How To Measure Marketing Value To Harmonize
The Business With The Customer

Arturo F Munoz Open QuoteThe aim of marketing is to know and understand the customer so well the product or service fits him and sells itself.

-- Peter F. Drucker

measuring marketing value gauge The customer is the final outcome of any business. No business truly exists for any other result. No commercial endeavor would make sense unless it ended in a customer. Within this fundamental context, what then is marketing?

Marketing is the business both as presented and as customers perceive it. Marketing is both an emblem and a point of view. It is as much the image of the business that its owners wish to convey to the customer, as the perception that the customer has of that business.

While marketers inside the business build the image, the customer outside perceives it and calls the business what it is. When the image matches the perception, it may be said that marketing has done its job well. It has come to know and understand its customers well.

It would seem that so long as marketers preserve this harmony between the image that business owners want to publicize and the perception of the business that customers decide to adopt, marketing would be operating on solid ground. But what happens when marketing is expected to reflect an image that is not in tune with customer perceptions, as may be the case when the business owners or shareholders want themselves to play the role of "customers" to their own business? Weird, you say? Not really.

Marketing To Shareholders Doesn’t Produce More Customers

Increasingly marketers are expected to develop a business image that targets shareholders rather than customers. This is currently evidenced through the advent of new marketing performance accountability expectations, which are turning toward measuring how marketing contributes to the company’s bottom line rather than toward improving how accurately it can match customer perceptions against the public stance that the business decides to take in the market place. This is a shift from attitudinal metrics toward ROI metrics.

It is true that one cannot manage that which is not measured. But is impact to the revenue base the optimal measure of marketing contribution or performance? Accountants would say yes, but that’s because they’re not customer-oriented or rather their “customer” is the business owner or shareholder, rather than the business' product or service user.

Yet the shareholder is not the final result of any business. The customer is the final outcome. Marketing more than accounting is called to close ranks with that customer. Its entire raison d’etre is to become intimate with that result because, as Robert Half said, “When the customer comes first, the customer will last.” And one thing marketers want to do is last right along with them!

However, in a world exploding in diversity with the opening of new global markets and trading at the speed of modern technology, marketing has failed undeniably to account effectively for its performance. It has continued to use antiquated models to measure its contributions, which smell of irrelevance.

Don Schultz, Northwestern University Professor of Integrated Marketing Communications, says in On Brand and Branding, "We can hold onto the attitudinal measures we have developed but which can't be related to financial returns. In short, we can stay with marketing's version of the annual audit. Or we can rethink and rework our approaches and our measurement systems because, if we don't, the accountants and financial people will.”

But Marketing To Customers Must Produce ROI

So, how is marketing to walk this tightrope between being the business as customers perceive it while being the business as shareholders expect it to be? What measures could indicate whether marketing is truly performing? Metrics that tie a customer’s appraisal of value to the company’s bottom line represent that blending between perception and practicality.

To illustrate, associate to any promotional offer a measure of customer responsiveness to match a response rate that, if met, would allow that promotional investment to break even. Why? Do it because promotional response is a perception of value that the customer expresses toward the business, but break-even response rate is a measure of how marketing can recover the cost of executing the promotion that the customer responded to.

Tie the two together and, again, marketing will be able to preserve harmony between the image that the business owners wanted to publicize and the perception of the business that customers chose to adopt. That will make marketing measurably valuable for both the business owners and the customer.

Try it out. Use this calculator to run your first estimates.

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