Measuring Marketing Performance Toolkit3 min read
There exist many definitions of marketing, in fact, too many. Together with the progression of the Internet, and consequently the development of new marketing techniques, technologies and stratagem, new definitions of marketing are appearing in large numbers. However plural and diverse the definitions of marketing may be, the essence of the said remains intact. Marketing is still no doubt the unique function of the business enterprise and no prosperous business is possible nowadays without effective marketing.
Most businesses believe that marketing effectiveness is expressed solely in numbers. Apparently, there are aspects (metrics) of marketing effectiveness that can be quantified and measured. The first and foremost goal of marketing is to create customers. Consequently, the effectiveness of this aspect of marketing can be evaluated by the number of new customers, new leads of a company or, in case of telemarketing, the number of completed calls. Another significant metric of effectiveness is the number of new products purchased by existing customers since the objective of any enterprise that intends to stay competitive in the market is not only to create new customers but to value and retain the ones they have already.
Measuring the response is another simple and cogent way to evaluate marketing activities. By taking the total cost of a marketing activity (for example, from an advertisement) and dividing it by the total number of responses, you determine the cost per response ratio. This cost per response ratio can help you decide if this activity was a success by comparing it with other alternative marketing activities. A standard measure of the effectiveness of various marketing activities is marketing ROI (return-on-investment).
Apart from the above there are aspects of marketing effectiveness that cannot be quantified. Many marketing analysts state that the mission of marketing is to establish an environment in which the customer appreciates the benefits of doing business with your firm, to set the stage for making the sale, to create the circumstances that make the sale the next logical, appropriate step. The uniqueness of a company that sets it apart from the competitors, its strong hold on the market place, i.e. the status of a company as the acknowledged leader in the field, the ability to stay at the forefront of the customer’s mind can all be considered the benchmarks for testing marketing success of an enterprise.
Marketing effectiveness that results in businesses achieving its sales targets, enhanced profits and increased bottom line performance is determined by both quantified and non-quantified metrics. The concept of singling out certain metrics when analyzing the efficiency of marketing policy and performance has been adopted by many and continues to evolve. Making marketing more accountable is an opportunity to put the effectiveness of your marketing performance to test. The elaboration of modus operandi for measuring marketing performance has become a hot issue in today’s marketing discussions. There are two parties concerned that are interested more than others in the solution of the issue. The first party represented by chief executive officers, chief financial officers and board directors want to know that investment into marketing brings profit. Marketers that make the second party want to proof the same.
The solution of the problem took the form and shape of a scorecard, no surprise. Thus, marketing is becoming the last in the list of business functions to accept scorecards – a concise report featuring a set of measures that relate to the performance of an enterprise, as a means for measuring marketing activities in order to give an all-embracing view of the performance of the above business department.
The next question that arises here is how many metrics and which in particular will make a scorecard comprehensive and all-embracing. Some economists claim that there are over 50 marketing metrics; however, it is clear that not all of them are equally important. A scorecard that is able to accurately diagnose and predict the future of marketing performance will comprise the fundamental metrics that evaluate only what is really important.
The fundamental metrics should include not only quantified metrics that are easy to measure (for example, number of new customers, ROI) but also non-quantified ones (brand awareness, brand equity) since it is the latter which are mostly able to determine the long-term vitality of a business. Thus, elaboration of a perfect scorecard measuring marketing performance needs certain training. Surveys show that the ones that already exist may still need some refinement and updating.