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Today’s CEO’s and board members want marketing executives to speak the language of productivity and return on investment – and to be accountable. Despite its importance, marketing is one of the least understood, least measureable functions within most companies. Most board members and a rising percentage of CEO’s lack deep experience in this field.
How can a CEO be sure that the company is spending the right
amount of money on the right kind of marketing that enhances
shareholder value? Here are some useful questions to
be asking:
1. Is our marketing expenditure made wisely in context of both the long and short term benefit of the company?
2. What
are the specific returns from our marketing expenditures? Are
they acceptable?
3. Are our customers satisfies with our service and will they continue to use us?
Without precise answers to these questions, your decisions are at best, uneducated guesses. Measurable performance and accountability have become the keys to marketing success. For example, when marketing declares that customer satisfaction is up, a CEO needs to know whether that extra point of customer satisfaction actually translates into shareholder value. Marketing metrics provide precision and accountability. Some examples of useful marketing metrics:
Margins and profits - accurately quantifying the profitability behind products, services, customers, markets and sales programs.
Customer profitability - determining the value of individual customers and relationships both for the long and short term.
Sales force management - determining the effectiveness of the sale force organization, performance, compensation and market coverage.
Marketing and finance - a financial evaluation of each of the marketing programs, ensuring efficient and effective allocation of corporate resources.
Marketing is often perceived as just a cost
center, even though they provide the critical information needed
for important business decisions. Marketing metrics facilitate
strategic decisions and guide course adjustments. Successful
companies manage the way they go to market based on insights
gained from accurate and up-to-date metrics, effectively
aligning their marketing and sales processes with ROI marketing.
The use of
marketing metrics will probably not make the marketing
executive’s job easier, but the knowledge gained will help
senior executives and board members do a better job in
increasing shareholder value.
What you can measure, you can manage.
About the Author: Ken Wilson: Strategist, marketing guru, educator, facilitator, author, university lecturer and consultant, he can be reached at ken@wmg-mn.com or 763-476-2216.
Copyright ©2017 by Ken Wilson All rights reserved.