Measuring performance — it’s really about you

This week, I saw a rerun of The Hour with George Stroumboulopoulos. I’m a big fan of the show (and George) — always interesting people and great interviews. This particular show featured Gene Simmons. Now, I can’t say that I’ve ever been a big fan of KISS, but I must admit that Gene Simmons is an interesting character.

During the interview, Gene said something that I quite liked. It was: “There is no such thing as winning; there is only trying to be better than you were before.”

You can spin this comment a number of different ways, but I want to look at it from a business perspective. In some industries, there are benchmarks you can use to evaluate your products against those of other companies. A good example is the automotive industry, which uses such factors as gas mileage, acceleration rate, etc. to compare the performance of different cars. Financial benchmarks are a common way to compare the performance of different companies.

But what about marketing — how do you measure performance and how do you know that you are successful?

Certainly, there are established benchmarks for a variety of activities, such as email open rates, direct mail response rates, etc. When you first try a particular tactic, it may be unreasonable to expect that you will initially achieve that standard. Or if you are trying something completely different, there may not be an established benchmark.

To start, it is important to consider what you to measure — what metrics are important to you? What metrics will help you understand whether you are successful? What metrics can you measure?

Before you start making changes, you need to establish a baseline for the metrics you choose so that you can see the impact of your actions. Once you have a starting point, you will also have a better idea of what goals are appropriate.

Having metrics that are easy to capture is also important so that you can continuously take measurements without too much difficulty. For example, knowing the number of people who enter a store on a daily basis would a good metric for understanding variations in store traffic, but manually counting visitors might be impossible. Therefore, having a mechanical or automated means to capture this information would be necessary in order for the metric to provide valid data.

Measurement doesn’t have to be complicated — a few key metrics can provide useful data — but it does need to be consistent over a period of time. Measuring the same metric over multiple intervals will enable you to see how different actions have an effect.

After establishing a baseline and a few goals, you can test your marketing tactics or messages to see what works best with your audience. It is important not to try doing too many things at the same time, as it will be difficult to know what tactic contributed to any resulting variations. By testing one or two different approaches — such as different offers or call to actions in a direct mail piece — you may discover some valuable insight into what resonates with your customers.

It is also important not to give up too quickly. Keep testing — try different messages, different marketing tactics and different audiences — to see if you can discover the strategy that works best. Making wholesale changes won’t provide you with the answers you need and they could confuse your customer.

While it is good to know what the key benchmarks are, you may find that comparing your results to someone else’s may not provide the most useful information. Rather, having a solid understanding of your own results — and what drives them — may help you find the best way to grow your business.