Marketing Performance Dashboard – Is it overstated?
CMC- InsightExec 4th April 2006
When under the chairmanship of the late Lord Weinstock, GEC was generally considered one of the most efficient British companies of the past fifty years. Before Lord Weinstock’s retirement, GEC was known for its profits and cash mountain. This position of financial strength was credited to Lord Weinstock about whom, the story goes, that it was his daily habit of asking each of his main managers, how much money they had made that day.
The story may be apocryphal, but the principle is there that in having regular management reports of their business progress, the managers were reminded of their responsibility for making money for the company.
Measuring marketing performance highlights the ability of the management to convert marketing investment into profitable revenue. Thus marketing measurement provides a quantitative indicator not only of the efficiency of the marketing function, but also of the effectiveness of those individuals responsible for marketing management and generating profitable revenue.
For effective marketing management, there is no substitute for the quantitative measurement of marketing performance. After all, it was Peter Drucker who said that “If you can’t measure it, you can’t manage it.” The desire from the business world to find quantitative indicators of business performance, has led to increased interest in the “Dash board” approach, where particular business indicators are a guide to overall business performance.
This “Dash board” approach is now being applied to the marketing function as well as other parts of a business, but while some may see it as the key to management success, it is not the Holy Grail of management solutions, as it only provides part of the picture. The “Dash Board” approach takes its name from the idea that the performance of a business can be gauged from a small number of key indicators, rather like the pilot’s blind flying panel in an aircraft.
However, any pilot will tell you that the blind flying instruments indicate how the aircraft is moving; up, down, speed, height, and direction. But without a map and the ability to see outside, the aircraft can still fly into the mountain in front of it. So it is with Business and marketing. Unless the management keep their “heads up” to see what the market is doing and the business conditions in which their business operates, the marketing effort and the business may still flounder despite the marketing performance indicators showing all is well. The question is how is the marketing manager to keep “heads up” and read the map while monitoring the dash board?
Having a continuous flow of marketing performance measurements, enables the marketing manager to understand the current performance, but there is an equal requirement for a continuous input of market, economic and business environment information, so that the progress of the business may be seen in the external business context.
If, for example, the marketing performance indicators showed that revenue profits and customer growth were all growing at 6%, that would show a positive management performance. If however, external information showed that the market was growing at 10%, then the relative performance of the marketing management would be considered unsatisfactory.
To understand a business’s performance relative to its business and market environment requires the application of a Marketing Audit, not as a “one off” procedure, but as a continually rolling programme.
The Marketing Audit is a self administered method for identifying and realizing under-utilized marketing resources, comprising the analysis of the market, the business, the company's own organizational strengths and weaknesses, the economic environment, the marketing environment and the competition. Unlike marketing performance indicators, much of a Marketing Audit will provide qualitative rather than quantitative information.
The information collected should seek to identify and confirm what needs to be known, what should be known, what is known and what is not known. Generally held “assumptions” should be identified and examined for factual content. There is no “magic list” of questions, but they should cover as wide a field of enquiry as possible regarding the market and economic conditions in which a business works.
The Marketing Audit will also cover internal procedures and knowledge, which cannot be reported on through marketing performance measures. Typically a marketing audit can cover over 20 subjects including strategy, planning, market environment, competition, law and many others, with at least as many questions for each subject. Always the question must be asked; Why are we collecting this information? What does it achieve? Will this information help directly indirectly in making decisions?
When measuring a business’s marketing performance, the results must always be seen in relation to the economic, market and business conditions. The effective management of marketing performance must include a continual cycle of both marketing audit and marketing performance measurement. Internal marketing performance measurements alone without reference to the market and business environment can give false impressions, which could lead to disastrous consequences.
© N.C.Watkis, 04 Apr 2006
Contract Marketing Service, (Specialists in Measuring Marketing Performance and Return on Marketing Investment.)