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Measuring marketing performance is one of the most important business needs today. However, managers often misunderstand marketing measurement and misapply the analytical techniques. This is compounded by naïve expectations, reflected in a question I am regularly asked from executives, "what is the best measure to determine if my company's marketing is effective?" The answer is that there is no single measure that accomplishes this. Furthermore, measures alone are insufficient in determining marketing effectiveness. Skilled managers know that the key to meaningfully measuring performance is linking goals, rewards and measures. Goals establish tangible and intangible targets. Rewards are important for the simple reason that they inspire the right behaviors to achieve the goals. Measures then analyze and review the results.
Marketing success depends on business leaders who know how to integrate four key themes: destiny, strategy, culture, and experiences. 'Destiny' defines the company's long-term ultimate contribution to the world. To paraphrase Jim Collins and Jerry Porras from their seminal book, Built To Last (HarperCollins 1994), the concept of Destiny describes how successful firms pursue meaning, beyond merely making money (Collins and Porras referred to Destiny as 'purpose'). 'Strategy' is directly influenced by the company's Destiny, driving the differentiated direction of the business for the next 1-3 years. The combination of Destiny and Strategy serves as a positive filter for the type of people the firm seeks to attract, which has a direct and lasting impact on the development of the company's 'Culture'. 'Experiences' euphemistically describes how the company delivers its offerings to the market in ways that deepen the relationship between the customer and the company. Value-added experiences that connect customers to the company at multiple points in the market (products, locations, advertising, web, events, entertainment, design, services.) serve to differentiate market leaders from less successful competitors, enabling the company to deliver on the promises made.
For marketers, the implications are clear: their role is no longer just functional or tactical, but strategic. From customer targeting to product development to integrated marketing communications, each is dependent on a consistent implementation of strategy. For non-marketers, understanding the importance of organizational alignment throughout means that execution must be accomplished with full knowledge of the company's (and marketing's) promises to the market.
When the business-customer relationship is viewed from this perspective, the inadequacy of a single measure of marketing performance becomes clear. The question grows more complex when lifecycle stages are introduced. Each stage of the classic lifecycle curve (known as the 'S' curve for its shape) has different implications for marketing programs and, consequently, marketing measures. When launching a new product or service (or company, for that matter) at the introduction stage, marketing activities will focus on programs that build early awareness. Assuming success occurs, then the organization enters the growth stage, characterized by rapid growth of the product and the concurrent demands on expanded production, distribution, and customer support. Growth-stage marketing activities would be focus on communications that reinforce the product's unique value compared to the inevitable competition that emerges. As the market matures (the 'Maturity Stage'), customers need loyalty programs to reward their ongoing support.
Each stage clearly has different customer needs requiring specific and unique marketing programs. More importantly, no single marketing measure will succinctly or accurately capture and measure these activities. There must be multiple measures, reflecting different marketing approaches, changing lifecycle stages and a maturing customer audience. Managers must understand this if there is to be useful measurement of marketing activities. The good news is that marketing tools exist to help managers do just this!
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