marketing performance management definitionMarketing Performance Management definition, as proposed Wikipedia updated content. Please comment below to indicate your approval or suggestions.

(Note on August 2, 2015: thanks to the many subject matter experts who responded to this post, which we shared in dozens of LinkedIn Groups, daily on Twitter, and in newsletters to many thousands of marketers, the definition has now been updated.)

Marketing performance management is the systematic management of marketing resources and processes to achieve measurable gain in return on investment and efficiency, while maintaining quality in customer experience.[1]

Marketing performance management is a central facet of the marketing operations function within marketing departments.

Marketing performance management relies on a set of measurable performance standards, a pointed focus on outcomes, and clear lines of accountability (i.e. roles and consequences).

Marketing performance management is comprised of six success factors: 1) alignment, 2) accountability, 3) analytics, 4) automation, 5) alliances, and 6) assessment.[2]

1. Alignment
Alignment of marketing activities and investments to business outcomes occurs when a marketing organization establishes a direct line of sight between marketing activities, investments and business outcomes.

Alignment begins with customer insights, to ensure that the marketing performance management approach will be rewarded by the marketplace. Secondly, alignment with enterprise objectives ensures that marketing efforts are in sync with what the company is striving to achieve. Enterprise goals can be cascaded to the business unit level and then to the department level to maintain consistency and drive synergy both horizontally and vertically. Marketing objectives that are developed this way can be cascaded to all of the marketing sub-functions for alignment.[3]

2. Accountability
Accountability is the monitoring and measurement of the commitment a person, group, or organization makes to deliver specific, defined results relating to the enterprise’s financial and strategic objectives.

Selecting the right metrics, integrating performance targets, and producing actionable dashboards are all integral to accountability.

Accountability encompasses making a commitment to a particular action, accepting responsibility for completing that action, and then disclosing how well you performed against your commitment. Accountability requires commitments, metrics, and consequences (positive and negative).

2a) Metrics
Measurable performance standards are called metrics, which are the cornerstone of accountability. Marketing metrics encompass Activity, Output, Operational, and Outcome categories:

  • Activity metrics relate to the number of things done in a process, such as the number of new blog posts or the number of events.
  • Output metrics relate to the result of a process, such as website traffic, media mentions, or event participants.
  • Operational metrics relate to the efficiency and effectiveness of a process, such as cost per lead, revenue per customer, revenue per sales representative, cost per customer, or leads per sales representative.
  • Outcome metrics relate to the consequences of a process’ outcomes, such as revenue, profit, win rate, pipeline contribution, share of preference, share of wallet, or share of market.

2b) Indicators
To manage causes and effects, managers identify Leading Indicators and Lagging Indicators:

  • Leading indicators are metrics that a manager can monitor before stakeholders see results. They are in-process metrics and process-input metrics that serve as warning signals of output, operational, and outcome metrics. Within a workflow diagram, the questions represented by a diamond are typical sources of leading indicators. They indicate whether there will be re-work, scrap, waste, or delays in what the process is meant to achieve. They are actionable and predictive. By monitoring leading indicators, managers can intervene to attain higher performance.
  • Lagging indicators are metrics that a manager’s stakeholders see. They are post-process metrics (i.e. output, operational, or outcome metrics). Lagging indicators are important for seeing the big picture, but they are not actionable in and of themselves.

2c) Reporting
Marketing performance can be reported in a wide variety of formats (verbal, pictorial, graphic, tabular, text, dashboard), which are used for accountability and decision-making. Ideally, reports revisit past commitments or forecasts, to enable learning and refinements for future performance.

Dashboards are particularly important in marketing performance management, visually displaying multiple metrics on a single screen or page. This allows managers to monitor performance at a glance, and to be alerted when performance varies significantly above or below expected levels. Ideally, dashboards show the relationships between leading and lagging indicators. This can empower people at every managerial level.[4]

3. Analytics
Analytics seeks to identify patterns in data by organizing it and applying mathematics, statistics, or algorithms to it. Analytics foster fact-based, data-driven customer, product, market and performance decisions and develop models to support scenario analysis and predict potential outcomes.

Marketing analytics can be used to create models to help understand, monitor, and predict customer behavior, such as likelihood to defect or predisposition to purchase. It can help managers quantify performance, make and optimize channel and mix decisions, understand the impact of a campaign on a sales list, and create many other types of insights.

Data availability is accelerating at an unprecedented pace, and analytics technologies can help marketers quickly synthesize data from various sources. Analytics can harness the power of data by converting it to actionable information and models that guide strategic investments and decisions that drive marketing performance.[5]

4. Automation
Automation of marketing processes reduces manual labor, errors, and inconsistency. It enables timely, personalized messaging to customers, prospects, and other stakeholders.

Automation provides infrastructure for marketing performance management. It spans marketing resource management, campaign automation, business intelligence, data management, reporting platforms, and scenario analysis tools.[6]

5. Alliances
Alliances are arrangements between companies to create additional value together. Distributors, resellers, marketing agencies, and other companies may co-develop, co-promote, and/or co-deliver various parts of the marketing mix (product, price, promotion, placement).

Marketing performance management requires information transparency, clear roles, and smooth handoffs between alliance members, both externally and internally. A spirit of alliance among the work groups across the marketing organization, and with other support functions and business units shapes the ecosystem that nurtures or hinders marketing performance. Collaboration cross-functionally is essential to marketing efficiency and effectiveness.[7]

6. Assessment
Assessment is the evaluation of strengths, weaknesses, and opportunities in marketing performance management. Assessment is typically conducted by benchmarking other organizations or comparing performance to a standard. Ideally, assessment is supported by a culture of genuine concern, dedication, and willingness among management and employees to continually improve performance.[8]

For more information, see 10 Ways Marketing Operations Creates Value
[1] Edited from American Marketing Association, 2005.
[2] Marketing Performance Management Study, VisionEdge Marketing with Forrester, Demand Metric and ITSMA, 2001-2015.
[3] Aligning the Organization with the Market, Marketing Science Institute, 2005.
[4] Marketing Accountability Standards Board.
[5] How CMOs Can Get CFOs on Their Side, Harvard Business Review, 2013.
[6] Marketing Technology Landscape, Chiefmartec, 2015.
[7] Top Challenges that Face Marketers, MarCom Central, 2014.
[8] Open Standards Benchmarking for Sales and Marketing, APQC.

See also