Finding the Goldilocks Zone of Marketing Metrics

The central character of the children’s story Goldilocks and the Three Bears is renowned for lamenting, “This porridge is too hot. This porridge is too cold” before she delights in discovering porridge that is “just right!”. Although the old tale originally intended to warn children not to enter places uninvited, it’s Goldilocks’ longing for that “just right” zone that continues to resonate in popular culture. We know that both too much and too little cause problems.

The just right amount of marketing metrics is not too many, but not too few.

Early in my career as a marketing leader, the C-Suite lacked confidence in marketing because there was too little data to demonstrate value. Today, the prodigious amount of available data causes many marketing leaders to tumble into the opposite region. They share too much data, too many metrics of the wrong kind, thus leading senior executives to wonder if marketing knows what they are doing. Sometimes executives react to the excess by narrowing marketing focus to a single metric, such as revenue or pipeline contribution. In doing this, executives ricochet back into the risky territory of too little.

Finding the goldilocks zone of marketing metrics where leaders share just the right amount of metrics isn’t an exact science, but there are guardrails that can guide marketers closer to that sweet spot.

Avoid Too Many Marketing Metrics

Under most conditions, the C-Suite wants to see metrics that answer two questions: What’s the impact of marketing on outcomes that matter (e.g., revenue, pipeline, customer experience, reputation, employee experience) and is marketing a good steward of the resources (e.g., money, people, technology) the company has allocated to them? Most CEOs run their firm with about 5-10 metrics. Marketing leaders should aim for a similar dashboard containing operational-level metrics that the C-Suite can reasonably link to the key performance indicators (KPIs) used for the overall company.

What the C-Suite deplores are metrics that are too low-level to be clearly linked to the business, for example those detailing the performance of specific media, events, campaigns, geographies, stores, or content. I’ve seen enthusiastic marketing leaders present slide after gorgeous slide on new brand campaign performance, the uptick in content conversion, or a brilliant analysis of multi-stage funnel conversion. The C-Suite politely listens but later wonders if marketing understands business. In surveys of 400 senior Fortune 1000 business leaders conducted in 2018, Proof Analytics, a leader in automated marketing mix modeling, found that 94% said they had little, or no reliable understanding of the quantifiable business value delivered by marketing.

Detailed data is essential for the marketing team. Marketing needs more metrics to track and analyze performance, diagnose problems, and identify opportunities for optimization. Models that produce the operational-level ratios and trends that the C-Suite wants often incorporate dozens of low-level data points. Low-level data is also interesting if it predicts the probability of important outcomes ahead. For example, one company’s marketing mix model found that this quarter’s revenue was highly correlated with social sentiment nine months ago. However, what is interesting and useful for marketing practitioners doesn’t always transfer to executives with broader priorities, especially if they lack a marketing background that confers meaning to the data.

All data shared with senior executives must be presented in context so that insights can be relevant. Maintain consistency. Useful business insights need trending to answer questions such as “are we getting better or worse?” and “are we where we expected to be – why or why not?”. Because markets are volatile, uncertain, and complex, occasionally an average campaign will produce a streak of great metrics or great marketing can get poor results in the short term. Only analysis over a longer time can identify when a metric result is likely temporary and when it represents a genuine shift in the trend line.

Avoid Too Few Marketing Metrics

Entering the risky zone of too few marketing metrics may be a reaction to the frustration with too many metrics. It can also be a misguided interpretation of management guru, Peter Drucker’s observation that, “what is measured, improves.” Measurement keeps marketing teams focused on important outcomes. However, even if you select the right metric or two, a wrong application can lead to problematic behavior and disappointing results.

Surrogation is a term for when a proxy metric that is used to measure something becomes a substitute for the real thing. For example, revenue is a great proxy metric but isn’t a surrogate for full role of marketing. Net Promoter Score (NPS) is a great proxy metric but isn’t a surrogate for the whole of customer experience. It’s like saying a road map is the equivalent of a city. You can forget that there is so much more to pay attention to.

Leaders institute metrics expecting employees will pivot towards actions that result in better outcomes. Implicit in a proxy metric, such as revenue, is the assumption that employees will realize that the metric is just a representation and will keep the broader “real thing” in mind. This doesn’t always happen. Lead volume is intended to be a marker of good demand generation. However, if marketers surrogate that metric, they clog pipelines with thousands of unusable names allowing marketers to stand tall in their quarterly business reviews while the sales team misses their numbers. Moving marketing’s vision closer to business goals by measuring pipeline value or revenue is an improvement. However, if revenue becomes a surrogate for effective marketing, then marketing’s broader role will be lost. Marketing becomes nothing more than an extension of sales - to the company’s disadvantage. 

Just Right

To find the goldilocks zone of marketing metrics, leaders should heed the advice of Roger L. Martin in his book When More is Not Better: Overcoming America’s Obsession with Economic Efficiency. Martin, Professor Emeritus at the University of Toronto, recommends using multiple, seemingly contradictory metrics that force managers to consider the dynamic, integrated nature of business. In addition to revenue or pipeline, marketing’s goldilocks dashboard should include multiple outcome-oriented metrics covering several dimensions of marketing including customer experience, brand, and reputation. Internal metrics for budget management and employee experience would also add value.

Not too many, not too few, the goldilocks zone contains just the right amount of marketing metrics to help marketing leaders collaborate with their C-Suite partners. This may not end difficult conversations, but it will build trust and a better understanding of marketing’s role in business.

This article first appeared on CMSWire in January 2023