Factfile 49
Academics, consultants and businesses have proposed various techniques for dealing with this problem. The Henley Centre believes that business needs to set up a system to measure all components in the sales cycle, including both the inputs of marketing and sales specialists:
Figure 17: Simple model for analysing return on investment
Source: Henley Centre, 2001.
This involves a three-stage process:
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System - Developing a system for measuring ROMI.
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Measures - Building the measures that you want to consider.
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Process - Making sure the system and measures are applied appropriately.
To develop a system of measurement, UK businesses are starting to realise that they must address some key marketing questions.
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Are we providing the right products, for the right people and at the right price?
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Are our brands better than those of our competitors?
Once these questions have been asked, it becomes easier to come up with some measure of effectiveness.
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First, it is important for a company to understand its current marketing position. Questions such as, where is your brand today and what is your current market share should be answered.
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Then it is important to define what the long term objectives of marketing activity are and thereby formulate a strategy. Who are you targeting? What do your customers want and need? What is the best way and channel to communicate with them? What type of marketing are they most likely to respond to?
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You have to measure the impact of communications on sales, the number of customers, the frequency and value of each customer and their purchases and what kind of products do they buy.
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To ensure optimal communication, it is essential to provide accessible, multi-channel, two-way methods of communication.
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Be externally aware of what offers your competitors are making, possibly to your clients and what your clients think of all the offers available.
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Feedback is essential. But, it is not just about collecting data; this must be analysed, absorbed and acted upon.
It then becomes easier to tailor the marketing mix to suit individual clients, according to their sector and account profile.
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A mix of the controllable marketing variables such as, product, price, promotion and place, can be used to pursue the desired target. (A strategy combining sales, communication, product, price, logistics and service plans, will make adjusting the marketing mix easier).
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Matching client preferences with marketing methods is vital to getting effective responses. Be prepared to consider that a customer may be in different ?modes?, based on their relevant priorities at any point in time.
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However, it is important to recognise that all parts of the corporate offer are interlinked. Although sales and marketing teams should recognise their individual roles in the process, integrating their activities on each client account is critical.
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While marketing can develop an awareness of interest, it is ultimately sales who have to pursue it. Shared knowledge and efforts are therefore vital.
Once a system has been agreed, the next step is to link the performance on the measures perceived as a return. It is generally difficult to link it to profitability and this may not even be the desired measure.
Marketing is after all not just about short-term profitability; it is also about long run returns and gearing your company to work in unity towards these. As such, both short and long-term effectiveness should be assessed.