How do you personally define success? High income? Substantial net worth? A fine home? Peer recognition?On a personal basis, there are likely almost as many definitions of success as there are people in
world.
In marketing, though, there are just four measurable elements of success:
Profitability, Market Share, Customer Satisfaction and Customer Retention.
Profitability requires little explanation. The very reason businesses exist is to make a profit, or generate more revenue than they pay out. Profitability may be increased by reducing overhead and
cost of goods sold—or by increasing
price to
buyer.
But prices can only be raised so much. Per
laws of price elasticity, as prices rise, unit sales tend to decline, as does Market Share; which brings us to our next measure of marketing success.
Market Share, as a measure of success, is important to marketers since
greater
share,
more stable
brand’s performance is in
marketplace. A product with 65% market share is a force with which to be reckoned. A product with 3% share is vulnerable to a variety of market factors such as competitive pricing, promotions, loyalty to better-known brands and more.
Financial managers understand
impact of Profitability and Market Share. But concepts such as Customer Satisfaction and Customer Retention are softer items and tend to be treated as lesser by those managers. Yet,
long term success and growth of a brand is highly dependent on them.
Customer Satisfaction doesn’t appear on a balance sheet. It can’t be measured in dollars and cents. It’s measured by
customer’s feelings about a brand. Does
brand deliver its promise? Is it a good value? Does it bring status to
owner? Is
customer generally happy with
product? Customer Satisfaction begets repeat purchases, loyalty, word-of-mouth advertising and, of course, long-term profitability via Customer Retention.