MKTG6201

Evaluating Marketing Performance Lecturer Tim Heberden Individual Report Commercial Benefits of Applying Marketing Metrics Written for A Large Professional Services Firm Servicing Large Companies, and SMEs
Based on the core textbook Marketing Metrics: The Definitive Guide to Measuring Marketing Performance Farris et al, 2010.

Jessica Yang

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Background Today, numerical fluency is a crucial skill for every business leader. Managers must quantify market opportunities and competitive threats. They must justify the financial risks and benefits of their decisions. They must evaluate plans, explain variances, judge performance, and identify leverage points for improvementall in numeric terms. These responsibilities require a strong command of measurements and of the systems and formulas that generate them. In short, they require metrics. (Farris et al, 2006). Managers must select, calculate, and explain key business metrics. They must understand how each is constructed and how to use it in strategic decision- making. (Farris et al, 2006) Introduction The following report examines why, and how certain marketing metrics benefit, and provide foresight to large professional services firm, who service large companies, and Small-Medium Enterprises (SMEs) in the business-to-business environment. In particular, the report will demonstrate why market trend data, competitive performance data, client numbers, clients historic usage, and consumer attitudes towards a brand are commercially advantageous for a professional services firm.

Metrics is the observation process.

Tom Osborn, The Leading Edge, 2011. MKTG6201

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Market Trends & Competitive Performance Metrics Market Share, Market Concentration, Penetration, and Share of Requirement (also known as Share of Wallet) metrics are required so that a firm can develop growth strategies. Market Share, and Market Concentration metrics paint a picture of the market landscape; showing where the firm stands in the market in relation to both larger, and smaller competitors, while Share of Wallet, and Penetration informs the firm whether to grow the category as a whole, or if it is more efficient to steal market share off a competitor. The Brand Development Index (BDI), and Category Development Index (CDI) need to be monitored so that the firm can see trends within segments; those that are successfully converting into leads, and those that are not. The Heavy Usage Index is a ratio that can be used to calculate which clients are already heavily dependent on the firms services, and those clients who could do with more nurturing attention from the firm.

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Client Numbers & Their Historic Usage Client numbers, and their historical usage data are crucial for a firm to keep track of. Both these metrics allow for current business analysis, and are needed to forecast future cash flows. These metrics assist the firm in knowing whether to up-sell, and or cross-sell to clients with a range of different services, and perhaps other Strategic Business Units (SBUs). Further metrics include Recency, and Retention, which are useful in monitoring, and optimizing a firms performance in attaining, retaining clients. Contractual Situations, and Retention Rates justify to the firm whether clients were satisfied with the delivery on their Service Level Agreements (SLAs). The clients organizational structure is helpful when capturing, and building data as the buying decision is complex within organizations; a client-side junior level executive may become aware of the need to use the firms services, and escalate the matter to the head of the department for financial approval. Further analysis of client data may demonstrate that one client-servicing team may be better fitted than another. Customer Profit is important so that the firm is aware of which clients are most valuable. The firm may rank, and segment from the most profitable to least, and this awareness assists client teams to make decisions on how much service they should be allocating to each client in order to retain their business, or may simply refuse to continue servicing others. This is also useful in ranking propensity for low hanging fruit, and analyzing how much investment is needed to capture the highest profit clients. However, the firm needs to tread carefully here, as there are Network Effects, Public Relations (PR), and legal consequences to consider. For instance, it sometimes makes sense to service one difficult, and unprofitable client if they will bring in profitable big business in the near future. In terms of PR and legal consequences, there may be uproar if the firm drops a not-for-profit organization due to profitability. Customer Lifetime Value (CLV) will inform the firm of the clients long-term projected value based on current data, from which the firm will decide whether to invest marketing budget in retaining particular clients. The same applies with Prospect Lifetime Value (PLV) in relevance to acquisition instead of retention. Acquisition and Retention Costs help the firm monitor the effectiveness of two important categories of marketing spending. Trial, Repeat, Penetration, and Volume Projections enable marketers to forecast sales by sampling customer intentions through surveys, and market studies. Generally, a firm will have their client teams forecast monthly budgets, acquisition/retention volumes, and an acquisition funnel to show potential impacts in the near future. Problems in the acquisition funnel can then be addressed with support from the firm.

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Consumer Attitudes Towards The Brand Studies of Awareness, Attitudes, and Usage (AAU) enable marketers to quantify and trend customer knowledge, perception, beliefs, intentions, and behaviours via tracking data. AAU studies can also track who uses the product, defined by category usage, geo-location, demographics, psychographics, media usage, and usage of other products. From there the firm can then draw insights as to why certain segments might prefer one firm instead of another. Client Satisfaction is one of the most important metrics as it measures how successful the firm was in delivering promised service (SLA), which then affects client Advocacy, and perhaps, the firms retainer agreement. While sales, and market share shed light on current firm performance, Client Satisfaction results forecast future performance, and also send an internal message through the firm that a high level of service is a priority Advocacy (willingness to recommend) and Purchase Intent are two of the most important metrics for a professional services firm. Purchase Intent predicts positive future cash flow, and Advocacy indicates testimonials, and endorsements of positive brand sentiment, which in theory will generate further Purchase Intent (highly effective, and free). The Net Promoter Score is one way to measure Advocacy. Willingness to Search shows the likelihood of clients settling for another firm if the first preference is unavailable, i.e.: due to shortage of human resources. Brand, and Service Knowledge is important, as it will determine how potential, and current clients think about the firm. Brand Equity is strategically crucial, but intangible, and difficult to quantify. A few brand strategy firms have developed techniques that look at key factors of knowledge, relevance, differentiation, and esteem. Brand Equity 10 (Aaker) Brand Equity Index (Moran) Brand Asset Valuator (Y&R) Brand Valuation Model (Interbrand) Segmentation by client size can assist the firm greatly in deciding how to tailor service packages for certain clients, and predict client demands, and behaviour. Hierarchy of Effects assigns the firms target market into stages from awareness though to initial purchase, to firm loyalty, which illustrates to the firm any business issues within the hierarchy to address for a more streamlined process. Price Premium metrics are used to evaluate product pricing in the context of the market competition. In regards to a professional services firm, price should be negotiated on a case-by-case scenario, and never discounted in public, as it will affect the market perception of the service being provided by the firm.

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CONCLUSION Although marketing has traditionally been the department who throws caution to the wind, it is evident that business investments need to be carefully thought out with a triangulation of metrics in order to demonstrate Return On Investment (ROI) to key stakeholders. Without data, metrics, and analytics, there is no basis or support behind the business theories. Marketing is no longer an art; it is a science. - Jessica Yang, 2011. BIBLIOGRAPHY Farris, P.W, Bendle, N.T, Pfeifer, P.E, Reibstein, D.J, Marketing Metrics: The
Definitive Guide to Measuring Marketing Performance, 2nd Edition, Wharton School Publishing, 2010.

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