Tuesday, May 11, 2010

Why Marketers Don't Measure

I had a small epiphany the other day when someone recommended that one of my clients needed a marketing measurement project. As author of The Marketing Performance Measurement Toolkit and a frequent speaker on the topic, I was surprised to find I didn’t like the idea. The problem was that this particular client had other marketing challenges that were more pressing. Even though their measurement could indeed be improved, a measurement project at this time would have been a distraction.

This got me to thinking. If I, a certified measurement guru, rejected a measurement project because we had other priorities, how much more likely are other marketers to make the same judgment? By coincidence – or was it? – I was speaking on the very topic a few days later, so I polled the audience. Sure enough, heads nodded vigorously: yes, they really understand the value of better measurement. But they just didn’t have time to set up a major effort.

It’s no news that marketers are busy. What makes this interesting (to me, at least) is that marketers have for years listed better measurement as a top priority but made little actual progress. When asked about obstacles, they generally come up with reasons like lack of data or measurement technology (For example, see the 2009 Marketing Performance Advantage study from CMG Partners and Chadwick Martin Bailey.) Since these are problems that can be solved with funding, they suggest that the root cause is that marketers doubt measurement is worth the investment or don’t know how to do it.

If ignorance is the problem, then education is the solution. This has long been my premise as a measurement evangelist: if only I could convince marketers that measurement is truly important and help them learn how to do it, they would take the plunge.

But if the real problem is lack of time, then education doesn't matter. My current thinking is that most marketers do sincerely want to improve their measurement programs and would even spend money to do it but just don’t have the time to set things up.

My analogy is a speedometer. We all recognize the benefits of a speedometer and use the speedometer built into our car, but few people would buy a speedometer by itself or attend seminars or buy books on speedometer design. We might glance at the speedometer when we buy a new car, but aren’t likely to give it much weight in our purchase decision. Similarly, I think marketers recognize that measurement is important and will use the measurement tools they have available, but few buy stand-alone measurement systems or make measurement a major factor in their product selection.

If I’m right about this, marketing system vendors are in an awkward position. They know that marketers are likely to use only the measurement tools their products provide, and thus that they should build in strong measurement capabilities to help their clients succeed. But they also know that marketers won’t buy their products because they have better measurement or pay extra for measurement features. So the software companies have no incentive to invest in better measurement capabilities.

Economists are familiar with this sort of market failure. It’s why seatbelts are required by law – because many buyers won’t pay extra for them despite their proven value. (Speedometers too, come to think of it.) Despite this, some marketing software includes extensive measurement features and some vendors have even attempted to differentiate their products with those features. I haven’t asked how that’s working out, but suspect it hasn’t been a major factor in many purchase decisions. (If any vendors care to comment on this point, I'd appreciate it.)

Consultants like myself have it easier. Although most marketers won’t spend either time or money on better measurement, there are enough others willing to pay consultants (basically trading time for money) for at least some of us to make a living.

The implications for me as a writer and speaker are a bit more pointed. Lectures aimed at inspiring or educating marketers about measurement are probably off target. Instead, marketers need concrete advice on how to do better measurement with their existing tools with a minimal investment in time. Such advice will lead to tactical and incremental projects rather than a grand unified measurement vision. But so long as it moves marketers in the right direction, it’s worthwhile.


Matthias Postel said...

Hi David,
I absolutely agree with your post. That is quite a big problem. Usually the buy a tool for a lot of money and they are not using it properly. From my view, the only way to move marketers in the right direction is to show them how much money it could save them, e.g:
- Reduce your CPC by measuring your keyword campaigns and optimizing the.
- Reduce your landing page bounce rates and get more qualified traffic
- Measure your shoppping process and see where the people exit the process
This is only possible by measuring your website and online activities. It helps you save money and increase the revenue.


Roy Russo said...

Hi David,

Good post. One the issue of time, I will support your findings with real-world patterns I see with our customers at LoopFuse.

*Most* customers rarely schedule marketing reports, yet we see enormous volume of "real-time" reporting, ie. "show me my ROI on all launched email campaigns for the last 90 days". What this shows, and what is needed (as you point out), is for marketers to have an ongoing process of measuring and tuning.

Of course, the irony is that we measure what our customers are doing so we can build a better Marketing mouse-trap. ;-)

Roy Russo

Adnan Galabhai said...

Hi David,

Interesting post. However, I think the fact that measurement is put aside due to lack of time speaks for its 'perceived value' in companies. More often that not, the companies that don't have the time are the ones who haven't really injected 'marketing thinking' into the organization, and hence, its a lack of belief in marketing measurement, than anything else. If you think something is valuable, you WILL make the time to do it.


Unknown said...

For most marketers we know, “time” continues to be a source of anxiety. No matter what it’s related to - less staff, higher expectations or simply business urgency - it’s the one thing we all wish we had more of. But even with more time, would measurement be the first thing we devote those precious hours to? As you point out David, the answer to that question may be “no” – for any number of reasons. But the fact is, without measurement, there is no “proof” your strategy is aligning with business goals, there is no support for additional budget, there is no justification for marketing. Period.

So, for efficiency-sake, we agree that maximizing existing investments in marketing systems makes the most sense, especially if you are using a common platform that supports and monitors marketing activities across all communications channels. Without that holistic view of your marketing programs, accurate, defensible measurement would be downright impossible. While I wouldn’t necessarily say we attempt to differentiate our software based on its measurement features alone, it’s certainly been a leading factor in purchase decisions. Mostly because measurement, particularly measurement that can be made more efficient and accurate by automated processes, helps solve more of the marketing problem for our customers, and alleviates the pressure on already-stressed resources and limited time tables.

In terms of advice, one path to gaining a “unified measurement vision” is to start with simple things, like response rates. Then, gradually take on more complex categories like revenue-per-campaign; click-through rates by segment and top 5 performing campaigns by revenue. Starting small and seeing the pay-off is the best way to make measurement a habit, not an albatross. – Kristin Hambelton @neolane

Unknown said...

Hi David,

I'm a big fan of your blog. I agree with your original hypothesis - that education and training are the issue - rather than lack of time. I would argue that the situation is much more serious than the analogy you make with a car speedometer. I'd say that running a marketing campaign without carefully measuring the results is more akin to trying to drive while blindfolded. If you can't see where you're going, you may end up driving off a cliff. At the very least, you're bound to end up in an accident. Most marketers are drawn to the profession because they are creative, and for the most part not analytical. Many do not have the inclination to dive into the numbers. In fact, it's probably not just lack of inclination, it's more of an aversion. If marketers really understood the dangers of running marketing campaigns without measuring the results, they would make time for it. The problem is that overcoming their aversion to numbers is an emotional issue, not one of pure logic. Since we analytical types usually are more comfortable dealing in logic, our challenge is how to help marketers overcome the emotional aversion they have to applying analytics to their creative activities. We have to reach them at a gut level before the they will be open to the logic. Once marketers understand that testing and measuring results can open up the door to more creativity, they are usually much more receptive to the logic.

Bob Hodgson

David Raab said...

Hi Bob,

I enjoy your work as well. I must respectfully disagree with the stereotype that most marketers are averse to analytics -- all the good ones that I've known have been highly analytical, although it's possible my sample is skewed because I've worked primarily in direct and database marketing. Still, my experience has been that marketers are so hungry for measurement that they pore over whatever crumbs of information are available, even though they know it may not be fully relevant.

But I fully agree that marketing without measurement is exactly like driving blindfolded. The question is why so many marketers choose to do this -- do they not realize they're blindfolded, or not know how to remove the blindfold, or not have time to remove the blindfold, or think they're doing just fine with the blindfold in place?

Per my earlier comments, and survey results showing the high priority assigned to better measurement, I think they're definitely aware of the lack of measurement. So they do know the blindfold exists. Ultimately lack of knowledge and lack of time are both a matter of priorities -- marketers must feel they have better ways to spend their resources than in learning to measure (knowledge) or setting up measurement processes (time). This suggests they don't see the value of measurement, or, more precisely, think the resources needed for measurement could be invested elsewhere at higher returns. This suggests the way to increase their use of measurement is to convince them that the value is higher than they think and/or the cost is lower.

Here we start veering away from pure logic back towards emotions: if marketers believe they are already making pretty much the best decisions while blindfolded, then measurement adds little value because it won't change their choices. Of course, most marketers almost surely do believe that, particularly if they've never been in a measured environment where they could learn some humility. I don't think this is exactly what you meant by an "aversion to numbers" but it has a similar result.

So, ultimately, it does come down to education. But the education is less about measurement technique than about likely value and cost. Once you've convinced marketers that measurement might be a good investment, you next have to help them start with small, cheap projects and show some concrete results. Then, as they see real value, they will be more confident that shifting more resources will be a good investment.

What I've just written is a slight shift from the original post, which focused on time constraints. But it still leads to the same recommendation: that we find low cost, low effort, quickly readable ways for marketers to start measuring. Compared with the time I've spent describing measurement frameworks and concepts, this is definitely a change in approach.

David Raab said...

It dawns on me that we could actually test whether "time" or "knowledge" is the major issue. See my next post http://customerexperiencematrix.blogspot.com/2010/05/why-marketers-dont-measure.html for more on this.