Measuring the effectiveness of marketing plans for service businesses
A three-level marketing accountability framework
The ultimate test of marketing investment, and indeed any investment, is whether it creates value for shareholders. But few marketing investments are evaluated from this perspective, and many would argue that it is almost impossible to link financial results to any specific marketing activity.
But increasingly, boards of directors and city analysts the world over are dissatisfied with this lack of accountability for what are, very often, huge budgets. Cranfield School of Management has been addressing this problem through its Marketing Value Added Research Club and Marketing Accountability Research Club, formed with a number of blue-chip companies. The club set out to create and test a new framework which shows how marketing systematically contributes to shareholder value, and how its contribution can be measured in an objective and comparable way.
There is an urgent need for such a framework. Not only does marketing need it, to answer the widespread accusations of poor performance,1 but corporate and financial strategists need it too, to understand how to link marketing activities to the wider corporate agenda. All too often marketing objectives and strategies are not aligned with the organization’s overall plans to increase shareholder value.
The purpose of this chapter is to set out the logic of this framework, which is underpinned by two Cranfield ...