Use marketing dashboard for better ROI
You wouldn't hit the road without first checking to see if you had enough fuel, or navigate from the freeway to side streets without monitoring your speed, right? Yet many businesses drive their marketing vehicles without the same critical information.
A marketing dashboard usually refers to a software program that allows you to measure and manage sales and financial data. In this column, I am referring more to the concept of establishing, monitoring and managing key marketing and sales metrics as a means of improving the return on your marketing investments.
William Moult, former president of the Marketing Science Institute, suggests, "There is a need to draw the connections between finance, marketing, customer attitudes and behavior. A dashboard translates complex measures into a simple and coherent set of information that allows marketers to assess the current situation and act quickly."
Essentially, you want to view, mostly in a simple graphic format, key marketing and sales outcomes relative to resources expended. Most dashboards focus on lagging indicators, commonly referred to as Key Performance Indicators (KPIs). Examples include sales revenues or units sold, cost of goods sold (gross margin), sales conversion ratio, accounts receivable and marketing expenses. Essentially, lagging indicators depict the past. While these data sets are useful for performance benchmarking, they are not predictive.
Leading indicators help you more accurately forecast what will come; and subsequently, allow you to take corrective actions if and when necessary. Examples of leading indicators include lead generation (the prospect pipeline), sales opportunities, proposals, traffic (website or in store) and orders.
Another useful dashboard tool is a sales funnel. Based on past performance (sales cycle conversion ratios), develop your sales funnel by working backwards from units sold to determine the number of leads necessary to achieve your sales revenue goals. This data will also enable you to predict future cash flow, as well as identify and improve your marketing (lead generation) and sales (conversion) processes.
So, how do you set up your company's marketing dashboard? You can either buy a software program (Google "marketing dashboard software" for information and options) or build your own using a spreadsheet. Here are the three steps to building your own dashboard:
Step 1, metrics: Determine the key marketing and sales metrics and the time frame for measurement. Include both leading and lagging indicators.
Step 2, format: Create a spreadsheet to enter the data (on an ongoing and real-time basis). Use a separate tab (or worksheet) for each metric measured. Keep all of your dashboard data within a single spreadsheet file; this will make analysis much easier. If you're not sure how to enter data in a "chartable" format, go to the "help" drop-down menu and type "chart" for instructions. I also recommend you consolidate each separate worksheet to a summary page (the dashboard).
Step 3, report: On a regular basis, chart your data and analyze results and trends. This information will help you make better-informed marketing and sales decisions. Your dashboard will gauge what's working and what's not, guide budget allocations based on ROI and define which communication channels, products and customers contribute most to the bottom line.
The "stoplight" dashboard is a popular visual presentation that management can see, at a glance, which indicators are on or off plan. Green conveys that you're on track, yellow indicates attention is needed, red signifies that action is necessary. Set up your stoplight chart with criteria by percentage, such as green (on or exceeding your plan), yellow (2 to 9 percent off plan), red (10 percent or more off plan).
Dashboards help hold marketing and sales management, personnel and resources accountable. Some companies are using dashboards to assess test-market experiments and simulations before making major marketing investments. My mantra is test before you invest.
As with an automobile dashboard, you want all of the critical information right in front of you — in a simple, explicit format — so you can keep your eyes on the road ahead.
Setting up and monitoring your marketing and sales dashboard may very well keep your business from running out of gas or blowing a gasket.
Andrew Ballard is the president of Marketing Solutions, a local agency specializing in growth strategies. For more information, call 425-337-1100 or go to www.mktg-solutions.com.