How do you know if you’re successful? Well, if you are a student, a key performance indicator (KPI) is your grade point average. If you are a hockey goalie, it’s your goals against average. If you are a sales rep, it’s your sales relative to quota. But if you are a marketer, what KPI do you use?
The wide array of promotion channels now available to pharmaceutical marketers has provided a significant opportunity to engage customers based upon their preferences. However, measuring the success of these marketing campaigns has become more challenging. Today, the pharmaceutical industry tends to measure engagement with our tactics. A few examples:
- The e-mail open rate was 2%.
- We had 5,000 hits on the product Web page last month.
- Session time on the Web site averaged 1.5 minutes.
- The average duration of a completed call from the call center was 90 seconds.
While these metrics may generate some interest, they provide little information as to whether these tactics were successful. And understanding what action to take based upon this data is not clear. Perhaps adding benchmarks will provide the appropriate context:
- The e-mail open rate was 2%, compared with a benchmark of 1%.
- We had 5,000 hits on the product Web page last month, compared with a benchmark of 4,000.
- Session time on the Web site averaged 1.5 minutes, compared with a benchmark of 1 minute.
- The average duration of a completed call from the call center was 90 seconds, compared with a benchmark of 60 seconds.
We beat the benchmark in all cases. Were we successful? If our only goal was to focus on measuring engagement with individual marketing tactics, then yes. But this KPI rarely tells the whole story; to manage the business successfully, we need to know more. Specifically, each of these marketing tactics cost money to produce and deploy, and we want to know whether that was a smart investment. And each tactic delivered a customer experience, leaving an impression with that customer of our company, so we want to know whether the experience was positive and if the customer will engage with us again. What we need are new KPIs.
There are three principles that we use in developing KPIs:
- Longitudinal customer KPIs, not point-in-time tactic KPIs. The KPI examples above were all tactic-level KPIs describing behavior at a point in time. However, longitudinal customer-level KPIs are significantly more insightful. For example, knowing that the top 5% of my customers consistently engaged with my sales and marketing programs over the past six months is much more valuable than knowing what the open rate was for a single e-mail delivered last April.
To better understand customers, combine KPIs. Often, a KPI will describe a single aspect of the promotion tactic. Yet this shows only a small sliver of what is really happening. For each promotion campaign, we are interested in understanding:
- Whether the customer has engaged consistently over time
- If it generated revenue
- Why the customer engaged (or didn’t engage)
By combining all three KPIs, we know who has consistently engaged (and who has modestly engaged or not engaged) over time, how that has changed sales and why the customer engaged. It is this complete picture that enables us to obtain a clear view of our success in the marketplace and how to continue to optimize performance going forward.
- Link KPIs to the business. Prior to designing and launching KPIs, it is important to start with the business question, identify what information is needed, how the KPI will be calculated and how frequently, and who will use it. If a business decision won’t be made using the KPI, then don’t produce it.
With more and more customer data available, companies must focus on those KPIs that truly inform smart business decisions. What business decisions are made from KPIs produced in your company?