- Category: September 2012 - Performance Marketing
According to a study of the Fournaise Marketing Group, 73% of the CEOs the company surveyed think that marketing is lacking business grasp and therefore can’t make a positive impact on an enterprise’s performance. They attribute this, among other things, to the fact that marketers do not understand that they have to consider business metrics and act accordingly, like thinking about revenue growth and sales performance. CEOs argue further that marketing is not able to communicate its existing value adequately, making it comparable and assessable.
Therefore, the time has come for marketers to starts dealing with key figures, measurability and comparability, to prevent being seen only as a pure operational service organization, thus losing out on any strategic involvement. Especially, since it is now easier than ever to deal with key figures and presenting them properly.
First of all, marketing has to accept that key figures neither constrain creativity nor innovation, but rather boost performance evaluations and reveal specific room for improvements. Aside from this, there are long-known marketing metrics that are unfortunately not used enough, such as market shares, customer stability, market growth, share of new customers, or revenue per customer. These five measures by themselves are adequate to clearly demonstrate the value of marketing. For example, an increasing market share usually implies higher sales, and in any case a better market position. The percentage of new customers demonstrates the future potential of the company for growth.
Critics will most probably complain that marketing in general has just a small impact on some of these variables, since they depend on a variety of factors. Well, that might be true in individual cases, but in the end it just clearly shows that marketing must move out of its lighthouse, if it does not want to lose its position.
Cooperation with all other departments is obviously necessary to determine these metrics and to achieve the underlying goals, but with these figures marketing can play a leading role in the strategic development of a business.
The implementation of a marketing scorecard is taking it even a step further. Here, the defined metrics are used not only once in an isolated manner, but a comprehensive performance measurement system with a periodic approach is established. Thus, by comparing various figures, future problems can be recognized and resolved in an early stage. Establishing such a scorecard can be the beginning of performance-oriented marketing management, as the basis of the figures can very well evaluate the efficiency and effectiveness of marketing measures and adjustments can be made based on weaknesses thus displayed. Still, such a system develops its real effect and provides a good overview only when figures can be compared with those of competitors.
Although instincts and gut feelings have always been a key element in business, true business development still requires hard facts and careful analysis. Tracking your business’ marketing results against expectations is key in making the best decisions and setting priorities for growth and getting significant increase in performance.
So if you do not want to come back to the assessment from the beginning with the conclusion that nearly three-quarters of CEOs believe that marketing has no effect on a company's performance, prepare to refute this opinion by reverting back to key figures. Metrics are useful not only as self-justification in marketing, but for identifying vulnerabilities and potentials to improve one‘s own performance. Taking it a step further would mean marketing departments not only detect and use key figures, but draw the obvious conclusion that processes in general help to improve the overall performance of marketing. So, don’t forget the science behind the art of marketing and keep in mind that art is subjective and open for interpretation, but that metrics are facts people can more easily understand.
By Daniela La Marca