Marketing Metrics

Marketing metrics refers to measurements that help with the quantification of marketing performance, such as market share, advertising spend, and response rates elicited by advertising and direct marketing. Customer based marketing metrics are highly relevant for firms. Marketing metrics such as customer share are an issue of growing concern to practitioners and scholars alike. The focus of interest gradually shifted from traditional aggregate performance measures such as market share, sales, or profits to performance indicators measured at the individual customer level (Kotler & Keller, 2006). This is associated with a change from transaction-oriented objectives to relational objectives (Hoekstra & Huizingh, 1999). As an illustration, the relationship marketing domain currently witnesses a tremendous growth in research investigating customer equity and customer lifetime value predominantly in consumer markets (Rust, Lemon, & Narayandas, 2004). Similarly, researchers in business markets argue that effective management of customer relationships requires a thorough understanding of customer profitability starting at the individual account level (Bowman & Narayandas, 2004).

Among performance measures at the individual account level, customer share has emerged as a key marketing metric which is a primary indicator of the firm' s future performance (Berger et al., 2002). Customer share can be defined as the proportion of a customer' s purchases of a particular category of products or services from one supplier to the customer' s total purchases of that category from all suppliers over a fixed time period (Peppers & Rogers, 1999; Verhoef 2003). Shifting attention from market share to customer share is considered as a more cost-efficient means of increasing overall profitability due to the omission of acquisition costs. Customer share strategy focuses on increasing purchase volumes with existing customers instead of creating customer switching from other competitors (Griffin, 2002). In business markets, such a focus on customers' share of business is particularly rewarding because suppliers typically rely on a smaller number of customers with greater proportions of purchases (Peppers & Rogers, 2001). Yet, suppliers typically lack rigorous customer share metrics as a basis for managing customer relationships both effectively and efficiently.