Marketing Metrics and the Balanced Scorecard

By: Nicole Hunter.  Student Number: 212411883

Deakin email address: nstandfi@deakin.edu.au

Word Press username: nicole3806

Image: http://www.thecopyworks.com

Before discussion regarding marketing metrics, it is worthy to define this terminology, marketing metrics is the measurement of results in marketing, generally measuring market share, customer satisfaction, and return on marketing investment (Iacobucci, 2014).  However, can marketing metrics be viewed in isolation?

As with any aspect of successful business, departments cannot work in silos, a common method of combining metrics data across business units, is the balanced scorecard approach, these come in many and varied versions, however, will often appear like this:

Image: http://www.balancedscorecard.org

This balanced scorecard is an adaption of Kaplan and Norton (1996), this approach has been tried and tested in many successful organisations and covers 4 keys areas.  These areas being (as detailed in Balanced Score Card Institute, 2016):

  • Learning and growth

~ Employee development

~ Corporate culture

~ Mentoring

 

  • Business Process

~ Internal business process

~ Measures efficiency in internal business operations

 

  • Customer Perspective

~ Customer satisfaction

~ This is a lead indicator of future performance – unhappy customers will move onto      competitors

~ Percentage of market share

~ Customer perceptions

  • Financial Perspective

~ Financial performance data

~ Revenue, expenses, profit and so forth

 

Therefore the answer to the question posed earlier – can marketing metrics be viewed in isolation, the answer is yes it can but a secondary question: does this serve any positive purpose? This answer to this is no, it does not.

Marketing metrics needs to be viewed in conjunction with all metrics data to gain an overall health of the organisation view, and a common user friendly way is the balanced scorecard approach, this places all of the organisations pieces together in the one puzzle.

Image: www. nottingham.ac.uk

So apart from ease of viewing, what are other positive aspects of the balanced scorecard?

One positive is creating a level of importance to all areas of the organisation, in some organisations, the only metrics viewed are financial, however, financial metrics data is generally retrospective, e.g. the previous month’s figures (Hillstrom, 2016).  Whereas the balanced scorecard measures multiple areas and creates equal levels of importance in areas of financial, customer relations, learning and internal systems (Hillstrom, 2016). The balance scorecard links departments to one another, and can assist in creating a culture of business togetherness (Sarkissian, 2014).

Another benefit of the balanced scorecard is the ongoing nature of data, with data collection systems in place, accurate scorecard data is available at any time (Sarkissina, 2014), there are multiple software applications designed to assist business development of balanced score card – however for this article, we won’t discuss these applications – a simple Google search will benefit those wishing to locate software programs.

Image: http://www.krusecontrolinc.com

As with anything, there are psotives and negatives. One limitation of balanced scorecard, one of the limitations is the lack of any aspect relating to organisational risk, if business decisions are being made based on balanced scorecard data, yet no details on risk, this could have a serious negative impact outcome (Gomes and Romao, 2011).

The balance scorecard also does not provide ability to easily alter measures with changing environments (Gomes and Romao, 2011), for example in an organisation dependent on another with a sudden change in circumstances the balanced score card does not account for these changing environments. This has been evident recently with the change in milk prices being paid to dairy farmers from major diary companies (Gannon, 2016), for these farmers operating small business, if using a balanced scorecard, there is no way that the scorecard can adequately show this data and can alter with the change.

Ultimately, the use of any tool, is only as important and relevant as the person developing the tool and the people interpreting and analysing the data, however one could argue the grandfather of all metrics data is:

Revenue – cost = profit

If the result of this equation is negative, all other data may be of little use, as the organisation is operating at a loss – this however is an entirely separate discussion topic, best left for another day.

Image: http://www.michaelko.me

References

Balanced Score Card Institute, 2016, ‘Balanced Score Card Basics’, retrieved 18 May 2016, www.balancedscorecard.org

Gannon, E, 2016, ‘Milk price crisis a crushing burden on our farms’, retrieved 20 may 2016, www.heraldsun.com.au/news/opinion

Gomes, J, & Romao, M, 2011, ‘Advantages and Limitations of Performance Measurement Tools: the Balance Scorecard’, retrieved 18 May 2016, www.academia.edu

Hillstrom, L, 2016, ‘Balanced Score Card’, retrieved 18 May 2016, www.referenceforbusiness.com/managment

Iacobucci, D, 2014, Marketing Management MM4, South-Western, Cengage Learning, Mason.

Sarkissian, A, 2014, ‘Advantages of a Balanced Score Card’, retrieved 18 May 2016, www.smallbusiness.chron.aom

Images

http://www.thecopyworks.com

http://www.balancedscorecard.org

www. nottingham.ac.uk

http://www.krusecontrolinc.com

http://www.michaelko.me

 

 

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