What marketing controls to put in place in your company for 2018

By Anuj Khanna|26th Jan 2018
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The importance of the core marketing models, tools and systems cannot be over-emphasised in today's digital world.

The beginning of the year is a good time to evaluate the marketing performance of your enterprise in the past year and put marketing processes in place to make sure that 2018 is going to be much better than 2017. As the old saying goes ‘If anything can go wrong, it will.’

It is a well-known fact derived from research across companies over the years that most companies have inadequate control procedures. The key aspects of the lack of marketing control processes are:

  • Poorer job by small companies to set clear objectives and establish systems to evaluate performance.
  • About a third of the companies have no regular review procedures for understanding problems from their products.
  • Almost half of the companies fail to compare and analyse their 4Ps, including pricing, warehousing or distribution cost.
  • Same number of companies fail to conduct a formal evaluation of advertising effectiveness or review sales force performance.

One of the key marketing controls that every company should put in place at the beginning of the year is the Annual Plan Control. The purpose of this control is to examine achievements of the planned results for sales, profits and other goals.

The five tools one can use to check on plan performance are:

i) Sales analysis

As the name indicates, this measures and evaluates the actual sales against the goals. This is broken into ‘sales variance analysis’ and ‘micro-sales analysis’. Sales variance analysis is used to measure the relative contribution of different factors, such as price, volume (number of software licences sold etc.), to the gap in sales performance. Micro-sales analysis looks at specific factors like products, territory and so forth in order to understand the cause for decrease in sales.

ii) Market share analysis

While doing sales analysis, one of the missing factors is the company’s comparison to its competitors. The different types of market share are overall market share (comparing with overall target market), served market (considering the specific target market) share, relative market (taking into account the top three competitors) share, and relative market (comparing to the leading competitor) share.

iii) Marketing expense to sales analysis

This is an important ratio to calculate as part of the marketing control analysis. This includes five different ratios - salesforce to sales, advertising to sales, sales promotion to sales, marketing research to sales, and sales administration to sales. The changes in these ratios need to be measured taking into account the fluctuations. The fluctuations can be tracked using a control chart model, which allows companies to measure the deviations between desired, upper and lower limits. When the marketing expense to sales ratio is out of control, disaggregative data can be used to track the problem. An example of that is a graph that shows quota attainment (percentage) on x-axis and expense attainment (percent) on the y-axis in order to do a comparison and revenue deviation by region. This will show which region achieved its sales quota close to the expected expense levels and which region exceeded the quota with expenses being proportionately higher. This type of graph will also show the troubling regions that achieved less than 80-percent quota with disproportionately high expenses. These deviant regions can then be mapped with the associated sales representative to further analyse the reasons for the same.

iv) Financial analysis

In order to see how and where the company is making money, the marketing expense to sales ratio needs to be analysed in an overall financial framework. A company can use the below fFinancial model for calculating the return on net worth.

v) Customer satisfaction tracking

The above measures of financial analysis, marketing expense to sales analysis and others are quantitative measures that are important but not sufficient. Every company needs to have qualitative measures as well. These measures can provide them early warnings of market share erosion. Proactive companies need to set up systems to monitor satisfaction of not only their customers, but their dealers, and other market systems participants. Putting this monitoring in place will provide early signs regarding changes in customer satisfaction/preference in order to take appropriate actions to prevent the effects of these changes on company’s sales and profits.

The main customer satisfaction tracking systems are as follows:

a. Complaint and suggestions system

In today’s customer experience era, a market-oriented company needs to record, analyse, and respond to oral and written complaints from their customers on their products and services. Research suggests that well-advised companies encourage, facilitate and even compensate for customer complaints. This is an important system for the digital, fiercely competitive and commoditised era, where every growing company is trying to provide the best customer experience ever. This could be seen as a starting point towards better customer retention because it will increase the consumer’s expected utility from the product.

b. Customer panel

In this system, companies create and run panels of customers that communicate their attitude on a regular basis. This feedback can be collected through phone call or questionnaire. The information collected is important as it is more representative of the range of customer attitudes towards the company’s products and services. Creating this kind of panel also shows your customers that you are listening to them and are interested in what they have to say.

c. Customer survey

Customer surveys can be done in a formal manner by means of a standardised yet locally sensitive questionnaire. This will help the company determine the needs and attitudes of customers. Once this data is compared with the financial data, expectation plus past attitude information, the company is able to determine its strengths and weaknesses plus their probable causes. The next step is to determine where and how effort should be applied to correct the weakness and preserve the strengths as per the results of the survey. This needs to be a continuous process that starts with the managers taking action and maintaining it in order to keep evolving in terms of the customer changes.

When the company performance deviates too much from the marketing plan and goals, corrective action needs to be taken. Normally, the company needs to start with minor corrective actions and if they fail to work, more drastic measures need to be taken in order to reduce the deviation with the marketing plan and increase the overall performance. The importance of the core marketing models, tools and systems cannot be overemphasised in today's digital world.

In future articles on this same topic, I shall share details on the other three marketing controls including profitability, efficiency, and strategy, which every company should put in place at the start of the year.

(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)