Marketing Value Creation

Marketing value creation builds long-term profitable growth by focusing on critical strategic marketing value drivers that ultimately create & deliver customer value.

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Marketing and value creation

Marketing functions have been under pressure for a long time to deliver tangible results. There are more than 25 years of research on this topic, numerous books have been written and a lot of debates on how to best measure Marketing and how it can be translated into financial values to improve profitability and ultimately deliver positive cash flow.

Still, the headlines keep coming, “Survey finds marketers are still struggling to measure ROI“.

As Marketing is an intrinsically value-creating discipline (Kotler 2020), the question is, how does Marketing change this long-time paradigm and create a position of strength, leading the way in delivering tangible results?


Marketing value creation and future focus

When looking at the Forrester 2021 Global Marketing Survey B2B results, Marketing leaders say that they are adapting their strategies to support the company’s growth objectives. The focus includes proving that ROI is still paramount while prioritising marketing strategy and planning, strategic brand management, and introducing new products whilst making customer experience a primary area.

And as the value creation elements start emerging around the customer, the brand, and innovation, several fundamental responsibilities in the strategic planning process need to be highlighted to address some of the ROI issues.

The need to set business strategy-based marketing objectives has probably never been higher. One cannot emphasize enough the importance of having a very tight chain of objectives, strategies, measurements, targets, and metrics that delivers on specific business goals.

Having a measurement system and process for measuring cannot be an afterthought. A marketing system needs to hold for scrutinisation and evaluation when it comes to longer-term marketing investments that go into building a brand and where the direct financial outcomes can’t be seen in the same financial year.


The challenge with Marketing ROI metrics

One of the main challenges for marketing value creation is that some of the most highly used measurements in marketing, such as awareness, salience, preference, and customer satisfaction, are interim measurements and do not directly financially impact a company.

While a calculation of short-term return on promotional marketing investments is fundamental to marketing, the question for marketing is how do you still translate these interim measures into financial outcomes, and what is the additional long-term impact of the investments?

So, what is the solution for Marketing to be able to substantiate intermediate brand and customer metrics that have a long-term impact on a company?


Short and long-term marketing dashboard

Farris and Reibstein emphasise the importance of building a marketing dashboard to see how the “marketing expenditures can have a short-term effect on intervening constructs”, including awareness, preference, etc., and a direct impact on short-term sales. This way, companies can understand the marketing flow throughout the system and its effects.

The second area of importance is to agree on high-level Marketing consensus measurements with key stakeholders, including the C-suite. The company can jointly agree on the critical values to create and decide what measures are valuable and relevant.


Intangible marketing assets

In his work, Closing the Gap between Marketing and Finance, David Reibstein outlines that for leading global companies, intangible marketing assets such as brand equity, customer equity, and distribution networks in a company make up the market value. When a company exceeds its book value, the difference arises from the value of the intangible assets.

Suppose intangible marketing assets drive the company evaluation. In that case, it becomes imperative to understand the connection between marketing expenditures and these intangible assets and how to balance short- and longer-term marketing investments.

But other essential marketing domains also create value. Innovation is, of course, one of them.

Whilst the most obvious question is what sales uplift will be generated from marketing investments at launch, perhaps an equally important question is how much time should Marketing be involved in the product innovation process to make the launch a success?


Marketing value creation drivers

With the intangible marketing assets, brand equity, customer equity, and distribution networks, coupled with marketing’s role in developing segment-based insight-driven innovation and determining an effective point along the digital marketing maturity curve, these form the top strategies for marketing value creation.

  • Building brand equity
  • Building customer equity
  • Segment-based insight-driven innovation
  • Moving along the digital maturity curve

Before diving into each marketing value creation driver, let’s understand the concept of value creation first.



Value creation definition

What is the definition of value creation? In layman’s terms, you can say that value is created when a resource is enhanced from its previous state, and as a result, it’s now worth more.

More specifically, the value created is the difference between the value that resides in a product and the cost of producing it.

To provide an even more exact and in-depth definition of how to create economic value, the book Origin of Wealth by Beinhocker outlines three conditions that need to be met:

  • Value transactions need to be irrevocable,
  • All value-creating economic transformations and transactions need to reduce entropy (randomness, uncertainty) locally while increate it globally,

All economic transactions produce artifacts or actions that are fit for human purposes.


Value creation in business

All businesses need to create value to survive.

The question about how to create value for a business depends on who you ask. Different stakeholders and business leaders will have other points of view.

Suppose a business has an inside-out perspective on selling goods and services. In that case, it may want to reconsider its viewpoint based on Levitt, the famous author of Marketing Myopia said. “The organisation must learn not to think of themselves as producing product and services, but as buying customers, as doing the things that will make people want to do business”. If you adopt this approach, that means value creation in business, and by definition is to create value for its customers, first and foremost.

For the owners of a business from a financial standpoint, value creation for a business or shareholder value creation is defined as the financial worth the owners receive for owning shares in the company. Shareholder value increases when a company earns a return on invested capital (ROIC) greater than its weighted average cost of capital (WACC).

However, others believe that shareholder maximisation is harmful long-term and advocate for a more balanced view. It is argued that a modern standard should be developed, which includes topics such as supporting communities, fairness, employee investment, and ethics.


Value creation for customers

The understanding of customer value for a marketing organisation is fundamental.

First, we should not forget that a product’s or service’s value differs from customer to customer. The reason is that customers have a different perception of value and how much it is worth them.

Gautam Mahajan provides a simple and easy-to-remember formula to describe customer value where customer value equals the benefits – cost (CV = BC).

You can alter the total customer value by increasing the company’s benefits or decreasing costs.

But the fundamentals of customer value are very complex (Sawhney). A company needs to understand the hearts and minds of the consumer since the value is relative to other alternatives, and it has different dimensions. Value is multi-dimensional; thus, crucial for a company to deeply understand the functional, emotional, and psychological value of a particular benefit.

And as Sawhney says, “you don’t define value; your customers do“.

There are many customer values to consider. Harvard Business Review (HBR) has outlined that there are as many as 30 elements of value. Understanding each building block will generate a return for more robust customer loyalty and consumers’ willingness to try and brand.



Marketing value creation - linking marketing investments to financial outcomes

With increased pressure to substantiate value from marketing investments over the years, ironically, Marketing has done an inadequate job to marketing the marketing function and its credibility to provide marketing value.

Already in 2004, Peter Doyle wrote in his book Value-based Marketing that “Marketing Managers rarely see the necessity of linking marketing spending to the financial value of the business”.

In the last twenty years, Marketing seemed to evolve into two camps – camp traditional and camp digital. The digital camp focused on tracking the return on marketing investments using technology platforms and CRM programs. At the same, this marketing stream was re-branded as performance marketing, while the traditional camp continued to build brand advertising campaigns to drive future demands and provide marketing services.

It’s certainly been a battle of finding the best route to create marketing value. However, recently Forbes wrote, “It’s time to stop thinking about brand and performance separately; the two needs to co-exist.


Marketing value creation long and short

Les Binet and Peter Field outline in their book: The Long and the Short of it how campaign results can develop over time. They recognise the growing tension between short-term response activity and long-term brand building and that only using short-term online metrics can have severe implications for long terms success. It is not about either; success comes from balancing the long and the short.

But even so, the credibility issues of linking marketing to financial outcomes remain.

Boards and Executive teams have a hard time seeing the evidence of ROI. A study shows 61% of marketing leaders do not use ROI when making strategic decisions.

The question behind the question, though, is if Marketing is that bad for measuring return on marketing investment, or is it something more fundamental holding marketers back?


Marketing accountability is still number one on the agenda

While marketing accountability is the number one issue on the agenda of CEOs, the definition of marketing accountability signifies management with data understandable to the enterprise’s management.

What seems to be a pressing matter is the alignment issues between Sales, Marketing, and Finance of what successful ROI looks like.

The failure to prove marketing value seems to be found in the inability of organisations to agree on useful definitions and agreed metrics or upper-level marketing consensus measurements.


Marketing value creation with intangible assets

Much of the misalignment in marketing measurements stems from Marketing’s role in building intangible assets over time.

As said earlier, it is not the tangibles that make up the market value for global companies; it’s the intangible assets such as brand equity, customer equity, and distribution networks.

ROI is defined as (Sales Growth – Marketing Cost) / Marketing cost = ROI. The challenge is that a short-term ROI measure doesn’t consider the potential for revenue growth long-term. So even if a Marketing function provides a high ROI on a promotional campaign, this may not be sufficient for the stakeholders if a company also makes sizable investments in building brands.

How willing is a company to track and evaluate return on investment beyond a financial year?

As marketing-related assets primarily drive a company’s market value and long-term intangible activities for more than a year, a finance department does not see the link between marketing investment and financial metrics. (Closing the Gap between Marketing and Finance. David J. Reibstein)

Without a clear link between marketing spending and intangible assets and the intermediate measures such as brand awareness, salience, and customer satisfaction, marketing investment will still be treated as a discretionary expenditure.


The use of NVP to evaluate marketing

One solution is to build agreed links between the investments in marketing-based assets (brand and customer) and cash flow similarly to companies’ for capital projects, measured as net present value (NPV) of future cash flow. That means that when Marketing invests in building customer value and brand equity, it should not be measured or classified as short-term ROI.

While Marketing needs to be accountable to drive this change, it shouldn’t be a one-way street in a company. However, the challenge remains to determine and agree on the link between marketing investments and financial outcomes.


Developing long-term financial standards for marketing

Currently, there are no externally validated long-term standards; however, the landscape is changing with MASB developing standards to link marketing activities to financial outcomes.

In the meantime, perhaps it is about changing the conversation: What is the ability to keep charging a premium price without long-term investment in the brand?


Marketing value creation – building brand equity

Much has been written about building strong brands, defining brand equity, and the importance of building brand equity for a business.

Brand equity as a concept was built during the 90s.

Akker (1991), for instance, defines brand equity as a set of assets or liabilities in the form of brand visibility, brand associations, and customer loyalty that add or subtract from the value of a current or potential product or service driven by the brand. In his book Building Strong Brands, he describes how brand equity generates value through brand awareness, brand loyalty, perceived quality, brand associations, and other proprietary brand assets.

Another brand equity model is Keller’s (1998), which is more focused on emotional responses created by the customer. His pyramid focuses on five steps; a brand identity which answers the question: of who you are– i.e., vision and values; brand meaning which answers the question: of what you are – i.e., performance and imagery; a brand response which answers the question: what customer thinks about you – i.e. judgment and feelings, and brand loyalty which answers the question: do customers identify themselves with the brand – i.e. becoming an advocate.

While Keller’s brand equity model focuses on emotions, Akker’s model focuses more on recognition and how well a brand is known.

Kotler states that brand equity is the added value endowed on products and services. It may reflect how consumers think, feel, and act concerning the brand. If consumers react favorably to products, it builds brand equity when adding or subtracting brand equity. If consumers reach out negatively, it will detract from its brand equity.


What is the difference between brand equity and brand value?

It is essential to understand the difference between brand equity and brand value. Even though they are linked, they are two different things.

Brand equity is consumer focused, as its value is derived from consumers’ perceptions, experiences, memories, and associations concerning the brand. Brand value decides the monetary value created by the brand for the company in the market.

The difference between the two is that brand equity refers to a value premium that a company generates from a product with a recognisable name compared to a generic equivalent.

On the other hand, brand value is the net present value of future cash flows from a branded product minus the net present value of future cash flows from a similar unbranded product.


Building strong brands

With marketers under pressure to prove and deliver a return on marketing investment, this also directly affects how a Marketing function should think or re-think how to build strong brands. The approach to brand building is evolving.

The traditional process of building strong brands can be summarised as taking a segment-based insight-driven approach, creating a unique brand positioning with a point of difference in the minds of the consumers, and developing strategies for distinct target markets. When marketing programs are implemented, they need to be thoroughly evaluated for profitable revenue growth with an understanding of interim measurements.

However, in his book How Brands Grow, Byron Sharp, Director of Ehrenberg-Bass Institute, outlines evidence-based guidelines for developing strong brands that contradict many traditional marketing practices. He argues that many marketing books that focus on differentiation, targeting, and building loyalty are not based on scientific study but rather on old myths and anecdotes.

How brand grows outlines seven scientifically derived rules for brand growth. As referenced:

  1. Continuously reach all buyers of the category (communication and distribution) – avoid being silent
  2. Ensure the brand is easy to buy (communicate how the brand fits with the user’s life)
  3. Get noticed (grab attention and focus on brand salience to prime the users’ minds)
  4. Refresh and build memory structures (respect existing associations that make the brand easy to notice and easy to buy)
  5. Create and use distinctive brand assets (use sensory cues to get noticed and stay top of mind)
  6. Be consistent (avoid unnecessary changes whilst keeping the brands fresh and interesting)
  7. Stay competitive (keep the brand easy to buy and avoid giving excuses not to buy (i.e., by targeting a particular group)”.


However, there are a lot of debate surrounding the definitions and the importance of some of these scientific rules. For example, when Sharp wrote that it was impossible to place a value on brand perception, former Professor Mark Ritson wrote in MarketingWeek that “Byron Sharp was wrong – of course, brand perceptions influence sales.

But there are other opposing views between them regarding building brands.

For example, while Sharp believes that distinctiveness is more important than differentiation, Mark Ritson argues that differentiation and distinctiveness are equally important and compatible. Ritson says, “Differentiation is by nature a concept where a brand tries to occupy a unique position in a consumer’s mind and market.”


Building brands short and long-term

Building strong brands requires a substantial marketing investment over a long period, which is one of the reasons marketing is under pressure to substantiate ROI.

However, the reasoning from an empirical point of view may have been missed in the discussion. Studies suggest that for an optimum balance of brand and activation expenditure, the average is around a 60:40 split.

In terms of optimising marketing campaigns, Binet and Field, in their book: The Long and the Short of it, provide valuable insights into how campaign results develop over time and how to think about brand vs. sales activation. As referenced in their book:

  • “How long-term effects are generated fundamentally differs from how most short-term effects are produced. Although long-term effects always make some short-term effects, the reverse is not true, and long terms effects are not simply an accumulation of short-term effects.
  • A succession of short-term response-focused campaigns, including promotionally driven ones, will not succeed as strongly over the long term as a single brand-building campaign designed to achieve year-on-year improvement to the business.
  • Volume growth can be quickly achieved, but pricing effects take longer; optimum profit growth over the long term requires both. Focusing on the short-term result will not maximise long-run profitability.
  • Emotional campaigns, mainly those highly creative, produce considerably more powerful long-term business effects than rational persuasion campaigns.
  • Rational campaigns produce more powerful short-term sales effects and are very seductive to organisations focused primarily on short-term results. They will not deliver maximum long-term success, however.”

Marketing value creation – building customer equity

Every company should have at least one specific customer goal, especially if you look at it from the viewpoint of Peter Drucker, who said, “the purpose of the business is to create and keep a customer:”

When creating marketing value, one of the biggest questions is where growth will come from. Should strategies be focused on nurturing the existing customer base or growing the current base?

In the Journal of Marketing 2004, the authors presented a strategic framework that enabled competing marketing strategies to be traded off based on projected financial return.

Their model defined customer equity “as the total of the discounted lifetime values summed over all of the firm’s current and potential customers“.

The authors also pointed out that an increased customer lifetime value is affected by increased customer attraction (customer acquisition) and increased customer retention (attrition). 


The three drivers of customer equity

There are three drivers behind building customer equity—value equity, brand equity, and relationship equity (also known as retention equity). Do the customers see value in your product offerings, are consumers attracted and retained by your brand, and are customers intensely loyal to your brand?

That means, to create customer value, strategies should be focused on enhancing the current range of products or introducing new ones, creating awareness, generate positive attitudes, and emotions of your brand, and finding ways to strengthen customer loyalty.


The law of double jeopardy

However, the strategic choice of either attracting new customers or retaining old ones may not be a consideration set any longer.

According to Ehrenberg-Bass Institute, brands grow mainly by selling to more people rather than targeting a segment of loyal brand users. The primary way marketing communications enhance growth is by increasing penetration, and the most significant gains come from customer acquisition. Brand loyalty is less critical and is, to a large extent, a side-effect of penetration.

Brands with high penetration tend to have better loyalty rates, as measured by the share of category requirement and customer retention. This theory is called The Law of Double Jeopardy.


The importance of customer experience

It seems relatively intuitive that if a company improves its customer experience, this will increase customer satisfaction and improve the customer lifetime value, CLV.

The link between the customer experience and customer satisfaction has been established from a research perspective. “Reliable brands that fulfil the value proposition, foresee and respond to consumer concerns and reinforce perceived quality in present/past consumer experiences are key to achieving satisfaction(Hernández-Ortega and Franco 2019.)

Further, Reichheld (2004) has found a strong relationship between customer satisfaction and retention, even if it is not linear. As customer satisfaction is defined as meeting or exceeding expectations, an easy way to increase customer satisfaction is to reduce expectations. However, if a company goes with that approach, they may see satisfaction levels go up, but the willingness to purchase may go down.


The importance of building customer journey mapping

Creating a customer journey map is the centre of building a superior customer experience. It helps to understand and visualise the customers’ experience and impressions before, during, and after a purchase. By doing this, a company can identify different pain points, gaps, and any improvements the company needs to undertake.

According to Forbes, the essential elements of mapping out a customer journey is to identify the process, i.e., the sales funnel stages: awareness, research, consideration, purchase, and support, understanding the different touch points across the journey, and identifying the thoughts and emotions customers have at each touch point.

Since customer equity is built on customer acquisition and retention, two different marketing strategies, success depends on the KPIs set for the various business challenges.


The importance of customer engagement

The concept of customer engagement, i.e., creating emotional relationships with customers, is critical for marketing strategy.

Many industries have undergone a tremendous amount of change in the last decades. The pharmaceutical industry is one example where the industry has been faced with patent protection expirations, generic competition, and a lack of new blockbusters and innovation. Consequently, the industry needed to re-think its business model and find new unique differentiations. (Martinez, B. & Goldstein, J. 2007).

Other industries, such as the financial service sector, have also undergone a vast amount of change for a long time. For instance, customer retention has become critical in the financial industry as banks, on average, have an estimated churn rate of 15% per year. Therefore, the strategy of customer engagement has become a way to retain customers while increasing the profitability of the existing base of customers. (Adobe whitepaper 2008. Executing on a customer engagement model).


Building customer engagement

As customer engagement is cross-functional in an organisation, a company must clearly define where they want to go. The marketing function should play a vital role in that process, becoming a coordinating hub that provides valuable insights, strategy, and program content.

A customer engagement model can be as complex as a company wants to make it.

The simple model contains four distinct phases, which in itself requires some in-depth analysis and consideration of these questions:

WHERE – Where will the touch point occur in the sales situation with the customer or outside the sales call?

HOW – How will you create the experience – through digital or traditional means?

WHO – Who do you focus your efforts on – the primary customer, the sphere of influencers, or the consumer?

WHAT – What is the array of tools you choose to develop to create a much stronger bond and relationship?



Marketing value creation – Innovation

Launching new products successfully is imperative for any organisation’s prosperity and long-term future success. And while a product launch forms a critical part of the marketing plan, this is not only one person’s marketing responsibility, nor a single marketing function’s obligation, but rather a whole company matter.

When you look at the success factors such as developing unique products, a well-defined product concept before development, careful consideration of the target market, and a systematic development process, it points to total company responsibility.

But even if it’s a team effort, how successful is Marketing in controlling and delivering their part?


Marketing and innovation

According to Forbes, they say; ‘It’s time for Marketing to reclaim innovation’. It seems that Marketing has lost its credibility in yet another area, even though a build-back plan includes recognisable marketing remits:

  • Communication
  • Creating space for creativity
  • Bringing back the human touch
  • Making it measurable

Other thought-leaders believe Marketing needs to manage innovation in a much better way. Marketing Week, for instance, states “that managing and understanding innovation will increasingly become the challenge and test of a marketer’s competence“.

When evaluating why most product launches fail, it’s in the areas of market size overestimated, poor product design, incorrect positioning, too high price, cost of product development too high, and competitors fighting back harder than expected.

Once again, most remits sit within the control of Marketing.

With all this said, where should Marketing invest resources, including time to best create value in the product development?

Harvard Business Review (HBR) says, “Understanding people’s fundamental needs and drivers, identifying customers, and developing the entire go-to-market and usage ecosystem are the essential aspects of marketing — and the ones that the success of innovations, especially breakthrough ones, hinge upon”.


Marketing value creation – needs-based segmentation

Regardless of the industry, applying needs-based segmentation is essential in product development. The approach should be driven by end-user insights to move product development and brand strategy forward. (Greengrove, K. 2002. International Journal of Market Research).

Kim and Mauborgne provide insights into their Blue Ocean Strategy. Competing in overcrowded industries (red oceans) is not a way of sustaining high performance; instead, it is about finding and creating a so-called blue ocean, an uncontested market space.

Players define and accept the market space and industry boundaries in the red ocean. The battle is fought to win the market share of existing demand, and the prospects of increased profits and growth are reduced. Blue oceans, on the contrary, are defined as untapped market space, new demand creation, and high opportunity for growth. (Kim, C W. & Mauborgne, R. 2005)



Marketing value creation – moving along the digital maturity curve

Why is digital marketing maturity necessary?

Imagine if you bought a house and land package and came to the building site when the builder was preparing the foundation without machinery. Instead, the building team used spades, daggers, and wheelbarrows; getting the foundation ready seemed to take forever.

Not only would you have a hard time accepting this approach, but you would most likely check if there was a none-technology-use inclusion in the contract. And if not, either break the contract or pay extra to get this done quickly, accurate and to the same standard as your neighbour.

Most of us would think building a house without high-tech tools and machinery is not the best way to complete the house on time and to a high standard. But when it comes to building the home of marketing, it is often accepted that manual work would do the job or at least some of it.

According to research, 51% of workers report wasting at least two hours daily on administrative tasks, such as data collection and entry. When you think about removing the administrative task from a marketing perspective, moving along the digital maturity curve helps to create marketing value.

It takes out waste in the system and drives costs through operational improvements. It also helps Marketing to move from a pure product or service orientation into a customer-centricity model.


Example of moving along the digital marketing curve

An example of moving along the digital marketing curve can look as follows: building a website, sending out eDMs, posting on social media, starting with digital adverting, then integrating website functionalities, implementing CRM systems, investing in marketing automation platforms, implementing e-commerce and shopping online, having the ability to provide a personalised user experience across touch points and user demographics, and then use data in real-time to gain customer insights for improving business decisions.

As these processes are embedded, the more significant the impact should be seen in the value it creates.

Ultimately, a Marketing function cannot run in a silo, and the digital maturity pace needs to strategically be in line and aligned with the business’s overall digital maturity objectives and its strategic business goals.


What is a marketing funnel?

The sales and marketing funnel is a central part of any marketing operations, so let’s start from the very beginning dating back to 1898.

This was when E. St. Elmo Lewis developed a model to map an academic journey from when a person is exposed to a brand to the point of purchase.

At university, though, most students learn about the more recognised AIDA model (awareness, interest, desire, and action) built from this original theory.

This classical marketing and communication model was later associated with a so-called sales funnel or conversion funnel in 1924.

Today, most marketers know about different theoretical sales & marketing funnels that outline progression in the marketing and sales process, usually from awareness build down to purchase.

Don’t forget that the funnel theories are about 100 years old. They are general, and they don’t necessarily apply to your industry. It is an average, but still only a model.

What’s important is that all marketers should define and build a funnel suitable for their business needs and specific approach, not using a generic funnel.

Most marketing funnels have a defined top of the funnel (TOFU), middle of the funnel (MOFU), and bottom of the funnel (BOFU). The top of the funnel represents the awareness stage, the mid-section the consideration part where leads are marketing qualified and nurtured until passed over to sales at the bottom of the funnel.


Why is a marketing funnel important?

While the marketing funnel is associated with lead generation and how a lead “travels” through each stage of the funnel to final conversion, a funnel serves many other purposes for an organisation.

It helps organisations define the customer’s journey and map it out through the different stages. It also brings sales and marketing together as a team and shares accountability across the sales process to generate revenue.

Forecasting is also essential to use the sales and marketing funnel, especially regarding financial modelling and new product launches.


Financial modelling

Financial modelling helps sales and marketing departments project sales per channel in the different stages, ultimately working towards a revenue target for a financial year. It also helps to predict the time it takes to build up revenue.

Due to the customer journey or consumer purchase decisions, some sectors have a very long lead time, so pipeline considerations are critical.

It may be that a company has fantastic sales achievements this year, but with a lack of pipeline, sales may look poor down the line. With dynamic financial modelling using the funnel, marketers can control the business outcomes better. Estimation and real-time knowledge of conversation rates are the essence of the sales funnel to evaluate short- and long-term return on investment.

With clearly defined sales funnel stages, a marketer can better understand the investments required and the effect across the different stages. You will also understand the cost of each step in the process; therefore, it becomes easier to estimate the investment required to change current run rate trends.


New product launches

Projecting revenue of new product launches is difficult for any company as there is no historical data to rely on unless there is a pattern of similar products launched in the past.

The best a company can do is to make assumptions about success rates in the different stages. If you correctly define and design the stages in your company’s sales funnel, you will understand the conversion rates in real-time. That means you can pro-actively make changes rather than chasing reasons why sales did not happen later.

A trial-to-conversation metric is one of the most critical measurements regarding product launches. What everyone wants to know is if the person who trials a product, in the end, will purchase the goods.

For example, a B2B marketer can easily follow uptake rates and the likelihood of repeat purchases through your customer network. Let’s say that Marketing has developed a mobile app tool to increase doctor and patient interaction. You would then expect a positive outcome, a shift in recommendations, and, therefore, a quicker uptake compared to those doctors that do not yet have access to the same service.

Developing and actively managing a company’s sales and marketing funnel is an essential part of marketing value creation.