Do Marketing Measurements Matter?

Why measure Marketing performance? When considering the efficiency of a marketing organization, many companies invest far more than they realize in getting and maintaining their business with little attention to the return on their investment.

Many will still say that measuring marketing performance is difficult or that it is impossible, because marketing is an art not a science. But marketing is both an art and a science. The art is that of the creative, and the science that of performance and results. While the creative element perhaps may not be measured in any way that has quantitative value, marketing performance should always be defined in quantitative terms that can be measured.

The Chartered Institute of Marketing (CIM) defined marketing as “all those activities which anticipate and satisfy customer demand profitably”. While the CIM’s definition is logical and complete, current marketing articles tend to focus on the specialist disciplines of brand management, customer relationship management (CRM), advertising and research. The term “marketing” is now in danger of becoming debased, so that its meaning is imprecise and just another name for advertising or selling. This tends to perpetuate similar attitudes amongst marketers, limiting objectives and encouraging short term thinking. Taking the CIM’s definition further, marketing includes all those activities involved in getting, maintaining and sustaining profitable revenue. This in turn tends to broaden the scope of marketing into none traditional areas such as production, research and development and distribution.

Businesses are organized in many ways, but frequently they are organized as a collection of functional departments based on what they are, rather than what they do or achieve. Hence organizations have departments of accounts, sales, production, marketing, transport, personnel and many others.

For many companies, British and American, marketing appears to involve CRM, advertising, promotion, research, and product management with sales as separately managed area. This is often the case with business to business and non-consumer based companies. While it is reasonable to consider these various specialist areas of marketing separately, they are all contributing disciplines which collectively work to “satisfy” customer demand.

If “marketing” involves everything that anticipates customer demand profitably, then it must not only include sales, but a number of other areas not normally associated with it. Those areas would include research and development as well as production.
While many marketing managers see their role in a much narrower area of specializations, the overall manager of the marketing function should perhaps be referred to as the manager of business operations. In this manner, the term “Business operations” would be more accurately reflecting the definition of marketing as set out by the CIM. Business organization could then be structured more simply into two main areas, Business Operations and Business Support.

Business Operations would encompass all the separate activities of generating sustainable profitable revenue for the long term future by anticipating and satisfying customer demand. Business Support would encompass all those activities of resource management necessary for operations, such as finance, supply, and personnel.

In business, the only actions that can be measured effectively are those which have quantifiable inputs and outputs. There is nothing else. The sales organization requires investment to cover costs, but is the prime source of business pcosts, but no quantifiable output that is comparable in financial terms with other areas of the business. However, within marketing, successful selling requires the support of product management, advertising, CRM, market research and other marketing specializations. Thus the financial output from these specializations cannot be quantified or attributed to specific specialist areas; they are collectively included in the success of revenue achieved by the sales organization. Thus when seeking to measure marketing performance, all the various aspects of marketing activities must be measured collectively, in order to measure the financial input and output for the whole marketing organization, allowing financial comparison with other areas of the business.

Marketing organizations in companies are often poorly defined in terms of responsibilities and their contribution to the business. Being responsible for generating and sustaining the necessary revenue of the company, the importance of marketing cannot be underestimated. Because satisfying customer demand profitably is so important, managing the resources invested in getting and retaining business should be regarded as crucial. In reality, the evidence shows that companies do not regard marketing with the importance it deserves. The CIM report of 2006 showed that only 7 of the top 100 FTSE companies in Britain had a representative for marketing on the management board.

Senior management want to know what sort of return they are getting from all the money that is invested in marketing. Marketers need to provide answers that clearly show in financial terms the contribution they make to the business. The evidence of the CIM’s survey suggests that they fail to do so. Marketers can demonstrate their return on investment by measuring marketing performance as a whole, in terms of financial inputs and outputs comparable with other business areas. By measuring marketing performance, strengths and weaknesses can be exposed, necessary questions asked, and assumptions questioned. Only then can clear strategies and actions be put into place to ensure the long term continuity of profitable revenue, which is the prime objective of the marketing organization and the manager of marketing in particular.

© N.C.Watkis, Contract Marketing Service 04 Sep 07
Contract Marketing Service, (Specialists in Measuring Marketing Performance and Return on Marketing Investment.)

September 4, 2007   Posted in: marketing management

Leave a Reply