Oftentimes company divisions are misaligned on Marketing Metrics which could put many of the customer driving programs in jeopardy. In fact, it is quite common for the Sales and Marketing departments to have very different ideas about performance metrics than the Finance department.

Marketing’s typical and key metrics are usually as follows:

  • ROAS – meaning return on Advertising Spend and calculated as Sales/Advertising Spend
  • Impressions – number of people exposed to advertising media
  • Click Thru Rate (CTR) – percentage of media viewers who clicked on media or Clicks/Ad Sends
  • Conversion Rate (CVR) – percentage of media recipients who placed an order or Orders/Clicks
  • Lift – meaning sales or conversion rate above the standard or control group
  • Cost Per Impression (CPI) – media cost per impression or ad displayed
  • Cost Per (M) Impression (CPM) – media cost per one thousand impressions or ads displayed
  • Cost Per Acquisition (CPA) – media costs per customer acquired
  • Cost Per Click (CPC) – media costs paid for each click on the advertisement

What becomes clear and predominate in Marketing Metrics is a measure of Cost. Most often Marketers are beholden to a limited budget on which to drive traffic and sales. And the key to managing the budget is to be sure spend is generally customary and reasonable to acquire each new customer or order.

On the other hand, Finance and Accounting departments are primarily concerned with Sales growth and Return on Investment (ROI) as they are charged with being the custodian for all money spent in the company to earn sales.

              Finance – Higher Returns                 VS                       Marketing – Low Acquisition Cost


                                                                      

 

This difference in objective I call “The Great Divide” as it can polarize the company where these departments are concerned. With all marketing metrics being considered, if Finance cannot translate sales driven by marketing spend to ROI, it may jeopardize any further spend on those activities and oftentimes can lead to cutbacks.

So what does it take to bridge the “The Great Divide”? Incrementality! Amongst other measures, Marketers must endeavor to calculate the incremental components of their efforts. Whether it be sales, conversion, orders or customers it must be understood how $1 of marketing spend delivers on any other unit of measure which is the basis for ROI analysis. This would help develop a much cleaner path to understanding for Finance and help support Marketing’s position on spend and budgets.