What contribution?

As marketers, we are continually evaluating the contribution of our initiatives to the business. It seems our perpetual existence is to determine what is working or not working, what to continue or discontinue. So one of our main objectives is to determine the most effective way of revealing the profitability of our marketing activities. Once we are able to assess profitability we are able to prioritize. So what is the answer?

Three words: Net Marketing Contribution (NMC)

NMC = [Market Demand x Market Share x (Revenue per cust - Variable cost per cust)] - Marketing Expenses

NMC can be utilized to evaluate overall marketing profitability, it is a means to determine the the impact of each strategy in relation to the business. This is by far one of the most useful tool that a marketer should learn to use in their professional career. This tool allows a marketer to maintain visibility of a few key strategic elements:

• Market demand = Grow market demand
• Market share = Increase market share
• Revenue per customer = Grow customer purchases
• Market demand = Enter or exit markets
• Variable cost per customer = Lower variable cost per customer
• Marketing expenses = Increase marketing efficiency

Controlling the components above in relation to its contribution to the NMC will provide more insight as to how you need to change your strategy.

Visit our website and learn more about NMC and the tools that we have available to facilitate