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Noora Färkkilä: Measuring the Performance of Marketing - Concretizing Marketing Through the Use of Metrics (14.07.2008)

This study concentrates on marketing performance measurement. Often marketing is seen as a somewhat soft discipline with no concrete metrics available to model its performance. This study will open up the key metrics used in marketing performance measurement today, and it will also give marketers means to benchmark their measurement practices against other companies.

In this study marketing is found to have a dualistic nature when it comes to measurement. Both the tactical and strategic sides of marketing are important when performance measurement is concerned. A framework for marketing performance measurement is formulated to highlight the fact that many different aspects of business need to be measured and these measurement results combined to be able to monitor marketing performance. Also the measurement of customer lifetime value (CLV) is highlighted as the key metric in strategic marketing performance measurement.

The data used in this thesis were collected using a web-based questionnaire targeted at business executives in Finland. The questionnaire was sent to 15941 respondents of which 1157 questionnaires were returned and accepted into the final sample. The key research methods were analysis of variance and grouping analysis, which were used in formulating answers to 11 hypotheses founded on the base of the framework.

The key findings were that the use of a palette of different metrics has a connection to the positive perception that executives have of marketing performance. Also firms operating in different market situations, different positions in the market, and different business sectors prefer different metrics, and have different measurement practices. The key obstacles in marketing performance measurement are measurer’s lack of skill, and management’s lack of time. In addition to these it was noted that CLV is not yet a widely used metric in Finnish firms, but the importance of this metric has been identified in companies today.

This study lays a ground for future studies in giving a broad outline of marketing measurement in companies today. It will help further researchers in finding the key areas of interest that could be researched further.

KEYWORDS: Marketing performance, marketing performance measurement, customer lifetime value, marketing metrics

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