Evaluating Marketing Performance
The Importance of Evaluating Marketing Performance
Evaluating marketing performance guides future marketing initiatives and helps a company achieve its goals.
Review the importance of performance evaluation from a marketing perspective
- Ideally, marketing performance measurement should be a logical extension of the planning and budgeting exercise that happens before a company’s fiscal year.
- Marketing performance metrics or key performance indicators (KPIs) are useful not only for marketing professionals but also for non-marketing executives.
- Determining what areas of the marketing mix to modify, as well as whether company goods, services, and ideas meet customer and stakeholder needs, are some of the primary reasons why companies evaluate the marketing performance.
- bottom line: The final balance; the amount of money or profit left after everything has been tallied.
- key performance indicators: considered industry jargon for a type of performance measurement, KPIs are commonly used by an organization to evaluate its success or the success of a particular activity in which it is engaged.
- return on investment: Return on investment (ROI) is one way of considering profits in relation to capital invested.
Why Evaluate the Performance of Marketing
The intangible benefits of marketing – improving and enhancing brand awareness; educating customers and prospects about product benefits; and strengthening stakeholder relationships – make measuring its financial impact a perplexing and challenging process. Ideally, marketing performance measurement should be a logical extension of the planning and budgeting exercise that happens before a company’s fiscal year. The goals that are set should be both measurable and applicable to every marketing role within an organization. Companies employ various methodologies to measure marketing performance and ensure they meet those performance goals.
Importance of Marketing Performance Metrics
Marketing performance metrics or key performance indicators (KPIs) are useful not only for marketing professionals, but also for non-marketing executives. From the chief executive officer to the vice president of sales, the senior management team needs marketing KPIs to gauge how marketing activities and spending impact the company’s bottom line. This is particularly important since companies are prone to reduce marketing budgets during economic downturns, downsizing, and mergers.
As marketers face more and more pressure to show a return on investment (ROI) on their activities, marketing performance metrics help measure the degree to which marketing spending contributes to profits. It also highlights how marketing contributes to, and complements, initiatives in other areas of the organization, such as sales and customer service.
Other reasons why companies evaluate marketing performance include:
- Monitoring marketing’s progress towards its annual goals
- Determining what areas of the marketing mix – product, price, place, and promotion – need modification or improvement to increase some aspect of performance
- Assessing whether company goods, services, and ideas meet customer and stakeholder needs
Establishing marketing performance metrics is integral to helping brands satisfy customers, establishing a clear company image, being proactive in the market, and fully incorporating marketing into the company’s overall business strategy.