“It’s good to be the king”, Part II

Let’s put marketing back where it belongs.

Jake Taylor: Well, then I guess there’s only one thing left to do.

Roger Dorn: What’s that?

Jake Taylor: Win the whole f**king thing.

— Major League

Last week, we talked about putting marketing back where it belongs … center stage, center ice, center court, center square, front and center, at the center of gravity.

To get there, marketers have to do at least three things. First, make friends with finance (and everyone, really). Learn how to speak everyone’s language. And figure out together what success looks like across the entire company. Easy-peasy.

Okay, how? How do you build consensus? How do you get a clear picture of overall success? Which Key Performance Indicators matter? How many do you need?

The honest answer is, “It depends.”

We recommend a healthy mix of finance-focused and market-oriented KPIs. What that looks like is up to you … and everyone else.

This will involve hashing it out with the CFO, CEO, sales, product development and a lot of other people. The larger your organization is, the more challenging it will be.

Really though, you can only decide which metrics matter when you can all agree on what your business is trying to achieve.

Are you trying to become the market leader? Are you attempting to grow through acquisition, new product development or by entering new markets? Are you playing defense against larger competitors?

According to the wildly great Marketing and the Bottom Line by the equally great Tim Ambler, “The strength of metrics usage flows from their alignment with strategy and goals across the whole firm.”

In other words, whatever success looks like and whatever KPIs you choose to measure cannot exist in a marketing vacuum. They have to matter to everyone. However, not every KPI matters for every organization.

Take market share. Does it matter? Yes, but not always. If you’re an established brand in a relatively stable category (or a declining category), absolutely. You 100% want to keep an eye on your share of the market over time.

But if you’re a young brand in a rapidly expanding category, measuring market share might not matter as much simply because the category is so dynamic.

Regardless, it can be a bit challenging to get an exact picture of where you are. Everyone knows who’s at the top, but things get a little gooey towards the middle. Sometimes, a good idea is more than good enough, and we can help you figure it out.

Other important metrics might include:

Mental Availability
Physical Availability
Perceived quality
Perceived service
Customer satisfaction (quantity)
Customer experience (quality)
Price elasticity
Penetration
Repeat purchase (loyalty)
Operating profit
Profit margin
Sales volume
Net sales value

You can probably think of a few more. Try very hard to keep efficiency metrics off this particular list. Not because they’re “bad”, but they’re inherently short-term. They don’t give you a broader view of the long-term health of your company or your brand.

Some companies might choose 30 KPIs to measure overall success. You might choose seven. The point is to find a mix of financial and marketing metrics that everyone agrees on … and stick to them year after year.

Why does any of this matter?

Again, marketing is your company’s growth engine. Also, we’ve found that marketers are, in general, more comfortable with uncertainty. Maybe it’s because getting large numbers of irrational humans to do exactly what we want them to is inherently probabilistic. Or maybe we’re wired different.

Regardless, marketers are in a much better position to lead their organizations through whatever might be coming next. But we can’t do it alone.

We need buy-in from finance, the CEO, product development, sales, customer service, and HR. Everyone needs to understand that we’re all on the same team. Yes, marketing should be driving the bus, but it’s a big bus with lots of seats. Everyone needs to be on board.

You may have to nudge the culture. Which? Is obviously much easier said than done. If you’re already doing this kind of internal work, brilliant. Keep at it. To quote Miley Cyrus, “It’s the climb.”

Because for brands to reach their true potential, marketing must be in the driver’s seat.

Remember that you can do anything but not everything. So, if you have questions or want to talk, we’re always happy to help. We’ll see you next time.

Sources!

Marketing and the Bottom Line: The Marketing Metrics to Pump Up Cash Flow – Tim Ambler, chapters 3, 4 and 5