Marketing Metrics in the B2B Context

Introduction

Siccion Marketing Inc. (SMI) was established in 1965 by Engr. Cayetano B. Siccion as Siccion Surveying Equipment Manufacturing in Manila, Philippines. SMI is one of the Philippines’ oldest suppliers of geodetic equipment. From its modest beginnings as a husband-and-wife business, SMI today has expanded its repertoire to include engineering laboratory equipment, construction equipment, and the recently launched Primetech, its services venture.

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Topcon GLS-2000 3D Laser Scanner

SMI’s strategy is to procure products of the highest quality and distribute them locally in the Philippines. Today, SMI is the sole Philippine distributor of 3 of the most respected brands in the industry: Topcon, for its surveying line, Controls, for the laboratory line, and Imer for its construction line. Armed with this brands, SMI serves the country’s largest construction and development companies, government agencies, universities and colleges, and private engineers and surveyors.

Prior to moving to Australia, I was fortunate enough to be part of SMI as a member of their marketing department. We were responsible for promoting the company’s products through conducting seminars, attending conventions, and producing marketing materials.

Attending board meetings were always stressful, especially when we were asked to present evidence of the impact of the marketing efforts when justifying the company resources spent and when requesting financial allocation for future projects.

At the time, the only performance indicator we used were sales figures which were difficult to use to quantify marketing efforts due to them being influenced by factors outside the department (Amber & Roberts, 2008), such as efforts of the sales department.

Marketing Metrics

Ambler and Roberts (2008) identifies 3 traditional metrics used in marketing, each with its own disadvantages. First is Return Investment (ROI). The problem with ROI is that companies usually treat marketing as expenses and not as investments (Amber & Roberts, 2008). It also promotes underperformance and focusing on short-term goals (Amber & Roberts, 2008).

Second is Discounted Cash Flow (DCF) which include the following values: Net Present Value (NPV), brand valuation, customer lifetime value (CLV),  customer equity, and brand valuation. The lack of validity that forecasts are precise, and taking credit for future marketing ventures are the drawbacks of this indicator (Amber & Roberts, 2008). Last is Return on Customer (ROC), which has similar limitations to DCF (Amber & Roberts, 2008).

Stevens (2006) recommends the use of several metrics specifically for business to business enterprises. It should be noted, however, that these indicators do have their own disadvantages and limitations (Stevens, 2006).

First among the recommended indicators is Cost per Lead (Stevens, 2006). It is derived by dividing the total cost of the marketing campaign by the number of leads generated (Stevens, 2006). The limitation in this approach is the denominator used in the calculation as it could either be inquiries or qualified leads (Stevens, 2006). Stevens (2016) stresses that whichever factor is used, it must be consistent.

Second is Inquiry to Lead conversion rate which is a function of the quality of the initial inquiry and the precision of the qualification criteria (Stevens, 2006). If used correctly this conversion rate can warn marketers of any adjustments needed in their strategy (Stevens, 2006). A limitation of this indicator is that cooperation from the sales management may be needed (Stevens, 2006).

Third is the Lead to Sales conversion rate which can help determine if there is any where additional focus and effort must be spent between marketing and sales (Stevens, 2006).

Lamons (2007) suggests a different approach. He suggests measuring customer awareness or recall of specific messages (Lamons, 2007). This could be accomplished through feedback of tag words or phrases from the organisations marketing campaigns (Lamons, 2007).

Lamons (2007) also proposes two “rules” in dealing with marketing metrics for B2B. First, is that the marketer has to determine what is important to the top management which can be discussed through meetings (Lamons, 2007). And second is “to pick an attribute your company or product needs to associated with, and own that attribute” as it helpr focus brand image (Lamons, 2007).

Conclusion

Marketing metrics in B2B context is certainly challenging, but it is necessary. The adoption of other types of metrics may help marketers better evaluate the performance of their strategies and campaigns and, in turn, help them better justify the resources used for marketing. It may also help open the minds of more “traditional” and “conservative” top tier management towards marketing.

References:

Amler, T., & Robert, J. (2008). Assessing marketing performance: don’t settle for a silver metric. Journal of Marketing Management, 24(7-8), pp733-750. Retrieved from http://ezproxy.deakin.edu.au/login?url=http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=34452722&site=eds-live&scope=site

Lamons, B. (2007). Tie distinctive brand attribute to metrics. Marketing News, 41(7), p6. Retrieved from http://ezproxy.deakin.edu.au/login?url=http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=24860330&site=ehost-live&scope=site

Stevens, R. (2006). Easy as 1, 2, 3. Direct, 18(9), pp41-42. Retrieved from http://ezproxy.deakin.edu.au/login?url=http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=22096901&site=ehost-live&scope=site

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