Customer satisfaction, and hence retention, is always high whenever companies deliver on quality. However, firms need to understand how efficient their operations are in achieving the desired objectives. Managers need to have accurate information about their business performance, and they accomplish this via the development and application of effective metrics ("What are Metrics and Why are they Important?", 2017). These measures allow the business to improve while focusing the resources on the most critical aspects. Companies can employ a broad range of metrics including the mandatory ones and those meant to track and improve efficiency and profits while reducing savings.
Effective metrics must be readily understood by the employees since vagueness makes them ineffective in driving the growth strategy. Metrics are a critical part of the control function since they give an accurate representation of daily measurements ("What are Metrics and Why are they Important?", 2017). It is easy to manage what is measurable, and these measures allow managers to determine whether to interfere with a process or not. They also indicate when a particular process is going according to customer recommendations. The concrete figures bring an element of objectivity since they alleviate any vagueness that may cloud the judgment of managers. Metrics also act as a scoreboard for the employees to compare their performance against the target figures in all critical areas of an organization.
Five Metrics to Measure Innovation
Empirical results have often reported negative, positive, or zero effects that innovation has on the performance of a firm while most literature understands the importance of technological advancement (Cruz-Cazares et al., 2013). Innovation is often measured by considering the inputs and outputs with different variations in every company. The effect of innovations inputs and the long-term results of the outputs are some conventional approaches. A third is a link between the performance of the firm and the innovation outputs. There are various input and output metrics that have been utilized to this effect:
R&D Expenditure- this is the money that the company spends to fund research that leads to innovations (Kaplan, 2017). The amount determines the commitment of the firm in pursuing innovative ideas.
The number of new patents filled within a year- this metric indicates the rate of new inventions that are coming up (Cruz-Cazares et al., 2013). A significant number shows a high level of innovation in a particular firm and vice versa.
Percentage sales from newly introduced products over a specific period- a high number mean the new products were well received in the market, and hence it is a positive measure of innovation. If the sales were low, the product was not a very thoughtful one, and thus it is a negative measure.
Percentage of ideas submitted by company employees- a high amount means that the workers in a firm are intensely involved in the innovation process. When a higher figure comes from outside the business, it implies that the staff is not quite innovative and hence is a negative measure.
Quality of Intellectual Property assets- it measures the percentage business value of a particular patent to the firm. Highly valuable patents are a definite measure of innovation capability while low-value ones are the opposite.
Five Metrics to Measure Marketing Strategy
Marketing metrics are aimed at increasing accountability by linking all the activities with the financial measures. It estimates how much a marketing strategy is contributing towards the success of an organization (Mintz & Currim, 2013). As more managers increase their focus on marketing metrics, others are advocating for inclusion of financial parameters in the assessment of marketing-mix performance. In marketing, metrics give us information about the number of people who are responding to our products or advertisements. These estimations give managers the ability to satisfy a particular market adequately. Studies have shown that an increase of metric use in organizations leads to improvements in the marketing-mix performance (Mintz & Currim, 2013). There are numerous metrics used in measuring the success of the marketing strategy:
Page views- internet advertising is an avenue that is explored by many organizations. This metric counts the number of pages clicked by visitors during a specified period. If the number of views exceeds that of visitors, it means that they are opening multiple pages thus, the content is engaging. The more the views, the higher the conversion rate into financial gains.
Social media followers- online marketing has forced almost every company to have a social media presence for interacting with clients. The number of followers on Facebook or Twitter can be major determinants of the marketing strategys success. A high number of people means many individuals are identifying with the firms product or service.
Share of wallet- it is a measure of the total consumer expenditure on a companys products. Marketers looking to boost revenue will look for ways to increase this percentage through sales and receive more money from customers.
Availability/out of stock percentage- it is a measure of how often a companys products are available for buyers. If the item displays a high percentage of running out of stock, it means the consumers are appreciating. Marketing managers will make informed decisions on how to increase distribution and inventory.
Market share- it is the percentage of sales earned by an organization within a specific industry. A high share implies that the company's products are in high demand and hence the revenues will be high (Hacioglu & Gok, 2013). A low percentage forces managers to come up with ideas to boost sales.
Metrics for Coca-Cola
Coca-Cola is a multinational that practices product differentiation. The company should use the percentage of sales from newly introduced products to gauge their innovativeness. A low figure will mean poor market acceptance and the managers will act accordingly to make improvements. They should track the source of their visitors by country to realize regions that have the highest marketing potential. It could be accomplished by curating comments on social media or the number of views on their website. They could also identify the favorite flavor of soft drink by counting the number of mentions of a specific brand on all online platforms. This method will enable the company to narrow its marketing efforts to uniquely suited regions hence high efficiency.
Cruz-Cazares, C., Bayona-Saez, C., & Garcia-Marco, T. (2013). You cant manage right what you cant measure well: Technological innovation efficiency. Research Policy, 42(6-7), 1239-1250. http://dx.doi.org/10.1016/j.respol.2013.03.012
Hacioglu, G., & Gok, O. (2013). Marketing performance measurement: marketing metrics in Turkish firms. Journal of Business Economics and Management, 14(sup1), S413-S432. http://dx.doi.org/10.3846/16111699.2012.729156
Kaplan, S. (2017). Innovation Metrics: Measuring Innovation for Business Growth. Innovation Point. Retrieved 16 November 2017, from http://www.innovation-point.com/innovationmetrics.htm
Mintz, O., & Currim, I. (2013). What Drives Managerial Use of Marketing and Financial Metrics and Does Metric Use Affect Performance of Marketing-Mix Activities? Journal of Marketing, 77(2), 17-40. http://dx.doi.org/10.1509/jm.11.0463
What are Metrics and Why are they Important?. (2017). Managementstudyguide.com. Retrieved 16 November 2017, from http://www.managementstudyguide.com/what-are-metrics.htm
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