The four habits of highly 'effective' marketing companies

Ad Age's CMO Strategy column is one of my personal favourites. The content really resonates with the idea of this blog and what I am trying to capture with my writings. I read a recent article on Why Measurement Alone Will Not Lead To Better Marketing and I couldn't agree with it more.

However, the article stirred up a whole new set of thoughts in my mind i.e. what makes companies highly effective marketers?  Well, let's start by thinking about it this way : "You can't manage what you can't measure", and hence, the first step to effective marketing is measurement.

But how do we measure the impact of marketing? And, can we measure marketing? Marketing is not something that can be measured, there are too many variables involved, it is highly intangible, right?

Wrong.

I am a firm believer that good marketing practice starts from the belief that marketing IS tangible and marketing CAN be measured. It is a similar concept to winning the Olympics - it seems really difficult and sometimes highly impossible, but people win gold medals at the Olympics, don't they?

So how can we as marketers win gold medals i.e. clearly articulate the impact and value that marketing creates for the organization?

I am not going to propose a secret formula for success or a magic metric to follow, simply because there isn't any. But what we can follow is a set of guiding principles and then apply them to our business context to achieve maximum impact.

Principle 1 - Define:  Understand what marketing means to your company and what it is accountable for, both in the short and long-term. Is it short-term incremental sales, brand equity, bottom-line growth or even long-term shareholder value creation. This first step is crucial in laying the foundations of effective measurement.

Principle 2- Design: Select the right metrics that align with and allow the measurement of these objectives. Is it ROI, cash flow, NPV, share price or even simple metrics such as NPS (net promoter score), brand awareness, intention to purchase or sales? Once there is clarity on what is being measured, the battle is half won.

Principle 3 - Decipher: This is the tricky part. But how do we measure ROI or NPV? How can we be certain that X% to our revenue or profit can be attributed to Y marketing activity. We can't be certain. But what we can do is build hypothesis through an expert understanding of our business and make reasonable assumptions based on our historical experience and current context. So principle 3 is acknowledging that measuring marketing is all about smart hypothesis building & testing! No marketing mix model will yield results with 100% accuracy.

Principle 4- Deliver: The last but most important of them all. Measuring marketing is all about courage and perseverance. It needs senior-level support, buy-in and initiative. It needs alignment with all other functions in the company. It needs to be a shared responsibility of all. It needs continuous learning. And finally, it needs artistic flair (hypothesis, creativity in selecting approaches & processes) as well as scientific rigour ( decision tools, statistical & modeling expertise). One cannot be substituted for the other.

Let's embrace one, and the others will follow.