Chief Marketing Officers in high-tech companies are under pressure as never before to produce reliable metrics of their firm’s marketing.  Politically, they are faced with demands to justify their slice of the corporate budget, which often appears large relative to its value.  Substantively, they want to be able to learn how to market better. 

Despite this, most CMOs are dissatisfied with the state of their measurement.  Particularly in the economic climate of the last five years, long-term investments in marketing and its measurement have been hard to come by.  Further, there are substantial points of resistance, some real and some perceived, to taking marketing measurement seriously in many high-tech organizations.  CMOs at technology firms feel they face more obstacles in measuring marketing and are less able to relate returns to efforts than non-tech firms.

Measures are not the problem here.  Using MPM to build a customer-focused business is.  An MPM system is too often seen as a database or a set of measures.  Clearly this is necessary for good measurement, but it is not sufficient.  An MPM system is the organization’s process for generating information on the efficiency and effectiveness of its marketing, disseminating that information to the appropriate decision makers in a timely fashion, and acting upon the information generated.  Early failures in CRM implementations, for example, often occurred because companies installed the software but did not actually change business processes to become more customer-focused. 

How do we then build a strategic MPM system?  The key is that MPM only works when the organization configures itself to embrace and exploit it: effective MPM is an organizational change initiative.  This configuration occurs when the organization is committed to the initiative, has the right capabilities, and evaluates the consequences of its measurement processes in both financial and strategic terms.

MPM systems are most effective when they are aligned to the marketing strategy of the business: Who are our key customers?  What is the value proposition we offer to those customers?  How do we deliver that value to customers in a way that makes money?  The strategy should determine the metrics, but the metrics help the strategy adapt over time.  In fact, one of the great virtues of building an MPM system is that you are forced to clarify what your strategy is (or is not).  Mapping your strategy and metrics together is an effective exercise to not only clarify strategy but communicate it and eventually prove its worth. 

The best results come from a balance of long-term (e.g., brand health) and short-term (e.g., activity tracking) metrics in alignment with your marketing strategy.  This allows both strategic and tactical learning.  Done well, a strategic MPM is hard for competitors to imitate, and thus leads to long-run competitive advantage for the firm.

About Bruce Clark

Bruce Clark is an Associate Professor of Marketing and Faculty Director of the Full-Time and Part-Time MBA programs at Northeastern University.  He is also a Visiting Research Fellow at the Centre for Business Performance, Cranfield School of Management (UK).  A former direct marketing and software executive, Dr. Clark is co-author of the book Marketing Performance Assessment and sits on the advisory board of the Performance Measurement Association.  His research, teaching, and consulting focus on performance measurement and competitive marketing strategy.