McKinsey Quarterly’s recent article on Measuring Marketing’s Worth uses five questions to evaluate how your company can use marketing to its best advantage.
From the article, these questions are:
- What exactly influences our customers today?
- How well informed (really) is our marketing judgement?
- How are we managing financial risk in our marketing plans?
- How are we coping with added complexity in the marketing organization?
- What metrics should we track given our (imperfect) options?
The following are my thoughts on these five questions.
Customers are different from what they were ten years ago. Many rely on customer reviews, price checking online, in-store interactions, etc. to determine which product to buy. Traditional media, like television advertising, may not have as big of an impact as it did in the past, when every TV had only five channels.
In this sense, the market is increasing in complexity and our understanding of it is waning, even as we try to improve. As the market changes, so called “tried and true” methods no longer apply.
How marketing is funded is an important decision in a company. When sales decrease, marketing needs to increase. Thus, basing the marketing budget on revenues creates an inherent conflict. The metrics used to measure marketing effectiveness can have a major impact on how we use our marketing dollars.
As far as marketing know-how goes, there is an old saying that says, “Half of our marketing budget is wasted, we just don’t know which half.”