Marketing Strategy: Toward a Standard for Marketing Measurement
The challenge to effectively measure and evaluate marketing has been a persistent dare for business practitioners and scholars for several decades. Business and academic leaders have routinely debated the relevant performance indicators needed to measure the influence of marketing on business performance.
In spite of these long-standing debates, a widely agreed upon standard for measuring marketing performance has not been determined and is not in use. This business challenge is particularly important for small business leaders who do not have the resources or marketing expertise to implement or measure their marketing programs.
Marketing efforts affect a company’s value in several ways including (a) financial impact, (b) shareholder value, (c) competitive positioning, (d) market position, and (e) customer value. However, practitioners share no universal standard by which to evaluate the effectiveness of marketing. The standard for measuring marketing efficacy varies depending on management’s goals for the individual organization, industry standards, and the perspective of the marketer.
In U.S. firms, leaders often observe marketing as an expense and not an investment, and during times of economic hardship, these leaders cut marketing programs more than other firm operations. In 2009, U.S. firms cut marketing expenditures between 33% and 50%—more than any other value activity—to mitigate financial loss because of the economic recession. The general problem has been that although recommendations for marketing measurement standards exist, small business leaders have not found a reliable method for analyzing marketing effectiveness. Specifically, some small business leaders lack strategies to measure their marketing activity.
The purpose of the recent qualitative multiple case study, Performance Factors that Influence Marketing Measurement in Successful Small Businesses, was to explore which strategies successful small business marketing leaders used to measure their marketing activities. Business leaders experience uncertainty in understanding and determining performance indicators in marketing. This study adds to the body of knowledge regarding marketing measurement by focusing on how small business leaders measure marketing effectiveness, and by investigating the marketing measurement factors that small business leaders found useful.
Participants in the study were leaders of four small businesses in metropolitan Atlanta, Georgia, and Baltimore, Maryland, areas. I chose to focus on four small businesses to maintain consistency with the standard count of cases required for a multiple-case study. The study included small business representatives across healthcare and sales sectors.
The findings from this study indicated that for successful small business professionals, marketing aligned with organizational goals. All participants in this multiple case study linked their marketing strategy to their organizational goals. Business-to-business practitioners were more concerned with relationship building than consumer advertising and measured the effectiveness of marketing with the ability of marketing to drive networking opportunities and relationships.
Business-to-consumer study participants relied heavily on the Internet and digital media to assess the effectiveness of their marketing strategies. The Internet age has brought with it new strategies to reach consumers and evaluate the effectiveness of marketing. Business-to-business participants in this study indicated they rely less on traditional media like radio, print, and television and more on Internet strategies. Participants indicated that Internet strategies were easier to track, and provided more reliable analytical data than traditional media strategies. One study participant said that Google Analytics has made it much easier to track the progress of Internet marketing campaigns. Practitioners should consider if Internet strategies offer a better indicator of marketing performance for their business than traditional media.
Findings from this study indicated that driving revenue is most important to practitioners; therefore, financial performance indicators are significant for business practitioners. One study participant said, “Revenue is king,” and recommended that clients’ primary responsibility is to link their performance measures to revenue goals. Another participant said that marketing is successful if it translates to increased revenue for his physical therapy practice. Practitioners should prioritize performance indicators that evaluate how well their marketing strategies align with their goal to drive revenue and sales.
Furthermore, participants indicated that to drive revenue, it was important to drive traffic to their business. Thus, business practitioners should employ marketing strategies that drive traffic to their desired consumption point. Practitioners should also use performance indicators to observe traffic sources and consistently evaluate the usefulness of those traffic points and strategies.
Finally, in a competitive landscape, practitioners should ensure their product or service delivers on consumer demand. Participants in this study indicated that although communications strategies are important in marketing, those strategies could be undermined if the actual product or service does not deliver on consumer needs or expectations. As such, as part of a marketing strategy, practitioners should consider how their product or service meets consumer need and perceptions. Practitioners should employ communications strategies in cooperation with product or service strategies.
Small businesses’ needs vary depending on the structure of the organization, the business sector, and the consumers the businesses serve. Each small business is unique with a distinct set of factors that determine its fitness for the competitive landscape. Nonetheless, all small businesses must determine a unique value proposition to compete successfully in the marketplace. Once a small business leader determines an organization’s value proposition, the leader must also determine how to convey that value proposition to potential customers, and ensure appropriate messaging and product or service consumption. To ensure success, leaders must determine key performance indicators to evaluate the effectiveness of their marketing strategy.
Leaders must consider many factors to determine the effectiveness of marketing efforts. According to participants in this study, the most important factors to determine marketing success in small businesses are
(a) how well the marketing supports the delivery of the product or service on consumer demand,
(b) how well marketing drives sales or revenue,
(c) how well marketing drives traffic or calls to their business, and
(d) how well marketing facilitates relationship building with stakeholders.
Based on triangulation of the data, I determined that the findings from this study are generalizable to other small businesses. Small business leaders should tie marketing strategy to their organizational goals and consider (a) Internet strategies, (b) return on investment, and (c) if a business-to-business or business-to-consumer strategy is most important for their business.
Fluker, T. M. (2016). Performance Factors that Influence Marketing Measurement in Successful Small Businesses.
Dr. Tareion Fluker is president of Raising Brand Marketing Management
Raising Brand Marketing Management provides marketing consulting services designed to help your company grow to reach its potential. We specialize in strategic development and management for small businesses. Elevate your strategy, and grow your business.