What are the most popular metrics used by managers worldwide to make marketing decisions? Researchers analysed more than 4000 marketing plans from over 1600 companies in 16 countries, including Australia, US, Russia, India, UK and China, to uncover the answer.
They found that ‘Satisfaction’ was the most popular metric for marketing decisions. It was the most used metric in eight of the 16 countries studied, and was employed in 53 per cent of all marketing-mix decisions analysed.
“Despite trillions spent on marketing globally, managers have said consistently over the last couple of decades that one of the most difficult activities is demonstrating the impact of their marketing actions,” says lead researcher Dr Ofer Mintz, from the University of Technology Sydney (UTS) Business School.
“We wanted to know what metrics managers are using globally, what drives metric use, including cultural influences, and how many metrics managers are using. In today’s digital technology-intensive and data-rich environment, it is important for managers to know which metrics count.”
‘Satisfaction’ measures how satisfied a company’s customers are with a company and its product or service. Along with satisfaction, the other two most popular metrics were ‘Awareness’ and ‘Return on Investment’ (ROI) to help determine marketing strategy.
‘Awareness’ measures how many people recognise a company, brand, product or service, and was used in 45 per cent of plans. This was followed by ROI, which measures revenue generated per dollar spent on marketing. Other popular metrics included Target Volume, Likeability, and Net Profit.
The study, just published in the Journal of International Business Studies, also found a significant and positive relationship between a company’s total metric use and its marketing performance, in each of the 16 countries.
“We found the greater a manager’s overall use of quantitative information or metrics when making decisions, the better the performance, accuracy, and overall quality of decisions. It also leads to greater CEO satisfaction, and increased profits and shareholder value,” says Dr Mintz.
“Metrics provide information to help managers diagnose, coordinate, and monitor their actions. They also quantify trends or outcomes, reveal current relationships, and help predict the results of future actions,” he says.
The study identified 84 different marketing and financial metrics in use, with managers employing on average around nine metrics per marketing-mix. Country and organisational culture also had an impact on the types of analytics managers used.
South Korea, China and India had the highest use of metrics, and Japan, France and the US had the lowest use. Managers residing in countries with a lower tolerance for uncertainty and ambiguity employed significantly more metrics for their marketing decisions.
Other areas of national cultural difference that had an impact on metric use included collectivism, assertiveness, power distance, and future orientation. The study also identified organisational characteristics that drove metric use, however the result was more counterintuitive.
“Rigid organisational cultures were less effective than more organic, free-flowing cultures where there was flexibility for managers to exchange ideas and choose their own metrics, rather than focusing on a strict set of instructions,” says Dr Mintz.
“It’s important for managers to understand the different drivers for metric use, both cultural and organisational. It is also useful to know what metrics other managers are using,