Measure, Understand, Act: The Keys to Marketing Performance Management

Nov 14, 2005 8:42 PM  By

When it comes to managing the performance of your marketing programs, most marketers will tell you that they are content when the elements of their direct campaigns drop on schedule and within budget. The ultimate success of any direct program, however, is not simply a matter of operational efficiency. Rather, it’s contribution to the bottom line of the organization.

All too often marketers don’t fully understand the impact of their actions on customers. Many cannot account for the effectiveness on the very programs that they manage–not a good scenario to find yourself in when the CEO of your company demands to see demonstrable ROI on every marketing dollar spent.

That’s where marketing performance management (MPM) comes in. MPM is a set of processes for measuring and understanding the impact of past marketing actions. You can use this information to understand and plan future marketing actions.

Seems simple, doesn’t it? Then why do so many marketers choose to repeat the same marketing programs and campaigns year after year despite less-than-stellar results or in the face of diminishing returns? It’s often because they haven’t made an informed assessment of their alternatives. Without a MPM process in place, marketers are destined to spend money on inappropriate or ineffective marketing campaigns–and lose precious opportunities to capture new customers and sales.

When properly executed, MPM takes into account several core components of every direct program. These elements include the performance (and effectiveness) of the programs and campaigns for various products, across multiple channels and markets throughout the entire campaign and customer lifecycle.

If you think of MPM as a process, four critical steps are involved:

  • Marketing analysis–insights that show what should be done based on the actionable content you have gathered and key findings from recent campaigns
  • Scenario planning–market tests that allow you to evaluate options that take into account the ultimate organizational and marketing goals and objectives of the organization
  • Forecasting–forward-looking marketing planning that uses past marketing performance to predict the results of future marketing programs
  • Projections–determining your course of action and creating benchmarks by first getting a reasonable idea of what you can expect to achieve from your marketing programs.

Once your campaign is complete, you can then measure and evaluate your results vis-à-vis your projections. Never simply “do” database marketing; to be effective, you must have a clear plan for what your actions are going to accomplish. Most important, always measure the results.

The competition for solid customers is too great for you to be spending your entire marketing budget based solely on the performance of last year’s campaigns. To be effective, marketers must be able to turn information into action and use their newest information in their marketing campaigns with an eye to the future, not the past.

Scott Cone is vice president/client leader for Merkle, a Lanham, MD-based database marketing services provider.