Imagine that you're driving your car down the highway. You know where you're going, and you have a general idea of which route to take, but you have no dashboard. You're completely ignorant of how fast you're going, how much fuel is in the tank, or even if the engine is overheating. If your "check engine" light is on to indicate some sort of problem, you don't know about it. If luck is on your side, you can drive your car under these conditions to the end of your journey. But continuing to operate your vehicle over time without the information the dashboard provides is tempting fate. Eventually, a problem will occur that you can't detect. Without the dashboard, you're blind to the performance of the vehicle. Ultimately, driving this way will lead to consequences, some of them quite severe. You could easily end up in the ditch on the side of the road.
This vehicle metaphor applies to organizations and the analytics - their dashboards-that help them keep their marketing engines running effectively. A properly implemented analytics process helps a marketing organization avoid negative consequences. But analytics aren't just about keeping marketing out of the ditch; analytics help optimize marketing's performance. An analytics process, therefore, isn't just about keeping the marketing organization out of trouble but helping it perform at its highest level.
The marketing analytics process isn't just about keeping the marketing organization out of trouble but helping it perform at its highest level.
For most companies, analytics are at the heart of how the business is managed. The finance department is perhaps most often associated with measurements and analytics with which the entire organization is familiar: revenue, profit, return on investment (ROI), return on equity (ROE), and many others. Manufacturing tracks metrics like output and defects. Human resources will measure employee retention and performance. Every department or division in a company uses analytics to make sure there is alignment with and progress toward goals. The outlier has often been marketing. Even today, 14 percent of marketing organizations don't have an analytics process, 1 a reflection of marketing's historical reluctance toward analytics.
The generic understanding of analytics is that they are measurements or numbers that indicate how a process is performing. This definition certainly holds true for marketing analytics, yet a deeper understanding of analytics helps marketing organizations take full advantage of what the process can do to drive better performance. To that end, here is definition:
Marketing analytics is the process of identifying metrics that are valid indicators of marketing's performance in pursuit of its objectives, tracking those metrics over time, and using the results to improve how marketing does it work.
The core components of this definition are worth examining more closely:
- Valid indicators: There are many things about marketing's work and results that are measurable. Not all of them, however, are true indicators of performance. The analytics process must determine which metrics have meaning and best represent the value that marketing creates for the organization.
- Pursuit of objectives: The analytics process is ideally built to measure progress toward a set of objectives.
- Tracking metrics over time:The analytics process isn't about taking a random, one-time snapshot of a performance measurement, but tracking measurements over time to monitor trends and direction of performance.
- Improve how marketing works:There are several reasons a marketing organization might implement an analytics process, such as accountability or justification of resources, but the noblest and ultimately most valuable reason is to improve its performance.
As the definition for marketing analytics implies, it isn't just a set of numbers. Instead, it is a process that has these primary components:
- People: The marketing analytics process is created, executed, and managed by people who own it. In most marketing organizations, the process owner is the chief marketing officer (CMO) or the marketing director.
- Steps: The marketing analytics process consists of a sequence of steps.
- Tools and technology: While the marketing analytics process isn't necessarily complex, tools and technology help marketing organizations deliver greater value faster than they ordinarily might.
- Input and output: Data feeds the process, with insights and decisions as the output of the process.
Like many processes, marketing analytics should have a definite beginning but no ending-it is a process that, once initiated, should continue indefinitely.