Measuring Marketing

Chapter 92 Absolute Index

Measurement Need

When marketers need to determine overall performance and annual bonus awards.

Solutioni

$AI=\frac{R_{at}}{R_{bt}}$

Where

AI = absolute index

Rat = the sum of total actual revenues during time period t

Rbt = budgeted revenues during time period t

Revenue estimates are a key target set by sales management, derived from the company’s overall performance objectives for the year. During the annual performance review, sales management compares actual revenue results to estimates.

For example, let’s assume a company has five sales offices in Japan, and each sales office is allocated an equal share of the estimated revenue target. If the total revenue target is $100 million, then each office would be responsible ...