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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
1. Is our marketing expenditure made wisely in context of both the short and long term benefit of the company?
2. What are the specific returns from our marketing expenditures? Are they acceptable?
3. Are our customers satisfied 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.
Bottom of FormThe use of marketing metrics will probably not make the marketing executive’s job easier, but the knowledge gained will help senior executives and board memebers do a better job in increasing shareholder value. What you can measure, you can manage.
About Ken Wilson: Ken is the president of the Wilson Marketing Group, Inc., a firm specializing in business-to-business and industrial marketing. Ken has over 32 years of practical consulting experience in business-to-business marketing and management. He has also been a member of the adjunct faculty at the Graduate School of Business at the University of St. Thomas for over two decades, teaching graduate level courses in strategy, marketing and product management and he has lectured on planning and strategy at the University of Minnesota, Carlson School of Management, Ken would be happy to answer your questions by e-mail at firstname.lastname@example.org or by phone at 763.476.2216.
Copyright ©2011 by Ken Wilson All rights reserved.
Over 25 years experience providing strategy and marketing consulting to manufacturers and business-to-business clients.
Proven experience you can trust.