[Book Review] A First-Rate Guide to the Power of Choice Architecture

Source:  Penguin Random House LLC

Over the past several decades, psychologists and other behavioral scientists have conducted thousands of research studies examining various aspects of human decision-making. Thanks to this research, we now know that people use a variety of mental shortcuts known as heuristics to make decisions.

Research has also found that our decisions and actions are greatly influenced by how choices and options are presented. This particular aspect of decision science is called choice architecture, a term that was coined by Richard Thaler and Cass Sunstein in their 2008 best-selling book Nudge.

The principles of choice architecture and the practice of "nudging" have been implemented in many business, non-profit, and governmental settings, but choice architecture is still not understood as well as it needs to be. That makes a recent book by Eric J. Johnson an important read for marketers.

The Elements of Choice:  Why the Way We Decide Matters (Riverhead Books, an imprint of Penguin Random House LLC, 2021) explains the psychological principles that underlie choice architecture and describes the tools that choice architects can use to influence our decisions and actions. 

Eric Johnson is a recognized authority on human decision-making. He is the Norman Eig Professor of Business and the director of the Center for Decision Sciences at the Columbia Business School. He previously taught at Carnegie Mellon, the Sloan School of Management, and the University of Pennsylvania. According to the Institute for Scientific Information, Johnson is one of the most highly cited scholars in Business and Economics.

What's In the Book

The Elements of Choice contains ten chapters. In the opening chapter, Johnson introduces the major topics he addresses in the balance of the book, and he briefly discusses his professional journey in human decision-making.

In Chapter 1, Johnson also describes his objective for the book and the perspective he will use throughout the book. He writes:  "This book goes well beyond the simple idea that defaults and other choice-architecture tools can nudge people into desired behaviors. It's much more important to understand how choice architecture changes choices."  (Emphasis in original)

One of Johnson's main points in The Elements of Choice is that choice architecture largely works by influencing a decision maker's plausible path and assembled preferences. He discusses plausible paths (the strategy a decision-maker chooses to use to make a decision) in Chapter 2, and he covers assembled preferences (the memories that most easily come to mind when we're faced with a decision) in Chapter 3.

In Chapters 5-9, Johnson covers the major tools and techniques of choice architecture.

• How to use defaults (Chapter 5)
• How to decide how many options to offer (Chapter 6)
• How to decide what order to use when presenting options (Chapter 7)
• How to describe options (Chapter 8)
• How to design and build online choice engines (Chapter 9)

In the final chapter, Johnson discusses some of the ethical issues surrounding the use of choice architecture and offers some ideas about how marketers, other business leaders, and policymakers can be responsible choice architects.

My Take

The Elements of Choice is an important addition to the growing body of literature about the use of behavioral science principles in marketing.

The book is clearly written and easy to read, although Johnson does tend to ramble a bit at times. He includes several useful anecdotes and examples in the book, but some are longer than necessary.

The content of the book is supported by extensive scientific research. Johnson includes over 170 detailed endnotes and provides a 25-page bibliography of resources that interested readers can consult.

The Elements of Choice is a valuable resource for marketers because it advances our understanding of choice architecture in two important ways. First, Johnson discusses numerous research studies that have demonstrated the power of choice architecture tools and techniques. This discussion reinforces the importance of choice architecture in the marketing toolbox.

Equally important, Johnson does an admirable job of explaining why choice architecture works. Unfortunately, many resources about choice architecture - and the related concept of "nudging" - describe the tools, but don't address why the tools are effective.

Johnson fully appreciates the importance of understanding "why" and "how" choice architecture works. He writes:  "Without understanding the processes underlying choice architecture, we can't be responsible designers [his term for choice architects]. Knowing how choice architecture works will allow us to invent new and more effective tools."

Marketers present choices in almost every communication they create for their potential buyers. Therefore, whether they realize it or not, marketers regularly function as choice architects. The Elements of Choice provides insights that can enable marketers to design and present these choices in ways that will improve marketing performance.

[Research Round-Up] Two Studies Explore the State of B2B Marketing

(This month's Research Round-Up features a research-based white paper by Winterberry Group that addresses the current state and future direction of B2B marketing and a wide-ranging research report by Livestorm, mention, and Jotform that is based on a global survey of marketers.)

Source:  Winterberry Group

Outlook for B2B Marketing:  A Market in Transformation by Winterberry Group (sponsored by the ANA and Anteriad)

• Based on a survey of 204 marketers across the United States (20%), France (13%), Germany (17%), and the UK (20%)
• 68.5% of respondents were with companies having between $100 million and $1 billion in annual revenue
• Survey conducted in March 2023
• Also based on more than two dozen interviews with brand, agency, and vendor executives conducted in February and March 2023

This research-based white paper by Winterberry Group provides valuable insights on several issues relating to the current state and likely future evolution of B2B marketing.

The paper discusses the dramatic impact of the COVID-19 pandemic on B2B marketing. Many industry observers argue that the pandemic greatly accelerated a process of transformation in B2B marketing that began several years ago.

Winterberry Group identified nine trends that are having the greatest impact on B2B marketing.

• The move of younger B2B buyers into positions of greater authority is driving a systemic change in buying behavior.

• More buying journeys will begin and end online, but the overall journey will continue to include both online and offline interactions.

• B2B e-commerce will continue to grow significantly.

• Authoritative thought leadership content, combined with effective creative, will be increasingly important to building brand trust.

• Artificial intelligence will transform content and creative execution.

• Data will play an increasingly important role in enabling better marketing decisions, but it's likely that privacy regulations and concerns will also increase.

• Utilization of marketing and sales technologies will increase, but the emphasis will be more on maximizing the value of existing technologies rather than on constantly adding new applications.

• B2B marketing organizations and the skillsets required of B2B marketers will be constantly evolving.

• B2B marketing budgets will continue to shift to digital, but this shift won't be as pronounced as is often found in B2C companies.

All of these trends are discussed in detail in the white paper, and I recommend that you read the entire paper.

Source:  Livestorm, mention, and Jotform

Marketing Manager Mindset Report 2023 by Livestorm, mention, and Jotform

• Based on a survey of 693 marketing decision-makers
• 46.1% of the respondents were director-level or above
• 36.4% of the respondents were with B2B companies
• 78% of the respondents were with companies having 500 or fewer employees
• The report does not state when the survey was conducted

This survey focused on five principal areas - marketing budgets, marketing strategy, marketing trends, content marketing, and social media marketing. The report provides separate response data for four types of organizations - B2B companies, B2C companies, agencies, and government/non-profit organizations.

Here are some of the major survey findings relating to B2B companies.

Marketing Budgets

Thirty-eight percent (38%) of the B2B respondents said their marketing budget increased this year compared to 2022, while 30% said their budget stayed the same, and 26% reported a decrease.

Marketing Strategy

The top three marketing goals for 2023 identified by B2B respondents were to increase brand awareness (59.9%), generate more leads (59.9%), and increase sales (56.3%).

The two most important digital marketing channels identified by B2B respondents were content marketing (76%) and organic search (74%). The next three most important channels were referral marketing (65%), email marketing (62%), and paid search advertising (61%).

Marketing Trends

This study found that the uncertain economic environment of the past several months had affected the strategic marketing decisions at most B2B companies. Only 24% of the B2B respondents said their marketing decisions had not been affected by the macroeconomic climate.

The top three impacts identified by B2B respondents were:

• Reduced marketing budget (36%)
• Change in pricing model (25%)
• Change in business model (21%)

Content Marketing

The three most important content marketing goals identified by B2B respondents were inbound lead generation (59%), improve SEO (56%), and improve brand awareness (55%).

The three types of content most widely produced by B2B companies were blog articles (72%), videos (63%), and case studies (40%). Infographics came in a close fourth at 39%.

Eighty-three percent (83%) of the B2B respondents said they produce all or most of their marketing content in-house.

Social Media Marketing

The three most important social media goals for B2B respondents were to increase brand awareness (79%), generate leads (59%), and drive traffic to website (56%).

B2B respondents identified LinkedIn as the most widely used and most important social media channel. 

The Vital First Step of Your Marketing Planning for 2024

The fourth quarter of 2023 is only a few weeks away, and that means many B2B marketing leaders will soon begin planning for next year.

Marketing planning processes vary considerably across companies. The planning process in large enterprises can be quite formal, and the output is often a lengthy document replete with spreadsheets containing budget details and financial projections. The planning process in smaller companies tends to be less formal.

Regardless of whether your planning is formal or informal, one key to having a sound planning process is to start the process in the right way. Fortunately, a proven technique from military planning can help marketing leaders get their planning process started on the right basis.

For years, US military commanders at all levels have used a framework called METT-TC as an integral part of their planning process. METT-TC is a mnemonic that is designed to help commanders remember and prioritize what to analyze when planning a military operation.

METT-TC stands for mission, enemy, terrain, troops available, time, and civil considerations. These six factors define the environment in which any military operation will be conducted, and commanders must thoroughly analyze each of these factors to develop sound operational plans.

When I work with a client to develop a marketing plan, I begin with an analysis of four environmental factors, and I've created a mnemonic for these factors that serves much the same purpose as METT-TC. My mnemonic is MEC-R, which stands for mission, economic/legal environment, competitive landscape, and resources available.

Mission Is "First Among Equals"

These four factors are all important, but mission is clearly the "first among equals" because it provides the critical starting point for a sound planning process. Mission occupies this pivotal position for two reasons.

First, to maximize impact and effectiveness, all marketing activities must be aligned with, and supportive of, a clearly defined mission. With every proposed marketing initiative, you should ask:  "How will this initiative help us fulfill our mission?" Obviously, you can't answer this question if you don't have a clear picture of what your marketing mission is.

The second reason is equally important. To be a successful marketing leader, you need the support of your CEO and other senior company leaders. Your chances of gaining and keeping that support will be higher if you and the other members of your company's senior leadership team have a common understanding of marketing's mission.

Therefore, before you begin any detailed planning for next year, you need to have an open and frank discussion with your senior company leaders about the core mission of marketing in your organization.

More specifically, you should prepare a clear and concise high-level description of your proposed marketing mission and share it with your senior management team. The goal, of course, is to have your senior leadership team endorse your mission description.

The Core Mission of Marketing

So, what is the core mission of marketing? I'm always skeptical of marketing principles or methods that purport to be universal. Competitive conditions can vary considerably across companies, and that usually requires a company to develop business and marketing strategies that fit its unique circumstances. But, this is the "exception that proves the rule."

Every marketing organization in a for-profit company has a twofold mission, both aspects of which are linked to revenue growth. It must run programs that will generate revenue in the short term, and also design and execute programs that will lay a solid foundation for long-term revenue growth.

The need to focus simultaneously on the short term and the long term is not unique to marketing, but this can be particularly challenging for marketers. For the past several years, marketing leaders have faced increasing demands to prove the value of their activities and programs. Overall, this has been a positive development, but it can have a dark side.

Marketing programs that produce a quick impact on revenue are relatively easy to measure, and their results can be seen in a matter of a few weeks or months. However, programs whose impacts are several steps removed from the buying decisions that generate revenue are much more difficult to measure, and they may not produce visible results for a year or more.

Under these circumstances, marketing leaders often face pressures to shift resources to marketing programs that can deliver quick and easily measurable results. Unfortunately, such a shift can cause companies to under-invest in longer-term marketing activities and programs, thus placing future revenue growth at risk.

Producing both short-term and long-term revenue growth is the core marketing mission at any for-profit company, and the company's senior leadership team must understand and endorse this mission. Therefore, communicating this mission to your company's senior leaders and obtaining their buy-in is the essential first step in your marketing planning for 2024.

Image courtesy of fdecomite via Flickr (CC). 

When You Should (and Shouldn't) Rely on Correlation

The march to data-driven marketing in recent years has been as relentless as the flow of lava down the sides of an erupting volcano.

The use of data in marketing is by no means new, but marketers now have access to a vast amount of data regarding customers and potential buyers. Equally important, they also have access to powerful and affordable analytics technologies.

Today, it's nearly impossible to find a marketer who doesn't think using the right data in the right ways can improve marketing performance.

Much of the heavy lifting in marketing data analysis involves correlation. In simple terms, correlation is a relationship between phenomena or things - "variables" in the lingo of math and statistics - that tend to vary or occur together in ways that aren't due to chance alone.

It's not surprising that correlation plays such a central role in marketing analytics. A single data point can provide useful information, but the real power of analytics is its ability to identify and quantify relationships between two or more "variables" in your marketing data. Understanding these relationships can enable marketers to make decisions that improve marketing performance.

Correlation ≠ Causation

One of the fundamental principles of data analysis is that correlation does not establish causation. In other words, data analysis may show that two events or conditions are strongly correlated statistically, but this alone doesn't prove that one of the events or conditions caused the other.

The following chart provides an illustrative example of why marketers must never forget the distinction between correlation and causation. It shows that from 1999 through 2009 there was a strong correlation ( r = 0.99789126 for you data geeks) between US spending on science, space, and technology, and the number of suicides by hanging, strangulation, and suffocation. (Note:  To see this and other nonsensical correlations take a look at Spurious Correlations.)

Source:  Tyler Vigen, Spurious Correlations

I doubt any of us would argue that there's a causal relationship between these two variables (despite the strong correlation) because they just don't have a plausible relationship. In marketing, however, it's easy to encounter events that are strongly correlated and have a plausible cause-and-effect relationship. The problem is, the causal relationship, while plausible, can be weak or nonexistent.

When To Rely On Correlation

It's preferable, of course, to base marketing decisions and actions on proven cause-and-effect relationships, but this may not always be realistic or even possible. Proving the existence of a causal relationship typically requires the use of a well-designed and tightly controlled experiment. In marketing, such experiments can be easy to conduct in some situations, but difficult, if not impossible, to run in others.

Under these circumstances, the real question is:  When should marketers act based on a correlation?

David Ritter with the Boston Consulting Group described a process for answering this question in an article published on the Harvard Business Review website a few years ago. I've used Ritter's process - with a couple of minor modifications - numerous times in my work with clients, and I've found it to be effective at focusing the attention of decision-makers on the right issues.

The diagram below is my adaptation of Ritter's framework.

Whether you should rely on a correlation depends primarily on two factors - your confidence in the correlation as an indicator of cause and effect, and the balance of risks and rewards.

Confidence in the correlation - The first factor is your level of confidence that the correlation points to a real cause-and-effect relationship. This factor is in turn a function of two things:

• How often the correlation has occurred in the past. The more frequently events have occurred together, the more likely it is they are causally related.

• The number of possible explanations for the effect under consideration. For example, your data may show a strong correlation between the number of marketing emails sent and revenue growth during a given period. But, if there are several plausible explanations for the increased revenue, you have less reason to think there's a causal connection between the number of emails sent and revenue growth.

The balance of risks and rewards - The second factor involved in determining whether you should rely on a correlation is an evaluation of risks and rewards. Any decision based on a correlation should include an assessment of the potential risks and benefits associated with the action.

The above diagram illustrates how these two factors are used together to help you decide whether you should act based on a correlation.

I need to make two points about using this framework. First, it's important to go through this analysis for each action you're considering. When you identify a correlation, there will probably be several ways you could act on that correlation. Each option should be evaluated separately because they will probably have different risk-reward profiles.

It's also important to consider the size of the "gap" between the potential risks and rewards. For example, if a potential action has huge potential benefits and very low risks, you may want to act even if your confidence that the correlation indicates a cause-and-effect relationship isn't very high.

Top image courtesy of Global Panorama via Flickr (CC).

[Book Review] An Insightful Guide to Customer Experience Innovation

Source:  BenBella Books, Inc.

Innovation has long been an important element of business success. For years, astute business leaders have looked for ways to improve the quality and value of the products or services they offer.

More recently, business leaders have recognized that delivering great customer experiences is vital to achieving competitive success.

A new book by Allen Adamson - Seeing the How:  Transforming What People Do, Not Buy, to Gain Market Advantage (Matt Holt, an imprint of BenBella Books, Inc., 2023) - brings innovation and customer experience together to describe a recipe for creating competitive advantage that some of today's most successful companies have adopted. 

Allen Adamson is a recognized expert in marketing and branding. He is currently a managing partner of Metaforce, a marketing consultancy that works with clients on strategy development, go-to-market planning, branding, creative, and activation. Prior to Metaforce, Adamson was the chairman of Landor Associates, a full-spectrum brand consultancy.

What's In the Book

The central focus of Seeing the How is experience innovation, which Adamson describes as reimagining how people could do the things they are already doing in ways that would make the experience faster, easier, and/or more satisfying.

An experience innovation that is profound enough to trigger a large-scale change in customer behavior can rightly be called a disruptive experience innovation.

Adamson argues that many businesses have achieved success and built competitive advantage by designing and delivering innovative experiences around everyday activities. He writes that these companies are finding success, ". . . not in making something new, not in creating new tech to do something, but in changing the experience of doing what we were going to do anyway." He calls it rethinking the how, not the what.

Most of Seeing the How is devoted to discussing eight "lenses" that entrepreneurial marketers and other business leaders can use to identify and seize opportunities to create innovative experiences. Adamson discusses each of these lenses in a separate chapter and includes several examples of companies that have used each lens to achieve success.

Here's a quick summary of the eight lenses.

Focus in and drill down - Identify a specific problem or friction point in the customer experience and find a way to solve that problem or reduce the friction. Examples:  1-800-Contacts, Calendly.

Customize and make it personal - Consider "how you can take what you do and know best and make it specific to the region, type, or personality of your customer." Examples:  Netflix, Stitch Fix.

Joining Forces - "Take what you do so well and work with someone else who does what they do well" to deliver an experience that neither organization could deliver on its own. Examples:  Casper (Target), Audible (Apple).

See like a concierge - Develop the expertise and ability "to solve problems better and faster than the average person can on their own, even after hours of research." Examples:  Apple (Genius Bar), Ford, Sodexo.

Go the rental route - Look for opportunities to "rent" a product or service for a particular period, thus eliminating the negative aspects of ownership. Examples:  Rent the Runway, United Rentals.

Approach things as a broker - Look for opportunities to create a two-sided marketplace. Examples:  Uber, Airbnb.

Explore virtual options - Identify opportunities to build a virtual business in a product or service category where virtual businesses don't exist. Examples:  Peleton, Coursehorse.

Getting close to the customer - Look for opportunities to eliminate the need to rely on intermediaries. Examples:  Apple (its retail stores), Warby Parker.

My Take

Seeing the How will be a valuable resource for anyone who has responsibility for driving revenue growth at their company. Allen Adamson argues that customer experiences are now responsible for more growth than product or service differentiation. Therefore, in today's business environment, delivering innovative customer experiences has become a strategic imperative for most companies.

Seeing the How is an enjoyable read because Adamson's writing style is engaging and because he devotes much of the book's content to stories about companies that have achieved dramatic success by creating innovative customer experiences. This narrative approach makes it easy to read the book in bite-sized portions.

The "lenses" Adamson discusses in the book constitute a useful and valuable framework that can help business leaders identify opportunities to innovate the customer experiences they provide. But Adamson also makes the point that you won't get the full benefit of using the lenses unless you have a deep understanding of the existing customer journey or journeys.

Adamson rightly observes that this level of understanding is hard to gain. One primary reason is that it's difficult for customers to describe an experience that does not yet exist, and yet creating a new experience is one of the requirements for a truly disruptive experience innovation.

[Research Round-Up] LinkedIn/Ipsos Survey Examines the State of B2B Marketing

Source:  LinkedIn and Ipsos

(This month's Research Round-Up discusses some of the significant findings from a recent global survey of B2B business and marketing leaders conducted by LinkedIn and Ipsos.)

This spring, LinkedIn and Ipsos conducted a significant survey of B2B business and marketing leaders located around the world. The B2B Marketing Benchmark survey used a sample of 1,954 B2B leaders from eight countries. Survey respondents were CFOs, CMOs, and senior-level marketers.

The survey included participants affiliated with companies of various sizes operating in a variety of industries. Survey data was collected from March 24 through May 5, 2023.

LinkedIn and Ipsos reported some survey findings for subsets of the total survey sample. In the survey report, the term B2B leaders refers to the full sample of survey respondents. The term B2B marketing leaders refers to CMOs and other senior marketers (81% of the total survey sample). The term C-suite refers to CMOs and CFOs (38% of the total survey sample).

The objective of this research was to examine several factors currently affecting B2B marketing, including the state of marketing budgets and spending priorities, and the strategies and tactics B2B marketers are using to drive growth. Here's a brief summary of some of the significant findings from this important survey.

Marketing Budgets and Spending Priorities

Despite the uncertain economic environment of the past several months, most respondents in this survey reported that their marketing budgets are in reasonably good shape. About 6 in 10 (59%) of the respondents said their marketing budget had increased over the past year. And two-thirds (67%) said they expect their marketing budget to increase over the next year.

LinkedIn and Ipsos asked survey respondents to rank four marketing objectives in terms of how much of their marketing budget would be allocated to each objective. The following table shows the percentage of survey respondents who ranked each objective as their top spending priority.

Unfortunately, the survey report doesn't include a definition of "Lead Generation" or "Demand Generation." So, it's impossible to determine how these objectives were defined in the survey, or whether they were defined at all. If they weren't defined in the survey instrument, it may be more accurate to combine the percentages shown for these objectives in the above table.

It's also somewhat surprising that only 15% of the survey respondents ranked account-based marketing as their top spending priority.

The LinkedIn/Ipsos survey clearly showed that survey respondents are primarily interested in acquiring new customers. Overall, about 70% of the respondents said their marketing budget is primarily focused on generating new business rather than on retaining existing customers.

Marketing Strategies and Techniques

LinkedIn and Ipsos also asked survey participants about their views on various marketing strategies and techniques.

The survey revealed that most B2B marketing leaders place significant importance on brand building.

• 70% said their team understands the importance of brand building and that they have the right creative skills on their team to support brand-building efforts.

• 60% said their company had increased spending on growing brand awareness in the past year.

• 59% said their C-suite had increased the importance of brand building given economic conditions.

The survey also asked B2B marketing leaders what marketing techniques they plan to use in the coming year. The three most frequently identified techniques were:

• In-person events (60%)

• Video (59%)

• Thought leadership content (57%)

The two marketing techniques deemed to be most effective by B2B marketing leaders were in-person events (21%) and thought leadership (20%).

The survey report contains many other valuable insights, including several findings about the evolution of the CMO role and the skills that are needed in marketing. And, like almost every other survey I've reviewed in the past several months, this one also has some interesting findings relating to artificial intelligence.

This is an important survey, and I encourage you to review the full 86-page report.

How to Take the "Vanity" Out of Marketing Metrics

Marketers are often told to avoid using "vanity metrics" to measure marketing performance. Vanity metrics have been described in several ways, but the term is frequently applied to social media and other types of "engagement" and "consumption" metrics - things such as impressions, "likes," shares, and page views.

The primary criticism of vanity metrics is that they don't have a measurable relationship to strategic business outcomes. So, for example, the number of shares or likes received by your social media content might have doubled over a given period, but there was no meaningful growth in your revenue or market share over that period.

The real problem with vanity metrics is not with the metrics themselves, but rather with the failure of marketers to place those metrics in the appropriate context. In fact, the need to provide context applies to all marketing metrics, not just those traditionally called vanity metrics.

Marketers need to take two essential steps to create an effective and credible marketing performance measurement system. First, they need to link each of their marketing activities to one or more specific objectives. And second, they need to link their marketing objectives directly or indirectly to one or more strategic business outcomes, typically revenue or market share growth.

These two steps are critical to building a marketing measurement system that will support better decision-making by marketers and produce data that will be credible to senior company leaders.

Objectives, Activities, and Metrics

The three core components of a well-designed marketing performance measurement system are objectives, activities, and metrics. The following diagram depicts a small portion of a marketing measurement system for a hypothetical B2B company. It illustrates how the three measurement components relate to each other.

Marketing Objectives

The foundation of any effective and credible marketing performance measurement system is a set of objectives that collectively describe a company's marketing strategy. At the most basic level, a marketing strategy is a growth hypothesis that states:  "If we achieve these objectives, we will drive revenue and/or market share growth and add value to our company."

The marketing objective shown in the above diagram is to increase brand/company awareness among potential buyers in the company's target market.

Marketing Activities

The second element of a marketing performance measurement system is the set of marketing activities a company chooses to perform to achieve its marketing objectives. In a well-designed system, each marketing objective is linked to one or more objectives. The logic of this linkage is:  "If we perform these activities well, we will achieve our marketing objective(s)."

The above diagram shows two marketing activities - publishing high-quality blog content and posting engaging content on selected social media networks. The arrows indicate that the company's marketers believe that performing these activities will increase brand awareness.

The arrow connecting "Social Media" to "Blog" indicates that the company's marketers plan to use some social media posts to promote their blog content, which they believe will improve the performance of the blog.

Marketing Metrics

Marketing metrics are the third component of a marketing performance measurement system. In our example, a part of the company's marketing strategy is based on the hypothesis that blogging and being active on social media will increase brand awareness. Metrics are used to test the validity of this hypothesis.

The role of metrics is to quantify the immediate results of performing an activity. Marketers then use those results to reveal the progress (or lack of progress) toward achieving a particular marketing objective. In our example, the company is using blog metrics (views, subscriptions, etc.) and social media metrics (likes, shares, etc.) to show the change in brand awareness.

Connecting Marketing Objectives to Strategic Business Outcomes

Linking marketing activities to marketing objectives, and then using metrics to quantify the immediate results produced by each activity is a fairly straightforward task. But, it's also important to link marketing objectives (and their related activities) to strategic business outcomes like revenue or market share growth.

Marketing creates business value through activities that operate at different stages of the value-creation process. However, many marketing activities contribute to business value only indirectly, and some will be several steps removed from the strategic business outcomes they affect. This makes it difficult for marketing leaders to show the value of such "remote" marketing activities.

I described how to address this issue in a detailed post several months ago, so I won't repeat all of that discussion here. However, the solution basically involves describing the "chain" of linked marketing objectives (and the related activities) that ultimately leads to a strategic business outcome.

The following diagram depicts a simplified version of one of these marketing value chains.

This diagram is based on the example I've been using in this post. It shows how our hypothetical company's marketers have connected blogging and social media involvement to the strategic revenue growth objective.

When the link between these marketing objectives and revenue growth is made explicit, blogging and social media metrics that might otherwise be viewed as vanity metrics become relevant and meaningful for measuring marketing performance.

Top image courtesy of ESO via Flickr (CC).