What Key Marketing Metrics Should Small Business Owners Focus On?
At first glance, tracking the key metrics of your small business can often seem like a challenging and unnecessary task. However, for business owners who take the time to master this skill, the rewards can be tremendous. From attracting new customers to gaging the satisfaction of your existing client base, the data collected from a business metrics analysis will not only help you assess the effectiveness of your current practices, but will also show you which aspects need improvement. In episode #163, Gene Marks and special guest Kathy Bromage discuss which key metrics your small business should focus on.
0:32—Today’s Topic: Can Tracking Specific Key Metrics Help Improve My Small Business?
2:55—Tracking key metrics or business metrics is essentially using quantifiable data to measure the success of a specific practice, such as advertising or pricing. Small businesses can use his information to adjust their existing practices accordingly.
3:38—The most successful advertising campaigns are data driven. In these instances, advertising companies will typically buy their customers’ information so that they can understand how their clients think; they can then design a campaign around these preferences.
5:18—In order to gage how well the public perceives your small business, you need to find out your Net Promoter Score (NPS). This data can be obtained by surveying your distributors and customers about their interactions with your company.
6:48—Your NPS not only measures customer satisfaction, but also allows you to identify which specific factors are helping or hurting your business. Once identified, you can adjust these factors to drive more business.
8:39—Some of the metrics used to evaluate your business’s success among new customers, as opposed to existing ones, include the rate of customer conversion and the retention average of these converted clients.
10:02—If your campaigns or practices are not generating a 20% response rate from your target audience, it’s time to reevaluate them.
11:10—Small businesses that deal with distributors will typically spend 15-16% of their revenues on marketing; for direct businesses, this average can vary according to the market as well as their personal goals and budgets.
15:51—Although acquisition used to be the primary metric for measuring success, sentiment and retention factors have been proven to be more accurate predictors of customer satisfaction.
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Gene: Hi everybody and welcome to the Small Biz Ahead podcast, my name is Gene Marks. I’m here with Kathy Bromage, who is the Chief Marketing Officer, Communications Officer, here at The Hartford. And we’re going to talk about metrics. We’re going to talk about marketing and numbers and data, to hopefully help you figure out what metrics you can use to run your marketing programs in your business. But before we get started on that, we’re going to take a quick break and hear from our sponsor.
This podcast is brought to you by The Hartford. When the unexpected strikes, The Hartford strikes back for over 1 million small business customers with property, liability and worker’s compensation insurance, check out The Hartford’s small business insurance at TheHartford.com.
QUESTION: What Key Metrics Should Small Business Owners Focus On?
Gene: Okay, welcome back. And Kathy, welcome back. We’ve already had a couple conversations already about people. But listen, I’m an accountant, you’re an accountant. We can talk about numbers. For those of you who have not listened to any of our other couple conversations that Kathy and I have had, Kathy, you come from a financial background.
Kathy: I do.
Gene: Many years spent as a CPA. Which, that’s a Certified Public Accountant. Which is very bad that you let that lapse, I’m very disappointed in you. But somehow –
Kathy: I moved on to greener pastures.
Gene: Yeah that’s right, bigger and better things. But somehow, there was a position that was made for you here at The Hartford. Just again, just very quickly, what was that story again? That you moved into a marketing role from being an accountant?
Kathy: Well I mean, even if I just go back for a minute, I love to tell this story about how I got hired. So the company I had worked for was a technology company, it was acquired, they relocated to Atlanta. I’m looking for a job outside –
Gene: And you did financial work, to backup.
Kathy: Financial work. I decide that I’m going to network into insurance, and I didn’t have insurance expertise. And this is the insurance capital. But once in, you know I’m good. It’s the insurance capital. Long story short, I actually got hired. And I learned a lot from this because I didn’t know anything about insurance. And I was joining a company that employed folks that were subject matter experts, and I had a certain naivete. And the idea was that I would maybe ask questions that the company had maybe stopped asking itself a long time ago. And as a result cause us to rethink some of the things we did. So I got hired because I didn’t know a lot about the category. And the other piece was I was an extrovert working on a team that was largely introverted. That wasn’t in the job qualifications and that wasn’t in the spec for what they were looking for, but it was somebody who said I need to do something about the team dynamic that is different than the team’s composition today. It was a very important lesson for me to learn.
But my transition into marketing started with an opportunity to lead our direct to consumer business and personal lines. That was really mathematically driven. So you’re trying to figure out what’s the media mix I’m going to put in market to drive a response. Somebody to come in, get a quote, and purchase insurance. And you’re trying to optimize the different channels and how much you’re willing to spend within each channel and an aggregate to generate leads at an affordable cost. So my finance background was the transferable skill. And then I had a great team of folks who were creative geniuses, who had that covered and taught me a lot about that side of the business.
Gene: It’s all data driven though now, isn’t it?
Kathy: It is.
Gene: It is all about the data. I interviewed about a year ago, and I apologize because I forget the gentleman’s name. But he was the Chief Marketing Officer at Heineken. And they were going to start a campaign to introduce like a new line of beer and it was going to be at bars, restaurants. And they bought data, where they knew the exact demographic of the type of customers that were going to be in certain types of bars that were particularly like this type of, that they were going to offer. And he knew going into it, before they spent any money, that what the results of that campaign was likely to be. You know, you never know that. You know what I mean? Do you find that as well? Like when you start campaign, do you just, can you imagine a Marketing Officer now just sort of, just taking a chance. Just like shooting from the hip and going from it. You know? That doesn’t happen today.
Kathy: I suppose there are situations where that still happens. People are just true believer in just sort of the arts and crafts aspect of marketing.
Gene: Does that happen in a Fortune 500 company?
Kathy: No. No. But I’m going to come at it just a little bit differently. So in our direct to consumer business, as I was describing, it’s all data driven. And yes you can buy lists, and yes you can append your own data with list data and create segments and tailor your messaging and the whole nine yards. Where we’ve really been using data, inside a company that is largely distributing through distribution partners. So we don’t always have direct access to the consumer.
Gene: They’ve got the data on the consumer.
Kathy: They do, until they become a customer of ours. We’ve been using what we call a Net Promoter Score, but a pretty comprehensive study where we evaluate what are the drivers of a distributor being pleased with The Hartford and choosing to place business with us versus a competitor.
Gene: So let me back you up for a second and let… just the Net Promoter Score, which I’m going to ask you to –
Gene: Define that more. But you are, again, if you’re running a business and you’re listening to this podcast and you’re selling through distributors, independent people, whatever, and you need to have a way to gauge how effective they are and will be, the Net Promoter Score is something that could be helpful. So what is that and how do you use it?
Kathy: So Net Promoter Score, it’s been around a long time. But you basically ask somebody, would you recommend this company to your friends and family?
Gene: You’re asking the distributor or the consumer?
Kathy: Yes. Both. So you start with, I can’t get a customer until I’ve made the distributor happy. So I’m asking the distributor, would you recommend The Hartford to a friend or family member, on a scale of zero to ten.
Gene: And I apologize for, just specifically, is The Hartford asking them these questions, or do you have an independent, just like a survey firm or just somebody that’s asking on your behalf?
Kathy: We do both. But where we get the most value is we do a blind survey. So we ask somebody else to field the survey that we design. And we’re basically asking, say, a distributor, to evaluate The Hartford. You know, would you recommend us? That’s the first question. And then what we’ll do is we’ll ask them to evaluate us, as well as three other competitors on 20 attributes, zero to ten. And then we apply statistical techniques to determine what attributes are actually driving loyalty. So then we know how we’re performing, how we’re performing relative to the competition, and where to focus improvement.
We do the same thing with customers, though in that case it’s less about the competition and it’s more about our own execution. And it helps us to understand where we’re getting it right, and where we have room for improvement. And just as importantly, what interactions actually matter the most.
Gene: So this is so survey driven. And is this done, I mean this is a big company, so is this done mostly internally? All the conducting the surveys and bringing back the data and crunching the numbers? Or –
Kathy: Yes. But you know what? There are survey tools out there that are pretty inexpensive. And it really is, go back to, do you really understand or do you think you understand what matters to your customer, and are you getting the feedback that you need so that you can take action where action is likely to drive repeat business or referral business? We just have the complication of, we need to sell through a distribution system, so we need to satisfy both. But it is a pretty disciplined process where we’re getting feedback in enough granularity to understand. We do really well with handling billing. But maybe we need to do a better job explaining a price increase at renewal. And that’s how we focus our efforts to drive better customer experiences.
Gene: That’s fantastic. Okay. So that’s really good for existing distributors and existing customers and of course learning from them. Let’s talk about some metrics regarding new customers. Right? When you do campaigns, and you have a big marketing budget and you’ve got a lot of people. They’re doing content. This podcast, they’re doing certain campaigns, emailing, mailing, what all the different things. And like every business you’re looking for new customers. What metrics do you use to judge the effectiveness of a campaign for new business?
Kathy: So did we convert the number of customers, and did they stay with us.
Gene: Ah, so let’s dig into that. So first of all, you’re sending out a campaign, you say people convert. That means you sold them something. Correct?
Kathy: Yep. They did what you wanted them to do. They either, you wanted them to read a white paper –
Gene: I see. It’s not selling. Not necessarily selling.
Kathy: Or you wanted them to buy insurance. Not necessarily.
Gene: It’s an action.
Kathy: Or you wanted to cross sell something. Or you wanted to influence retention. You have campaigns focused on all of those things.
Gene: Got it. And this… go ahead, I’m sorry.
Kathy: So are you getting somebody to engage with whatever it is you sent them? And does that engagement lead to a positive outcome? It could be purchasing. It could be retaining longer. It could be, why don’t you try to do this online instead of on the phone. It could be selling another piece of business that makes sense for that particular customer.
Gene: So when you’re sending out these campaigns, you have multiple campaigns that are running. Do you have, from a metric standpoint, and again a lot of this depends on the industry and the business. But what do you consider to be a successful campaign? If you send out a hundred emails asking people to download, say a white paper for argument’s sake. What do you say, like wow, that worked really well. It’s a toughie.
Kathy: So this is, it totally depends on which business we’re talking about. So we are the number one company for disability insurance and we sell group insurance. If we could generate one new customer as a national account customer, that’s big premium business, that is a home run. Whereas for a small business, you know you’re really talking about if you’re not generating, you know, at least 20 percent response rate, it’s probably not worth the spend.
Gene: That’s helpful. That’s exactly what I was going for.
Kathy: So it’s really different. The metrics are appropriate to who you’re trying to reach and how much revenue is involved, will determine how much I can afford to spend or how much I need to convert.
Gene: Do you, I’m not sure, we can look this up separately. But do you know like what percentage of Hartford’s revenues go towards marketing? Do you know? And I ask that because business owners ask me, like, how much should I be spending on marketing? Ten percent of my revenues? Five percent of my revenues? Is that a number that, I don’t even know if you know the number, or if it’s –
Kathy: So it depends on what you want to call marketing. For some of our businesses, we are distributing through a sales force and we are equipping the sales force. And we’re paying a commission to the person who distributes. And if you were to add that up, that’s probably 15, 16 percent of revenue. In our direct businesses, it really is about, you know, what percentage of revenue you’re going to invest in new business versus retention. And that number varies depending upon how competitive we think we are, what the market conditions are. But you’re probably talking about a similar number.
Gene: Got it, okay.
Kathy: It’s just you’re spending it differently. In a direct business you’re spending it on advertising, and in a B to B business you’re spending it on your sales force, arming your sales force with what they need to promote your company, and then paying a commission to the person who is representing you.
Gene: What are your thoughts on advertising? Particularly for a small business.
Kathy: Wow. You know, I think you always have to get your name out there. Obviously the best way to get your name out there is through existing customers who refer you, but I just think you have to be visible in whatever way makes sense. So you should have a website, you should have a social presence. I think it’s just important that you show up when people are searching for information.
Gene: So branding is important. People should be recognizing The Hartford.
Kathy: I think it’s really important.
Gene: I mean The Hartford has partnerships with MLB and with AARP and other, just because it gets the logo out there. And that’s something that, you can’t really track that by metrics, but there’s this tangible thing. So how do you justify those non-trackable things to your bosses?
Kathy: So even with our MLB and our advertising, what we do measure is top of mind awareness. So what we’re trying to move is, are more customers, when asked the question when you think about personal insurance or when you think about small business insurance or you think about group benefits, what companies come to mind? We want to come to mind. And if, over time, we can demonstrate more people would name The Hartford when asked those questions, now we’ve at least gotten ourselves into the consideration set. So we do measure that and we measure that on an annual basis to make sure we’re making progress. Once they’re aware, well how does that show up? Are you getting more traffic to your website, are you getting more engagement in social channels, is that awareness translating into more activity on earned and owned properties?
Gene: It’s funny. You talk a lot about surveys.
Kathy: A lot.
Gene: You talk a lot about talking to your customers.
Kathy: Well to me it’s all about that. So my big thing with my own teams is, the notion that marketing being about advertising, those days are over. It’s not that advertising isn’t important, but in the days of social media, whatever you say, you’d better walk the talk. And so I advocate that marketers are really about customer experience. What experience are you trying to deliver, because you know that’s what your customer expects. And how are you doing? And if you’re not getting feedback from your customers, how can you really know? Other than by how much repeat business you get. And repeat business is a lagging indicator and not a leading indicator.
Gene: It’s funny because that’s, it just proves how ignorant I am. In my business, to me, if the customer is paying the bill, they must be happy. And that’s –
Kathy: But somebody else can come along and make them happier. And you know, you can over survey too. But we are really diligent about making sure that we understand changing expectations, and they are a-changing, and how well are we delivering against those expectations. And none of us have a never ending source of money. We just want to make sure we’re getting the feedback we need to know where to spend the one dollar we have to spend.
Gene: Got it. You talk about changing expectations and the world changing. What metrics have changed for you over the last 15 years here at The Hartford. If you were to look at the metrics you were using back in the day versus what you’re doing now, what’s changed?
Kathy: I mean I do think it’s sentiment. Right?
Kathy: So think about social. I look at customer sentiment. I think that’s number one. And number two, I am really really focused at understanding what’s driving retention. Or maybe, said differently, what’s driving attrition. We always focused much more on acquisition because there was a fair amount of inertia in our category, so you didn’t have to focus as much because who wants to spend time thinking about insurance? That’s changed. People are much more self empowered. People aren’t as loyal as they used to be for a lot of good reasons. And as a result we’re just as focused on retention as we are on acquisition and developing metrics. And understanding what types of people tend to stay longer and why is that, and is it something about we’re not meeting an expectation, or is it just something about some customers are stickier than others.
Gene: So it’s not all about just lead generation for the metric.
Kathy: No, no.
Gene: It’s about customer retention as well.
Kathy: It’s just as much about customer retention. Don’t get me wrong. You always have to be investing in new customers. But as we’ve been talking throughout these podcasts, it’s really probably more important that we retain the ones we have.
Gene: Let me finish on this. We had talked, I noticed this about performance reviews, and I brought up like how you get evaluated. Because it’s a senior executive at a company, so you’re the senior marketing person. What metrics do you get evaluated on, as far as the performance? The specific metrics that are of importance to the powers that be.
Kathy: Can I demonstrate I delivered business results. So at The Hartford, marketing and communications is also accountable for digital. So customer facing digital capabilities. So from a marketing perspective, I can drive people to adopt digital channels for service, and I can measure whether they were able to complete what they came to do online. If they can’t complete online and they have to call, I was not successful. So I can measure, am I driving more people to self service? Are they able to do what they intended to do? And as a result, am I eliminating phone calls? I can, I talked earlier about unaided awareness. Am I increasing people’s awareness of our brand, and am I having an impact on how they perceive our brand? Because that matters to distributors and that matters when distributors are presenting The Hartford to a customer. I manage traffic to my website and I manage what are they doing when they come there. And again, are they able to do what they intended to do? We measure our rankings in a search engine. We measure the engagement with the content that we publish. Those are all metrics that we establish at the beginning of the year and I’m held accountable for those metrics because we’re able to demonstrate how those metrics either save money or generate revenue.
Gene: Do you have a favorite marketing metric? That you just, you know, this is the one you look at every week or every day? Like, this one definitely drives me.
Kathy: That’s a good question. I’m going to say no. I would say the one thing I care about the most, across, is an abandonment rate. So if I got you to come to my site and you didn’t do anything, that’s not success. Or if I got you to try and come online to pay a bill and you couldn’t pay the bill, that’s a problem. So I’m less focused on sort of what things are working, and I’m more focused on what things aren’t working.
Gene: That’s the accountant in you. Right? You’re focusing on the negative?
Kathy: Right? So why couldn’t somebody do what they… why were they coming here and why did they leave?
Gene: Kathy Bromage, thank you very much.
Kathy: Thank you.
Gene: I appreciate your time that we spent. I learned a lot about metrics this session. This has been the Small Biz Ahead podcast. My name is Gene Marks. And we’ll look forward to you joining us in a podcast in the future.
Kathy: Thank you, Gene, very much. It’s a pleasure.
Gene: Take care. Thanks.
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