Marketing performance is most effectively measured by its end results, such as bookings, revenue, or profit. Unfortunately, these measures are inadequate because the results do not become available until it's too late to make constructive changes.

Marketing difficulties can sink a company. Even though lack of cash and poor cash management are ultimately behind failed companies, it is often poor marketing decisions that got the company into trouble in the first place.

All management functions need checks and balances, and marketing is no exception. Marketing can intimidate the rest of the staff, and many times others are reluctant to challenge them. However, using common sense and a little knowledge, other team members are often essential in keeping Marketing focused and on their toes.

Most importantly, the successful manager must understand and accept that in the marketing world, perceptions are more important than fact. Customers are far more likely to act on their perceptions of suppliers than on the product or service specifications. Therefore, how a company positions itself is crucial to the company's continued growth and health.

While trying to satisfy customer perceptions, the management team must also overcome internal perception problems with marketing in order to be effective. Sales is a part of and controlled by Marketing. Unfortunately, Sales often has little respect within a company, and consequently, their input is disregarded. When they have bad news, management tends to kill the messenger rather than recognize that the bad news may accurately reflect a customer perception that is not based in fact.

This mistrustful relationship can also spoil good news, and the marking effort can get off track because of some of these perceptions. Consider the following examples:

On the other hand, salesmen have strong perceptions that can get them in trouble as well. To some degree, all these perceptions are true, but they must be controlled, or Marketing and management will be working against each other instead of against the real enemy -- the competition. This is the problem mentality against which management must be vigilant.

For example, Marketing personnel are inclined to build to forecast, even if the world is caving in on them. To them, the forecast is sacred, and should not be changed. Thus, Marketing is always the last to accept it when the forecast won't work and has to be modified. For them, accepting a reduced forecast is admitting defeat, so they will oppose making the adjustments that poor results and changing market conditions necessitate.

Marketing also tends to get carried away with huge gross margin percentages and overlook the need for an equally huge payback in real dollars. High percentages are great, but will the total dollars coming in cover the company's needs? Often, Marketing really believes that their pricing formula will guarantee the profit goals of a company. As a result, they are reluctant to review the analyses that indicate why reality isn't living up to the projections. I've seen any number of companies expect a 20% profit but end up with significantly less. No matter what the reasons, product mix, differences in sales volume, increased materials costs, or missed budgets, this discrepancy means that the original pricing formula wasn't valid.

Marketing personnel also tend to use the "master of the after" strategy. They’ll turn a company upside down to get their way, perhaps a low price or an unrealistic delivery commitment, and then when the order doesn't come, they’ll change their tune, noting that those conditions would have hurt the company anyway. With these kinds of tactics, they always sound right, and they keep that untouchable attitude among the staff.

Sales people can hurt a company when they are not good listeners, naively believe that customers really are their friends, and overcommit the company, even if it neglects short-term company needs.

Sales' role should be to sell what Marketing defines and directs and what will benefit the company. I shudder when I hear salesmen use words like "gross margin" or "product integrity." Sales is indeed responsible for keeping the customer happy, but they must balance this against the company goals and needs. Management has to support sales, because they are in a war out there with many competitors. The staff must bear the following concepts in mind:

Most salesmen will tell you that it is more difficult to sell inside the company than it is to sell to the customer. It therefore behooves management to accept sales for what it is, support their sales staff, and recognize some of the realities of managing sales.

The sales person's way of thinking means that they will make a unique part of the management team: by nature they are very insecure, have a high tolerance for indignity, are competitive, and have a well-disguised mean streak that helps them out do (out screw) the customer. Where multiple disciplines can be performed well by good managers, only special personalities can do sales well. The most common and most damaging handicap in those who do not have a "sales personality" is an inability to ask for an order, especially under adverse conditions. Where many managers can be successful without passion, sales people must have a passion for what they're doing.

A company in its infancy can be driven by the founder's gut feel for market needs and product definition. However, as the company grows and its market niche expands, the competition gets tougher and more fierce, and mistakes get far more expensive, even devastating. Although there will be a disjointed transition time and often a difficult cultural change, eventually the planning, development, and implementation process called marketing must become organized.

With or without changes in personnel, the analysis and assumptions behind marketing's efforts needs to be challenged and questioned. Marketing tends to believe that because they have thought through and planned their strategy in great detail they don't need these checks, but this thinking will get the company into trouble that can be easily avoided if the management team works together.

Marketing can take a company astray so easily because they are by nature Pied Pipers with great story telling and presentation skills that can persuade others to go along. However, the management team should be aware of and be careful to avoid the following marketing pitfalls.

• They will start to believe their own B.S.
• They will trust their forecasts and projections so much that they risk waiting too long to make changes.
• They are prone to underprice or give away services in order to make a customer happy.
• They want to be all things to all people, which can spell economic disaster.
• They may make impossible specification and schedule commitments.
• They will constantly push the system to overcommit.
• They seem to believe that competitors will just stand around and watch them take over a market.
• They tend to play down competition when making plans.
• They like to sell for the long term at the expense of the short term.
• They tend to take the customer's position without thinking it through.
• They will sometimes act like they work for the customer.
• They hate to lose, even to the detriment of the company.

New products and new programs need to be monitored, because marketing is often reluctant to give up or greatly reduce a program. It is difficult for marketing types to admit that they were wrong or have failed, especially to their peers on the management staff.

In spite of all this, marketing should be the driving force for a company. When a company's decision-making is based on economics and sound marketing, they have reached full maturity. In this situation, marketing is responsible for defining the products as well as analyzing and building the market.

When it comes time for the company to formulate their strategy, not only should marketing work with the other management staff to formulate the vision and mission, they have some specific jobs of their own. They will be defining the markets and determining how to develop them. They will also be defining the products and providing the diversification necessary to keep the company successful.

In planning, marketing's role is to drive the company and provide financial maturity. They should support the vision and mission by understanding the market and product, committing production, and defining the support functions needed.

Overall, the marketing personnel must be the experts on the market, individual customers, and the product. This expertise will extend to definition, planning, pricing, return on investment, production forecasts, and sales

To begin with, since it is the nature of marketing to conquer new horizons, it is important to challenge what new product and market directions they take.

The easiest market direction with the greatest likelihood for speedy success is to take new products to the market segment you are presently in, taking advantage of established marketing relationships that have been built up over time. In this relationship, the company is better able to gauge the customer base and their needs and resources.

Taking your present product to a new market segment is tougher because it takes time to determine those customer's needs and the difficulty of the competition. Before going into a new market, it makes sense to include marketing expertise from that new market rather than trying to develop that expertise internally.

The most difficult way to expand is to take a new product to a new market. The customers are unfamiliar, product needs aren't easily understood, the type of customer support required isn't clear, the competition is a complete unknown, and the time it will take to develop new sales is hard to determine.

So why do some many companies try to make this jump to a new product and a new market? I believe the main reason is that they are bored with their present success and like the excitement of a new venture into the unknown. Unfortunately, the radical changes involved in such expansion have been the downfall for many successful companies.

There are several phases in the pre-commitment evaluation of a new product. If this process is short circuited, the company is far more likely to fail in their expansion attempts. Even if the company has a robust market, a strong management team, and the resources with which to participate, they must still complete the three major tasks involved in such expansion: identify the market need, match the need with internal resources, and penetrate the market.

In identifying the market need, marketing and management together need to ask the following questions:

• Is there a market need?
• Is there a market pull from the customers?
• Is it an emerging or growing market?
• What is the product providing for the market?
• What are the customer's alternatives to buying the product?

All these questions relate directly to the product's potential for success in a given market. Obviously a pressing customer need can make a successful product, but if the product requires educating the customer, it will be a long, hard sell. Worse yet, if the best customer alternative is to do nothing, you may have to wait forever for sales.

After it's established that there is a need, it must then be established that there is a match between market needs and internal resources. This applies to many different types of resources, including technology, production capability, and capital. Certainly, if those resources aren't sufficient, it could be costly and time-consuming to put them in place.

There are assumptions behind any plan, and it is vital that those assumptions be carefully examined and understood by everyone. Marketing assumptions made in a vacuum concerning technological capability, production capacity, and manpower resources can be overly optimistic and harm future performance.

The third and perhaps the most important question to ask is, "How do you plan to penetrate the market?" Answers like "The market is $4 billion, and we should have no problem getting 0.01% of the market," are not sufficient. Is there a market channel in place? Can the existing competition be beaten? How many customers are clamoring for the product?

There are many ways to go about evaluating a product, but here is one sequence of helpful steps:

Feasibility -- Can the product be produced? Is there a market need for it? Will the investment make sense if the program is successful? What sounds and feels good can break down under a good analysis. Here is the moment to look at boundary conditions and to determine whether the program can be successful if all the assumptions come true.

For example, I have a friend who bought a restaurant and asked for my opinion. We did an analysis, and we did not have good news for him. Even with all the tables filled at night, and with three turnovers of customers per night (which wasn't likely), the restaurant would lose money. In a more sophisticated situation, I looked at a fiber cable manufacturing operation. After projecting yields that were very optimistic, using favorable pricing, and operating at full capacity, the company would lose money.

Development -- This is the phase in which the company must define the specifications of the product to match the market needs and determine the internal resources required.

Evaluation -- It is important to get the product in front of the customer and have it operated under field conditions.

Pre-Production -- This phase involves working out all the "bugs" to make sure performance costs and yields will be attained.

Production -- This phase includes manufacturing and all the supporting functions required. This is the phase that will make money, provided all goes well.

If any of these phases are short-circuited, then the development will probably be ill-defined, requiring constant changes to the product, and the product will end up incomplete and create cost and schedule overruns. It could also result in over-built inventories, missed cost objectives, missed sales projections, and costly quality problems. Finally, at the end of the product's life, the company still needs to support it, and the program could end up with expensive write-offs.

It takes months to develop a new customer, but it only takes seconds to lose them, and one unhappy customer can deter several potential customers. One effective way to bow out of a bad relationship is to raise prices until the customer rejects them. It is not a crime to walk away from a deal, and sometimes a company is better off without a given contract.

Top management must stay in touch with the market and the customers. One method of improving contact is to minimize the number of layers between top management and the customer. The company president must have his finger on the customer's pulse and be on call to visit or support marketing at all times. Often the president is the best salesman to put in front of the customer. Not only can the president make promises and commitments, he has the span of control to make those promises happen by setting the right priorities.

For effective planning and strategizing, it is important to understand how the customer uses the product and/or to what market he sells it. In companies that do not have a strong marketing structure sales personnel are the ones who fight to make customer service and products high priorities. They should be able to get the message through to the top without losing valuable information along the way so they can make sure the products and services continue to meet the customer's needs.

The company needs to present a positive, winning attitude, offer some mystique -- make the customers want to deal. Top management situations can help do this by turning negative situations into positive ones. When a customer has a complaint, they feel important when they can talk to someone in top management and be assured that their problem will be rectified. Challenges and unique requests provide opportunities for upper management to build customer relationships and should be brought to their attention. Keep in mind that the reason companies exist is to serve customers, so the company culture should be oriented toward partnering with the company to provide the best possible service.

Be wary of marketing when they put down the competition and fail to take their actions into account. Keep in mind that the competition is also meeting in planning sessions to find ways to increase their market position. It's a poor product plan that shows a dramatic increase in market percentage while the competition sits around a watches it happen. Rest assured, your competition is not going to watch you implement these strategies without a fight. Your competition isn’t simply going to roll over and play dead.

Marketing needs to know as much as possible about the competition, and their attitude towards competitors should be one of respect. Marketing must familiarize themselves with the competition's strategy, personnel, strengths and weaknesses, customer base, financial condition, and resources.

As much as possible, sales personnel should be compensated on the basis of performance. Not only is the trend toward guaranteed base pay being reversed, but the new stress on customer satisfaction has brought about integration of customer service quality measures and recognition of skills and experience into sales compensation plans.

Remember that sales compensation plans need to be built with the company's needs in mind, not the salesperson's. Since sales personnel are strongly influenced by rewards, structure the plans to reward accomplishment of company goals. If the company's goal is to add customers, reward successfully bringing in a new customer; if it's to add margin contribution, reward contracts closed with higher margins.

All key staff, including marketing, should participate in the development of multi-year plans. These plans should start with a vision and a mission and have detailed goals for markets, products, organizations, and people. A company can be successful without a vision and mission, but having them makes strategy, planning, and implementation easier because decisions can be keyed off the vision, mission, and goals, avoiding the need for endless detailed analysis for each separate decision.

How are the vision and the mission different? The mission describes the direction the company will take to accomplish the vision. For example, if a company's vision statement was, "To be the best, most profitable manufacturer of bathroom fixtures and to be recognized around the world as the 'King of the Crapper,'" it's mission might be, "To provide premium, innovative bathroom fixtures, using our new flushing technology to become the leading crapper company in the international market."

From this mission statement, marketing and technology planning can be done in detail. It also helps employees, suppliers, and customers understand what the company stands for.

Reporting

One of my favorite reports is a twelve month rolling forecast for revenue to give the company more insight about what may happen in the coming year. Keying forecasts off calendar or fiscal years is of less value because as the end of the period approaches, the amount of helpful information drops off and near-term planning can fall apart. It is reasonable to expect marketing to have a good understanding of and be planning for the coming twelve months.

All these reports should be discussed in management staff meetings with full participation. Reports are one of the best tools management has available to discern where marketing needs to be checked or balanced.

All these things help keep marketing from taking a company astray by tempering the Pied Pipers with facts. However, shored up by the company's vision, mission, resources, established customer relationships and common sense, marketing can close the gap between the customer and the company, and lead the company, not astray, but to success.