Since measuring marketing activity does not deliver value, what metrics should marketers focus on? The answer is KPIs and Proxy Metrics.

Marketers need clearly aligned KPIs to business outcomes and Proxy Metrics to reflect progress, bottlenecks, and roadblocks on the customer journey.

Marketers have seen the futility of reporting on so-called vanity metrics — open rate, click through rate, bounce rate — as the main metrics of success. After all, marketers should be judged on the outcomes of their work, not on the volume of their deliverables. While marketers will always need metrics to understand efficacy and trends, in order to prove Return On Investment (ROI) there has to be a better understanding of Marketing KPIs (Key Performance Indicators) and the purpose of proxy metrics to create visibility into the bottlenecks affecting the flow of delivering value.

A simple litmus test for marketers is to ask a simple question of each and every metric being reporting up the chain of command: Does this metric reflect value or merely activity?

Measuring Marketing activity does not deliver value. Only Marketing outcomes can possibly deliver value.

The way many Marketing metrics are used today is all over the map, leaving many marketers spending valuable time crafting weekly PowerPoint slides showing the up-and-down trends of mostly meaningless charts and graphs in order to satisfy the request to highlight what Marketing is doing week in and week out.

(Typical Marketing report highlighting activity instead of outcomes. Image from datapine.com is merely anecdotal.)

Imagine if the Sales team were to be judged based on the number of emails sent or the number of prospects called as their main metrics. This would create a seriously busy sales team which may or may not deliver value, as sales activity is not a reliable proxy for closing sales. Or imagine if HR’s metrics were based on the number of candidate submissions for a new role instead of delivering a few highly aligned and qualified candidates to hiring managers. Activity is not a proxy for delivering results.

So what are proxy metrics for Marketing? And are they even useful?

To answer these questions, marketers must be able to readily identify what delivering value means to their organization. In many (most?) marketing teams, this is unclear. Not surprisingly, when polled, marketers identified measuring ROI as their greatest challenge. According to a study conducted by Simply Measured of almost 1,000 ad agency employees, difficulty in measuring ROI was cited by 61.4 percent of the marketers.

The two types of metrics worth measuring and reporting are Key Performance Indicators (KPIs) and Proxy Metrics.

KPIs are the summation of data points which identify value delivered. Any metrics not aligned to delivering value are not candidates for Key Performance Indicators (KPIs).

A Proxy Metric is a data point (or points) which can be used to represent the value of something else. In marketing, Proxy Metrics are most often used to identify the flow of delivering value to the user and/or to the organization.

While KPIs are different in each organization, in most Marketing departments delivering viable leads is a common goal so one KPI is the conversion rate flow, which measures and tracks the ratios and the rate of change of conversion rates from visitors (unknown user) to prospects (known user) to Marketing Qualified Leads (MQL) to Sales Qualified Leads (SQL) to a Closed Sale (client). As a simple example, it might look like this:

1,000 ad clicks to new landing page visitors at $1,000 ad spend | 55% bounce rate off of landing page

50 call-to-action clicks to form submission or cookied users | 5% conversion rate from ad click

20 sign-ups for new prospect webinar | 40% conversion rate from CTA clicks

5 new prospects who fit MQL threshold scoring | 25% conversion rate from webinar registration/attendance

3 new sales prospects who meet SQL threshold and enter into Sales pipeline | 66% conversion rate from webinar leads to Sales Qualified Leads

1 new client from Sales pipeline | 33% conversion rate from SQL to new client; A .1% conversion rate from ad click at $1,000 Cost Per Conversion.

In the above example, one KPI is the overall flow of the conversion rates (highlighted in italics) with an additional KPI being the Cost Per Conversion. The purpose of theses two KPIs is to visualize both the actual cost per new client and the typical flow and expected loss thresholds along the customer’s buying journey.

Proxy Metrics in the example above represent how one set of data points reflects the impact/progress of another set of data. Inside of the conversion rate flow KPI are several proxy metrics: 5% conversion rate from ad click, 40% conversion rate from CTA clicks, 25% conversion rate from webinar registration/attendance, 66% conversion rate from webinar leads to sales qualified leads, 33% conversion rate from SQL to new Client. On their own, each of those individual metrics doesn’t mean much out of context. However, in the conversion rate flow, each of those proxy metrics represents how one set of metrics is reflecting progress in the overall customer journey.

What should Marketing measure in order to deliver value? Clearly aligned Marketing KPIs to business outcomes and Proxy Metrics to reflect progress, bottlenecks, and roadblocks on the customer journey.

NOTE: It is worth noting that even in the simplified example above, the automation of tracking and the ability to assign an ID (usually via email address or social media profile) to identify the conversion from visitor to prospect to lead to client is assumed. In the digital online world, this is now commonplace with marketing automation tools, CMS (Content Management Systems) integration and CRM (Customer Relationship Management) integration with marketing toolsets. If marketing automation is not a part of your technology stack, you will continue to struggle to identify ROI for Marketing. I offer consulting for recommending technology tools, systems, and processes to add marketing automation for an affordable flat fee.