Nothing Succeeds Like Success

“Nothing succeeds like success,” but when marketers need to claim success for their efforts, how are they to do it? How can marketers “deliver” and what in fact is it that they are delivering? What contribution do marketers make and where is the evidence? What does the marketer need, to ensure success?

The contribution of Marketing to any business, is to be found in the generation of profitable revenue. Without that profitable revenue there can be no sustainable business. Thus marketing must ultimately be measured by the amount of profitable revenue generated. That is not to say that brand awareness, market penetration, customer retention and many other aspects of marketing are not important, but ultimately, the purpose of all marketing functions is to generate a continuous profitable revenue stream for the business.

Thus the amount of profitable revenue generated together with the efficiency of the use of assets and investment, must be the primary measures of marketing performance.

Much of what has been written on the subject of measuring marketing performance tends to have concentrated on particular aspects of marketing, principally CRM data, the return on investment in advertising, brand awareness and market penetration. For the brand manager, the advertising manager and those involved in CRM data management, performance measurements in their respective areas of responsibility are all important.

The purpose of measurement in Marketing, as in any other facet of business, is to establish the level of results derived from marketing plans and execution. Metrics and measurements act as indicators of performance and as a guide to future action. Without future action, there is no purpose to collecting marketing performance measurements of any kind.

A new book on the subject of measuring marketing performance, “Marketing Metrics 50+ Metrics Every Executive should master” actually lists over 114 metrics excluding sub-metrics. But it is open to question whether all those items listed as “metrics” are really measurements, which used to be called “management ratios”.

Metrics are the standards for measurement, providing target values that a company must achieve to reach a certain level of success. Measurements are the raw outcome of a quantification process, such as a company’s numbers, ratios and percentages, while Benchmarks are the very best measurements to which to aspire, the standard by which all others are measured.

Unfortunately, many marketing people misuse the word “metrics”, when in fact they mean measurements or management ratios.

Marketers often complain that marketing measurements are not actually very informative. If that is so, then the wrong things have been measured. Choosing the right things to measure is dependent on what one needs to know in order to make informed decision. Collecting volumes of marketing measurements achieves nothing if the information does not directly assist in informed decision making.

Marketers are getting better at measuring the performance of specific marketing activities. However, except for specialist response advertising, most advertising campaigns cannot be linked directly to specific sales, neither is it usually possible to ascribe specific marketing actions to specific marketing results.

Brand awareness, market share and other measures all have a certain importance, but all the separate elements of the marketing function are interdependent, collectively contributing to the overall contribution of marketing, so that marketing performance must be measured as a whole.

“Marketing”, is not another word for advertising or selling, but comprises all those activities which anticipate and satisfy customer demand profitably. In many businesses, marketing and selling are still seen as entirely separate functions. Yet if Marketing “anticipates and satisfies customer demand profitably”, it must include selling as the executive function of “Marketing”. Marketing does not mean selling, but selling is an integral part of Marketing. It is within this definition of marketing that there is scope for understanding and measuring its performance.

The purpose of any commercial business is to make profits for the benefit of its shareholders and employees, by satisfying customers. It is the job of the marketing function to generate profitable revenue by satisfying customer demand. It does not matter how good the marketing strategy, the promotional support, the advertising campaign, the market research, the customer relationship management programme or anything else is, if the business’s sales organization cannot close the sales, then the revenue cannot be realized.

The objective of the chief marketing executive (CME) is to maximize profitable revenue while minimizing costs and the use of assets. To achieve this, he or she must understand all the activities involved in getting and maintaining business by asking questions, avoiding assumptions, and seeking quantifiable proof of achievement through marketing performance measurement.

Effective management is necessary to convert marketing plans into actions and to achieve results. The continuous monitoring of marketing results provides indicators of performance, highlighting success, failure, and identifying problems. For the CME, performance measurement is an essential tool of management by which marketing’s contribution is measured.

But marketing measurements are only indicators of performance. Converting marketing plans into successful actions requires the CME to inspire, motivate and direct those staff responsible for carrying out the separate marketing tasks, to reach their initial objectives and encourage further achievement. It is only the effective leadership and management of all marketing activities that will determine the level of overall marketing success.

© N.C.Watkis, Contract Marketing Service 15 Aug 06
Contract Marketing Service, (Specialists in Measuring Marketing Performance and Return on Marketing Investment.) CMC- InsightExec 15 Aug 06

August 15, 2006   Posted in: marketing management

Leave a Reply