Marketers are happy speaking their own language, replete with jargon like "awareness," "share of requirements" and "customer satisfaction." Such terminology works fine in the marketing department and with the advertising professionals who execute marketing plans. But there's a translation problem between that language and the language of profitability and stock price which is the mother tongue of corporate CEOs. "CEOs want to know what a 5% increase in customer satisfaction will do for the bottom-line," says Wharton marketing professor David Reibstein, adding that "we need to draw a connecting line" between concepts of the two languages.
Reibstein offered a primer on how to make those connections in his talk – entitled "Linking Marketing Metrics to Financial Consequences" – at the Wharton Marketing Conference on October 15. He pointed out that marketing metrics has been the top research priority for the past six years of corporate marketing professionals polled by the Marketing Science Institute. "In this economic environment when corporate budgets are being squeezed, Chief Marketing Officers are kept up at night by worry, trying to justify their expenditures and their existence. They believe what they are doing has value, and they have to figure out how to demonstrate that value" to skeptical CEOs and CFOs, Reibstein said.
An important step in that direction is quantifying the value of a firm's key intangible assets, such as the value of a customer and the value of brand awareness. Reibstein started out his discussion about the value of customers by showing the contrasting financial history of two companies. Both Company A and Company B had the same stable profit for the last five years. Company A had spent far more on marketing than Company B and its revenues had grown faster, but not as fast as its marketing expenditures. As a result, Company A's return-on-sales had dropped compared to Company B.
[continue]
Page 1 of 5
> >>