Another investigative tool that can be used to research a drop in a company’s sales performance is a marketing audit. A marketing audit is an examination or snapshot of the state of a company’s marketing strategies as they are actually implemented. Here, managerial control becomes important. Was the strategy implemented as intended? Is the strategy working?
For example, when Xerox launched a new workstation, the company ran a promotion giving a customer who bought a workstation a discount on a copier. Despite the promotion, the overall sales of the workstation failed to meet Xerox’s expectations. There were, however, geographical areas in which the sales of the product were quite good. What was up?
Upon closer examination, Xerox’s managers learned that the firm’s salespeople in these areas had actually developed a much more effective selling strategy: they sold the copiers first and then offered the workstation for free by applying the amount of the discount to the workstation, not the copier. Xerox’s marketing quickly revamped the promotion and communicated it effectively to the rest of the sales staff.
Fidelity is the degree to which the plan is being implemented as it is supposed to be. In the example of the Xerox workstation, there was substantial fidelity—the plan was being implemented right—but the plan was poor. Usually, though, the problem is that the plan is not executed properly.
More serious issues require more in-depth study. When Mark Hurd took over as Hewlett-Packard’s CEO in 2005, he ordered an immediate audit of HP’s sales and marketing activities. Metrics such as the win/loss ratios of business deals, the length of time it took to get a proposal approved and presented to a customer, and other factors exposed numerous problems Hurd needed to fix. The audit identified the causes, many of which Hurd and his team were able to deal with quickly. As a result, HP increased market share and captured the lead in the PC market in the first year following Hurd’s appointment.
According to the marketing consulting company Copernicus, a marketing audit should assess many factors, but especially those listed below. Does any of the information surprise you?
Top Ten Factors a Marketing Audit Should Assess
Key factors that impacted the business for good or for bad during the past year.
Customer satisfaction scores and the number and type of customer complaints.
The satisfaction levels of distributors, retailers, and other value chain members.
The marketing knowledge, attitudes, and satisfaction of all executives involved in the marketing function.
The extent to which the marketing program was marketed internally and “bought into” by top managers and nonmarketing executives.
The offering: Did it meet the customer’s needs as expected, and was the offering’s competitive advantage defensible?
The performance of the organization’s advertising, promotion, sales, marketing, and research programs with an emphasis on their return on the money invested in them.
Whether the marketing plan achieved its stated financial and nonfinancial goals.
Whether the individual elements of the marketing plan achieved their stated financial and nonfinancial goals.
The current value of the brand and customer equity for each brand in the product portfolio. 1
You were probably surprised by a few items on the list. For example, did your marketing plan include a plan to market the marketing program to important internal parties, such as the company’s managers and employees? We discussed earlier that the marketing plan should persuade others to invest in the plan’s success. Part of that persuasion process could actually include a plan to communicate the plan! A marketing audit should assess the extent to which the plan was successful in achieving the goal of getting important people and departments within an organization to buy into the plan.
Do you think the “top ten” list above is prioritized correctly? Some people would argue that the first four or five factors that need to be examined are the most important. Other people would argue that only the financial factors (factors 7–10) matter. Which group is right?
The answer really depends on what’s important at the time to a company. Because HP hired Hurd to improve the company’s poor financial performance, financial issues were likely his top priority. He knew, however, that the causes of the poor financial performance probably lay elsewhere, so he had his team look deeper. Financial problems are usually the first to prompt a marketing audit.
Many firms don’t wait for problems before conducting an audit. Either they hire consultants like Copernicus Marketing Consulting to conduct the audit, or they do the audits themselves. If a firm’s budget doesn’t allow for a complete audit annually, the company will often focus on one particular area at a time, such as levels of satisfaction among its customers and channel partners. The following year it might audit the company’s communications strategy. Rotating the focus ensures that every aspect is audited regularly, if not annually.