Demonstrate impact on the profit and loss statement
For years, most departments and functions within the business have been held accountable for their performance. Despite the desire to better manage performance, organizations continue to struggle with issues that prevent them from achieving long-term strategic objectives. Today’s challenging climate instils the need within many organizations to strengthen the performance management capabilities and (re-)build a framework of Key Performance Indicators (KPIs) to ensure that: (1) management attention is focused on key drivers of value and performance in the organization, (2) strategic goals, governance models, strategic initiatives and KPI’s are aligned, (3) processes and technologies are integrated, and (4) employees are properly informed, motivated and developed. To be able to successfully manage performance, the KPIs gathered, analyzed and evaluated have to be consistent and cascaded down through all levels of the organization, and should cover the strategic performance areas (tangible and intangible) deemed crucial to long-term success (e.g. financial performance, operating efficiency, customer loyalty, employee performance, innovation and change).
Although performance management practices are quite common for most departments and functions within the business, often the marketing department is a key exception. However, today’s increased pressure for performance across the enterprise calls for a culture of accountability and discipline for all departments, including marketing. Many executives believe the marketing organization first of all causes major cost and is ineffective. Responses to campaigns continue to decline and the costs to build customers relationships escalate. And when a recession looms large, the departments engaged in marketing activities are often one of the first to suffer from budget pressures.
It is up to the marketing function to justify spend and to clearly quantify and prove the short-term and long-term impacts of budget cuts. However, many organizations are not able to report marketing’s impact on sales volumes (top line), brand equity and shareholder value to the board, let alone a view of the organization wide spend effectiveness. To succeed in these challenging times, the marketing organization needs to be strong in three key areas: spending on the right things, being efficient enough to do more with less, and crucially, giving clear visibility of this to the board. The guiding principle is the assessment of impact of all activities on the profit & loss statement of the company.
Being able to demonstrate the impact of marketing and branding activities on the company’s ability to achieve its business results requires effective performance management practices. Many organizations are already deploying performance management systems, but often they are struggling with measuring marketing effectiveness and improving accountability. Assessing marketing and brand program’s impact based on customer and market data and analytics, - as opposed to intuition and experience -, requires different and even new processes designed to determine and optimize both de degree of effectiveness and efficiency. By establishing and leveraging these processes, the linkages between investments and outcomes become clear and the organization will be able to maximize returns and generate better results for less.
To demonstrate the added value of the departments and functions and their impact on business performance, NOOTABEENE designs and optimizes (integrated) performance management systems to ensure a systematic approach to manage performance improvements through gathering, analyzing and evaluating performance data. Measures will be aligned with strategic goals to provide both internal and external metrics of success, to facilitate decision-making about funding, and to help directing investments. Both the effectiveness and the efficiency of the activities will be assessed. As part of the system, the responsible employees should have the skills and tools to execute their activities efficiently and to improve return of investment (ROI). To this end, NOOTABEENE’s performance management offering involves the construction of organizational processes and capabilities necessary to get organization aligned and mobilized to work collaboratively together to achieve higher performance. All employees must individually know what they are doing and why they are doing it, and above all, they must be emotionally committed to do what they must do.
Review your performance management abilities on common pitfalls to decide if NOOTABEENE’s support is required to accomplish the organization’s greater accountability demands:
• Is your company delivering meaningful information for decision making?
• Contains your management information financial metrics only?
• Is known where money is being spent and for what purpose?
• Is spend allocation prioritized and optimized based on strategic objectives?
• Are performance targets and responsibilities clearly assigned within the functions?
• Is progress developed, evaluated and managed over time?
• Are lagging performers identified and managed for immediate improvement?
• Is a transparent, easy to use and comprehensible dashboard provided?
• Are departments and functions able to learn from historical performance?
• Does marketing contribute to company success and is this contribution quantified?
• Are the marketing activities run at reasonable cost and with reasonable resources?
• Is the ROI of marketing and branding programs measured?
• Is data available to perform sophisticated econometric modelling?
• Is a fact-based process used for evaluating the effectiveness of trade conditions?