A good friend challenged me to start writing a blog on how an Engineer can make sense of Marketing today. My experience, coupled with my academic background, can provide that lens. Here it is, challenge accepted, and YOU an unexpected audience. This article is the first post from a series of 12, which deconstructs how I see brand growth and communication. I welcome your feedback, as I am sure this habit will become better with time and promise to be brief. No one has time today to read 2000 word articles anymore.
Sales outcome is the ultimate KPI
To grow brands, you must generate sales; there is no other way. For any decision to optimize plans, use sales outcome as it is the best KPI, which correlates to growth. Focusing your efforts to analyze what drove a sale, you are on the way to make better marketing decisions. On top of this, sales outcome is the only KPI that can inform your future budget allocation when translated to Return on Investment. You might assume this is common sense, but it isn’t really in our industry? We often confuse Real Sales, with various upper funnel metrics of Purchase Intent or Purchase Propensity, or in the online space, we use Click-to-Basket or even Click-through as Sales. Unless the transaction has taken place unless the currency is exchanged for the product, you can’t say that’s a sale.
Purchase Intent is, unfortunately, still a long term best friend for the Marketing Research industry and its practitioner. Why? It’s easy to acquire via surveys, immensely facilitated by new digital technologies and offered for free by your media partners. But can you trust the research? Just ask 100 people if they’ll buy your brand, what is the incentive for them to say no? Is their response telling something about their status in society? Research has shown you are more inclined to say, “YES, I will buy a Porsche than saying YES to buying a cheaper Renault”). Is their response more likely to be the exact first option in the survey? Is their response conscious at that time but utterly unrelated to what their brain and emotions will guide the act of purchase at a later date? The answer to all those questions is YES. Future purchase intent questionnaires are genuinely biased and should be banned from any research that informs a marketing decision. I prefer to have 10 Real Sales studies, to 10.000 flawed “almost-sales-studies” of Purchase Intent.
Yes, and …
It’s not always easy to capture Sales, yet no one said it was. It’s tougher if you play in CPG vs. a pure-play Direct 2 Consumer brand. It’s tougher if you rely on third-party data, but not impossible. Mars is proof that an obsession with measuring sales is healthy and doesn’t limit your ability to learn. The closer you can get to personal level sales, the better decisions you can make. You can only attribute growth effects to penetration if you have personal level sales. Aggregation to the store level, geographic region, or even country, dilutes the signal in the noise and raises the requirements for experimental design.