True measure of performance is bottom line

Marketers may understand the importance of measuring the impact of their activities, but research seen exclusively by Marketing Week reveals few use metrics that are aligned to their brand’s business strategy.

Marketers are wasting too much time measuring what is easy, not what is important. As a result, many companies are failing to translate business strategy into marketing objectives, according to new research seen by Marketing Week.

Less than half of companies require marketing measures to be reported to the board, reveals the Measurement and Accountability in Marketing report, written by the Chartered Institute of Marketing (CIM) and consultants Deloitte. Only 7% say they set clear key performance indicators (KPIs) for all marketing activity.

The report identifies “greater alignment between marketing strategy and corporate strategy” among companies that reveal marketing measurements to the board. However, the proportion doing so has fallen from around two-thirds in 2007.

Nick Turner, director of marketing effectiveness at Deloitte, says: “We are perplexed how organisations that are holding out for marketing to drive their growth agenda are not consistently seeing marketing measures at board level.”

This is not to say that measurement of marketing campaigns is not being carried out, adds Turner. “We are questioning whether it is being done in the right way in this survey.”

Of the companies taking part in the survey, 96% measure customer satisfaction and 80% measure brand health. However, only 15% believe that the latter is done effectively. Only 10% strongly agree that they apply consistent measurement that enables long-term trends to be modelled, while 7% say they establish policies for accountability in meeting marketing objectives.

Of those companies that do set KPIs, two-thirds believe that those indicators are not very well suited to the task of measuring the value of marketing to an organisation.

The report suggests that rather than finding appropriate metrics “marketers are measuring what they always have or what is easy to”, and thus may not be giving an accurate impression of what return a company’s marketing investment actually yields.

Setting objectives
Turner says: “Marketers tend to select KPIs that best put forward the case for a particular activity, as opposed to being upfront in the way that those objectives are being set.”

Part of this may be down to the difficulty marketers have in showing how intangible aspects of campaign activity are converted into measurable financial gains for a company. As the majority of brands that have seen these findings acknowledge, the metrics used to measure the success of marketing messages are generally distinct from those used to determine return on investment, though both might be applicable in analysing a campaign (see Frontline, page 25).

Thomas Brown, head of insights at the CIM, argues that marketers will eventually have to relate the measurement of marketing messages to return on investment in order to satisfy the demands made by their finance departments.
Marketers should collaborate more closely with other areas of the business, so that operational aspects with relevance to customer experience can be factored into marketing measurements, the report advises. These would include touchpoints that have “an impact on whether a customer is happy, whether a customer makes a purchase or repurchases, or becomes an advocate of the brand or organisation,” says Brown.

Marketing objectives
Marketers need to take the initiative and put a case forward to make these measurement changes, the report recommends. Investment in marketing will be required to stimulate growth in most businesses but companies are also likely to maintain their scrutiny of any activity that cannot be analysed using data. Marketers should redouble their efforts to develop an apparatus for measuring marketing objectives and placing these firmly in the context of corporate strategy, the report says.

According to Turner, this should involve marketers taking “the role of customer champion”. Formulating the means of gaining customer insight and intelligence, then linking this back to value, will ultimately leave them in a stronger position within their organisations, he says.

Doing so could encompass a greater range of skills and place attention on a wider assortment of operational activities than have traditionally been considered part of the marketer’s remit. Yet as more elements of a customer’s engagement with a business become measurable, it will be hard to deny that these have an impact on brand perception.

“We need to be brave,” Brown argues, and he urges marketers to “put something forward”. He adds: “It is OK for it to be challenged, it is OK for it to be amended, but somebody has to start the conversation. If marketers can demonstrate that customer insight is their area of expertise, then they should use that as the catalyst in a conversation.” And ultimately position themselves at the heart of their business.

7% of marketers say they set clear key performance indicators (KPIs) for all marketing activity.

96%of marketers say they measure customer satisfaction and 80% measure brand health.

10%of marketers strongly agree that they apply consistent measurement that enables long-term trends to be modelled.

Luisa Fulci, Director of marketing services, Royal Mail

I think we are doing much better than these numbers would suggest, which you would not normally associate with Royal Mail. As part of the planning process, we work through the messaging and the targets of a campaign. The communications team then has a very clear return on investment target that we have to achieve on the spend we have allocated.

We report to the board on a quarterly basis explaining how the campaign performed in two respects – has it delivered the messaging, and has the campaign delivered the target ROI? I think it is absolutely right that those questions are asked and we should constantly be challenged to justify spend on brand building.

Pamela Brown, Sponsorship brand manager, British Gas

The one key measure that we at British Gas have been looking at is the net promoter score (NPS). That is basically customer advocacy, or how likely people are to promote your organisation. A lot of what we do in this business is understanding the impact our activities have on NPS.

In terms of sponsorship, there are four key measures. One is awareness, to establish the level of recall. The second is appropriateness. Another is about image, asking/ are people thinking about the company in the way we want them to? The last one is brand affinity because we want to identify whether the sponsorship is having the desired effect.

These four key performance measures are about understanding whether we can have an impact on the way the brand is perceived. Sponsorship is all about the brand.

Sue Moore, Marketing director, Bupa

One of the persistent issues for marketing is the importance of making sure the investment that companies make in marketing is tracked and has really clear metrics to ensure good return on investment. Some elements of the marketing mix are easier to measure than others. If marketing is a central part of the business, then the measurement and the influence of marketing activity is much more powerful than where marketing is just the department that makes leaflets.

It is up to marketers to create the right environment and have the right influence. Having effective metrics and being able to show the value of their activities are the best ways to do that. It should not just be a way to placate chief finance officers.

Bastiaan Ellen, Marketing manager, Expedia/Hotels.com

Things change so quickly nowadays that it is almost impossible, and also questionable, to have metrics in place consistently running for several years.

We artificially separate out into various marketing channels without really understanding or looking at the overall customer journey across those channels. You simplify the world that way but it does not give you a true picture of customer behaviour online. Another challenge for an online company is that we do not really value “the brand”. We all know there is value to having a brand, but we cannot really quantify it within our current metric framework.

Something that we are currently working on, but have not quite nailed yet, is having a single customer view across multiple touchpoints.

The Study in Context

This study makes a link between marketers’ attitudes to measurement and the definition of their roles within companies, identifying a trend of dissatisfaction across similar recent surveys.

In 2007, Deloitte’s pan-European Marketing in 3D study found that 77% of executives believed employees did not appreciate the value of marketing. It also revealed that only 20% believed their marketing KPIs were suitable.

In a global survey by the CIM, published last year, the majority of senior marketers (82%) said they were dissatisfied with the role of marketing within their organisation.

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