an incentive program is implemented, it may reward the “wrong” salespeople. To avoid this, before activating any newly proposed program, sales managers are advised to apply that program to the prior year’s results as a test. A “good” plan will usually reward the salespeople whom the manager knows to be the best.

The largest problem in performance review is a tendency to rely on only one or two metrics. This can be dangerous because an individual’s performance on any one measure may be anomalous.

Interest Creation: This entails building awareness of a product through such activities as trade shows, direct mail, and advertising.

few managers appreciate the range of metrics by which they can evaluate marketing strategies and dynamics.