The purpose of every business is to make money, thus the success of every business can be measured in the amount of money it produces, but also in the amount of investment and cost incurred. Every business requires a business plan that defines its overall objectives, and a marketing plan to support it. The importance of a commercial or marketing plan is that should set out the detailed actions that are required to achieve the financial and market objectives, and the measurements of performance required for effective management.
Formal, quantified marketing plans are essential, if resources are to be allocated and managed effectively. However, marketing plans in themselves are no guarantee of the required results necessary to meet the company’s business objectives. Targets will only be achieved by the successful management of the whole of the business getting activities. Effective commercial managers need to have good leadership skills to inspire, motivate, direct and encourage the staff, who are responsible for delivering the results.
The most important activity of any business is to maintain and develop profitable income for the long-term future of the business and the security of its employees and investors. Achieving this requires the support of all the business activities that are directly or indirectly involved in this activity, which requires effective management as a whole.
While brand awareness, market penetration, customer retention and many other aspects of marketing are important, their contribution is collectively to assist in making the successful sales from which the revenue is derived. Thus marketing performance must ultimately be measured by the amount of profitable revenue generated, together with the efficient use of assets and investment.
If all the business getting activities are to be managed efficiently and effectively, then measuring marketing performance is essential. While efficiency may be considered to be about the capable use of resources, effectiveness is about decision making and getting things done. Unfortunately, while performance measurement gives an indication of efficiency, it is limited in assessing management effectiveness.
Performance data provides evidence of the effectiveness of the strategy and actions, in achieving the objectives of the business and marketing plan, by indicating which were successful and which were not. If the marketing function operated in a controlled environment, it would be relatively easy to identify successful marketing activities and to repeat them effectively. However, all business getting activities operate in a dynamic environment, where markets, attitudes, technology and the economic conditions are continually changing. Thus the strategies and marketing activities which were successful yesterday will not remain so indefinitely.
The terms used for performance measurement are frequently mis-understood. The word “Metrics” often appears as a generic term when speaking of measurement, however, “Metrics” refers to the standards for measurement, providing target values that a company must achieve to reach a certain level of success. By contrast, “Measurements” refers to the raw outcome of a quantification process, such as a company’s numbers, ratios and percentages. “Benchmarks” on the other hand, are the standards against which all others values are judged. Therefore, in most cases, “Benchmarks” are used to establish the value of the metrics to be used for measuring satisfactory performance at any particular time.
To add to misunderstanding, the term “Return on Investment” (ROI), is often confused with the term “Return on Marketing Investment” (ROMI). but these terms are not interchangeable. Return on Investment (ROI), refers to the net income divided by the capital employed. However, the “Return on Marketing Investment,” (ROMI) is generally used to measure the financial performance of specific marketing activities such as an exhibition or advertisement. Because it is difficult to identify which sales are attributable to which activity, ROMI is generally limited to measuring specific marketing investments, and is not readily applied to the marketing function as a whole.
Frequently, marketing plans consist of a lot of projections, aspirations, and targets. While the targets are essential elements of any plan, the required actions and timescales are fundamental to their achievement. In addition, every action should also have a contingency action ready for immediate implementation, should the planned actions not achieve the desired results within the required time.
Regular and continuous monitoring of Performance measurements is essential to ensure that any marketing plan is being successfully enacted , and to highlight when and where results are not as planned. Whether it is described as the “Bottom Line,” “net earnings”, “income” or “profit”, the commercial manager must always be able to quantify the contribution made by the marketing function and to justify the need for the continuity of investment.
© N.C.Watkis, Contract Marketing Service 29 Oct 25