Whether it’s coming from the C-Suite or the Marketing Organization, the drive for measuring marketing performance is gaining momentum. In a recent study by the Advertising Research Foundation, “enhanced return on marketing investment” was revealed as one of the top priorities CEOs set for their marketing and research functions. Sadly, progress in measuring marketing performance continues slowly. A survey of over 1,000 senior executives by the CMO Council revealed that 80% of the respondents remain unhappy with their ability to measure marketing performance — yet greater than 90% rate the measurement process as a high or moderate priority. Likewise, over the years, research conducted by VisionEdge Marketing (VEM) has yielded similar findings. A most recent study conducted found only 9% of respondents were satisfied with how well their organizations are tracking performance.
What’s the big deal? Companies have been conducting marketing activities forever. Why is metrics receiving so much attention and interest? Metrics drive and enable the organization to see what is working and helps them to adjust and bridge the gaps when needed. Measurement is at the center of improvement. Measurement can provide timely feedback, enable corrective action, provide focus, and give the organization the ability to design, map and monitor processes, and adopt best practices. Today’s budgets and resource-constrained environments mandate organizations be able to discern which marketing efforts make a difference.
So does measuring matter? It is proven that companies with formal marketing performance systems outperform companies who lack systems. The CMO Council study found companies with systems achieve 29%, 32% and 37% better sales growth, market share and profitability, respectively. These outcomes continue to be the focus for most organizations. Participants in VEM’s study indicated that growing and acquiring new customers in existing markets is the number one factor to their company’s success in 2005. Forrester Research polled 176 firms and found similar results. Their study identified three critical business objectives : increasing sales from existing customers, expanding the customer base, and raising customer satisfaction. These business outcomes serve as the basis for both marketing strategy and metrics.
Marketing can measure a never-ending menu of items that consume a tremendous amount of energy, time and resources. Marketing must focus on the most relevant, essential and valuable actions as the basis for metrics and performance reporting. Yet metrics developed at most companies don’t show a high correlation between marketing activities and business outcomes. A Marketing Metrics framework must demonstrate how Marketing enables the organization to realize business outcomes. Marketing must transition to Outcome-Based Metrics, or face becoming merely Sales support and lose its ability to influence organizational strategy.
Establishing metrics and reporting the marketing function’s impact on the business requires having the infrastructure, people, systems, process and skills in place. Systems are needed to capture data and translate this data into meaningful information. Processes need to be developed and managed for measuring marketing performance and reporting on results. And without a culture of accountability and people with the right skills, the systems and processes will be for naught. The marketing curriculum at today’s universities typically includes courses that address measuring direct marketing and online marketing effectiveness, but there are few courses specifically designed around measuring marketing in general. A solid infrastructure will make all the difference in your organization’s ability to measure marketing performance. With the infrastructure in place, you will be able to develop a metrics dashboard.
Dashboards can provide visual monitoring and a feedback system to track progress and connect marketing to business outcomes. Likewise, they can provide insight into performance, foster decision- making and align strategy with implementation. A good dashboard maps out the relationships between business outcomes and marketing performance. To ensure your dashboard correlates marketing with metrics, begin with business outcomes and the most important measures that will indicate success.
The responsibility falls to those of us with “passion and experience” to model the way. We must set aside budget to invest in systems and processes. We must establish a discipline around measuring and a culture of accountability. And we must demand measurement training. Only when aligning measurement and metrics with business outcomes, tracking and reporting progress, and ensuring the organization is both measurement competent and proficient, can Marketing take its rightful place at the executive table and influence the organization’s strategic direction.