The True Measure of Marketing

1.	Is increased sales the metric? I don't think so: increased sales is how you measure Sales, not Marketing.
2.	Is increased brand awareness the metric? I don't think so: increased brand awareness is how you measure your brand agencies and media buyers.
3.	Is customer satisfaction the metric? I don't think so: I'm not even sure how to measure it--but even if it can be measured, customer satisfaction measures how well your company performs (the "do a good job" directive).
4.	Is scientific analysis the metric? I might think so, if I could understand it. Here's my all-time favorite, quoted by David Ogilvy in "Ogilvy on Advertising": "Though use of sample cross-validated correlations is acceptable, the infrequently used squared population cross-validated correlation coefficient (P(2)) is a more precise (although slightly biased) measure (Cattin 1978a, b; Schmitt, Coyle, and Rauschenberger 1977). It utilizes all available data simultaneously rather than bisecting the sample into arbitrary estimation and holdout components. Because of these comparative advantages, P2 is used in the present analysis. Though several versions are available Srinivasan's (1977) formulation of P2 is acceptable for models containing fixed predictor variables."

Fortunately, common sense comes to our rescue--as it does in so many other areas of our discipline.

In my view, the true measure of Marketing is this:

"How many profitable markets do we develop or strengthen for our new or existing products?"

Marketing is, in the end, about market development. Our job--in its "purest" sense--is to reach into the relevant business universes and discover new markets and segments our products and services can profitably penetrate, and new products that can profitably serve our markets and segments.

If you agree with that, then measuring Marketing becomes concrete and objective--maybe, Lord help us, even easy. We can look at our enterprise, and with a simple matrix evaluate our markets and our segments. And we can then look at that same matrix a year from now (or at more frequent intervals if we like), and evaluate how many new markets and segments we've added or strengthened. If we track our efforts carefully, we can figure out what it cost us to do this, and what we're earning from them. And voila: an objective, dollars-and-cents measurement of whether our marketing activities are providing value to the enterprise.

If we dig into the market landscape, do our homework, and return to the conference table with the suggestion that Product A, based on a mix of quantifiable information and plain old instinct, can penetrate a new international marketplace, we've done our job. If we determine that Product B, properly repositioned, can reach a new demographic, we've done our job. If we determine that Industry C is ready for a new product that solves an as yet untended problem--and define that product---we've done our job. If we determine that Market D, properly cared for, can become more loyal through a careful retention strategy, we've done our job.

Once we've identified and developed the marketplace or defined the product, it's up to other organizations and outside agencies to do their job. Once we've developed a marketplace, Sales has to go after it successfully. Agencies have to brand and advertise and publicize within it correctly. Customer service has to learn the unique, specific needs of that marketplace and be prepared to serve it intelligently and knowledgeably. R&D has to build a product at a level of quality and excellence to make it viable in the marketplace. As keepers of the knowledge, it's our job to provide them the information they need to do their job. But how well they do is their metric, not ours.

Oh yes. There's one other thing we have to do.

We have to be right about the value of the markets we choose to develop.

And we never know if we're right until we try. Marketing is about calculated risk and experienced instinct. And the quality of our calculations and our instincts is going to determine the quality of our results. We have to do the right work--but we have to do it well. The markets we build have to become profitable for us. Not every time. That's too much to ask. But many more times than not. Success funds failure.

So in the end, in my view, Marketing has to be measured by one core metric:

"How many profitable markets did we create today?"

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