Understand the interdependencies in Gartner’s hierarchy of metrics to balance business results.
As a digital commerce marketer, you are caught in a paradox of choice when it comes to metrics and performance. On the one hand, you have no shortage of metrics to measure. On the other hand, when you focus on one metric, you might analyze it in isolation without understanding the whole story of performance. It’s the equivalent of reading one chapter in a book and confidently proclaiming to understand the whole plot. The Gartner hierarchy of digital commerce marketing metrics encourages marketers to look at the interdependencies between metrics, rather than looking at each metric in isolation.
The hierarchy of digital commerce marketing metrics is a tiered system of metrics used to define relevant business metrics at many levels to improve digital commerce marketing effectiveness:
- Level 1 focuses on business outcomes for executives to assess the overall health of the business. Example metrics include revenue and profitability.
- Level 2 focuses on strategic levers for executives and directors to understand common strategic levers defining business outcomes. Example metrics include cost per visitor and retention rate.
- Level 3 focuses on operational levers for directors or managers to illuminate conversion and sales efficacy across customers and products. Example metrics include new vs. repeat customer mix and top sellers.
- Level 4 focuses on tactical levers for channel managers to gain visibility into channel effectiveness. Metrics include channel-level traffic and conversion metrics.
It’s the interplay among the metrics, however, that enables all levels of marketers to make effective trade-off decisions.
Metric interdependencies tell the whole story
For example, a household products manufacturer could use the hierarchy to see the power of analyzing metrics in concert. The metric “new vs. repeat customer mix” was green on their dashboard, meaning they were acquiring more repeat clients as a percentage of total clients. Their business valued retention and longevity and they were acquiring more and more repeat customers, which is why it was green.
Too much of a good thing can signal danger down the road.
Too much of a good thing can signal danger down the road. As it turns out, the company focused too heavily on this one metric at the expense of understanding how other metrics clearly signaled a scalable growth issue rooted in their acquisition strategy.
Their dashboard also showed traffic to the website was down, cost per visitor was increasing and the total cost to acquire a new customer was in the red zone. The chapter on repeat customers indicated they were doing fine but the overarching plot line showed the positive mix of repeat clients was masking the fact they had more repeat customers as a percentage of a shrinking total client base.
The growth lever of the example manufacturer’s business was in danger, and marketing leaders needed to dive into channel-level traffic and engagement patterns to identify net new customer growth opportunities.
The hierarchy of digital commerce metrics helps brands and marketers work with the interdependencies between the metrics to make effective trade-off decisions.
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