Measuring the results of marketing initiatives is essential for evaluating and optimizing the allocation of marketing budgets. I have often said that the key metric for measuring marketing programs is return on investment (ROI). However, I was recently challenged on this assertion. Evidently, a company had recently undergone of period of rigorous ROI measurement and had discontinued or not initiated marketing programs that could not be demonstrated to yield a strong ROI. Unfortunately, most of their marketing activities did not make the cut and their revenues were beginning to drop. While I don’t know the details, apparently a strategy of using only ROI as a performance metric was not a viable long-term strategy for this company.

Advocates of the balanced scorecard management method (initially developed by Drs. Robert Kaplan and David Norton in the early 1990s) would have strongly objected to such an ROI- centric management system. Rather, they would advocate a performance measurement system that includes a mix of metrics, including internal business process metrics and business outcomes such as customer satisfaction and financial results.

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