Attracting customers and making money is usually a key business goal. This is where marketing makes its most important contribution. Only marketing directly fuels growth. Other board functions fuel efficiency so combining both leads to more profit. As boards are accountable for making or beating profit, this is another key performance indicator (KPI).
Shareholders usually seek better returns than investing their money in a building society. Total shareholders return (TSR) equals the capital growth in the value of the share, plus the dividend yield (the amount of profit paid back to shareholders in return for lending their capital to a business). As a benchmark the most successful organisations deliver returns in excess of 20%. This is therefore a reasonable target to aim for.
Measuring, making marketing decisions on and delivering economic profit (profit after tax, less a charge for the capital tied up in the business) should be uppermost in your mind. This is a concept invented by British economist Alfred Marshall. If these measures don’t exist you will need to create them.
Successful profit management requires strong commercial awareness and commercial leadership skills
Thus be streetwise and a crystal ball gazer to anticipate profitable opportunities and how to realise them. Close relationships with the chief executive and the financial director are important too. To influence successfully, those relationships must be based on respect and speaking the same commercial and financial language. It is here that the marketing plan and activities must align to the targets set by the business. Demonstrate understanding and control by creating a performance dashboard, and always know where you are versus plan. Understanding and managing the budgetary variances contributes directly to profit, so maintain contingencies either to invest to make more money or to give some of your budget back!
Read successful marketing part 5 – brand development and delivery.