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Marketing and Measuring
Are you focusing on the right variables?
There have been many calls lately for marketing to become much more accountable; to talk the language of finance and business; and to prove its worth if it is to fill a permanent seat on the Board. Meanwhile, insight functions have undoubtedly been feeling the pressure in relation to finding the most appropriate measures for assessing marketing effectiveness and return on investment.
In early 2010, the Chartered Institute of Marketing (CIM) and Deloitte conducted a joint study of marketing effectiveness. Their
findings show that less than half of the companies they surveyed are even asked to report to the Board. Unsurprisingly, those that do are much more likely to be aligned with the corporate strategy.
A staggeringly small number (7%) said that they always set clear KPIs for marketing initiatives. This is slightly worrying if you consider that the aim of marketing for any business should always be to drive growth.
However, if anything is going to stress an organisation’s corporate strategy, it is the economy. If the right measurements aren’t in place for informing and changing marketing behaviour in the current climate, what are we all doing?
One of the questions in a recent book by Robert Simons, ‘
Seven Strategy Questions’, is: ‘What critical variables are you tracking?’
Small is beautiful
Robert contends that effective managers monitor only a small number of measures: those that could cause their strategy to fail. Adding more and more metrics to a scorecard could work against you by taking the focus off what really matters. It can also kill innovation through compliance with a standardised mediocrity, leaving little room for responding to consumer preferences.
McDonalds is a case in point. Field managers used to have to produce a 25 page report on each store, covering 500 metrics. Trying to keep all of that under control left very little time to service and adapt to the real customer.
So, what are the measures that could cause your organisation’s strategy to fail – and how will you respond?
Here’s a quick example. For Amazon, the biggest factor that could cause its strategy to fail is inconvenience – i.e. when it isn’t easy for the customer to make a purchase. So all of the company’s efforts go into ensuring that the purchasing process is made as easy as possible. The key parameters that it measures are revenue per click and revenue per page turn. It’s simple. And effective.
