With Charan Bagga I have just published an article in the Sloan Management Review (see the article here).
This central message is a bit cranky; it could be entitled, “annoying things that marketers do”. We highlight “…five of the best-known marketing metrics: market share, net promoter score, the value of a “like,” customer lifetime value, and ROI” (Bendle and Bagga, 2016, page 73) and criticize how these metrics are sometimes used. (We, perhaps a bit loosely, classify CLV as a metric). Our surveys show widespread confusion about metrics amongst marketers.
We discuss market share and return to a point that seems obvious, but isn’t widely appreciated. Namely, that market share may be useful but it isn’t an end in itself. Don’t think that simply improving market share is the key to success. There are plenty of ways to mess up your firm while boosting your market share.
We talk about the Net Promoter Score/System (NPS). Our key point is that NPS isn’t magic. Some of the claims made about NPS are simply too strong. I quite like our comparison to Guinness, which was sold as being “good for you”. NPS, like Guinness, may work well for you but don’t believe all the claims made about it.
We discuss value of a like on social media to dismiss the idea that the difference between a Facebook fan and non-fan should be used as a guide for social media spending as doing so ignores the problem of causation. We talk about how Customer Lifetime Value is widely misunderstood. Finally, we note that ROI is often used as just a shorthand for “good result”, which is a problem as ROI does have a specific definition.
We think that marketers need to improve their use of metrics to be taken more seriously in business. If marketers don’t understand their own metrics it is going to be hard to convince colleagues that marketers and their metrics matters.
Read: Neil T. Bendle and Charan K. Bagga (2016) The Metrics That Marketers Muddle, Spring, Sloan Management Review, Pages 73-82