Role of Marketing in Impacting Profitability Case Study

Marketing’s Role In Profitability

Role of Marketing in Impacting Profitability

The need for any company to see themselves as global competitors starts with companies putting their markets and customers at the center of their strategies, and measuring how effectively they are attracting, selling, and serving their prospects and customers. This dynamic of making an entire company aligned with the needs of customers is called being demand-driven. The concept of aligning and synchronizing the many departments, buyers, suppliers, and strategies to the needs of customers is called creating a demand-driven organization. The implications of becoming demand driven have been quantified in many different studies of marketing’s impact on an organization’s profitability. Of all these studies, the most significant are those by Columbus (2003) which states the unique perspective of looking at the distribution channels a company sells through from the standpoint of assets and liabilities, and measuring the ROI of strategies aimed at attracting, selling to, and servicing clients. This is interesting research to consider in the analysis of how marketing specifically influences the financial strength and growth of a company. In his research, Columbus claims that Microsoft was able to increase sales by 30% throughout France using lead management and escalation for their mid-market ERP applications.

In quantifying the financial impact of marketing on the profitability and long-term financial performance of any company, the processes surrounding order capture, order management, fulfillment, and order tracking are all critical. Askegar and Columbus (2002) extensive analysis of best practices in high tech manufacturers also highlights the integration of order capture, order management, and order fulfillment systems to the broader marketing systems, the higher the ROI on both the marketing and systems investments. Their best practices grid that emerges is one that shows when marketing strategies across industries are synchronized to sense and quickly respond to demand, there is a corresponding jump in the level of gross margins generated, a lower level of Days Sales Outstanding (DSO), and lower levels of Accounts Receivables as customers pay faster when they are more satisfied with the transaction service they receive. These financial results point to the financial strength of companies who become demand-driven and align all their strategies specifically to the needs of their customers, working to create a value chain that senses and responds quickly to changes in customer preferences and requirements. This agility of marketing strategies is only possible when companies become centered not on their own internal processes, but on the needs, preferences, and wants of their customers. Truly becoming demand driven actually exposes to the most critical of financial measures of performance to the influence of customers. Integration of systems is essential for this level of quick response to market demands is necessary, as the research in this paper discusses.

Where marketing’s impact on the financial performance of a company becomes very clear is in the selling of customized product and service configurations to customers. The continual shift of companies to embrace customization and tailoring of their products and services to the specific needs of customers offers some of the highest rewards for financial gains. AMR Research (2003) discusses this in the context of unifying the marketing of build-to-order production strategies into the broader value chain of a company, and the resulting significant influence on financial performance. The focus specifically in the build-to-order strategy is in the quote-to-order workflow process that spans both direct and indirect channels of distribution as order capture points, followed by managing orders from a distributed standpoint, measuring the effectiveness of specific advertising and promotion programs on order rates and profits per order. The quote-to-order process also has significant implications for managing inventories and increasing inventory turns specifically. With an optimized inquiry-to-order process it is common to see a factor of 5 or more increase in inventory turns per year, a reduction of 30% or more in Days Sales Outstanding, and an increase in average order size by over 40-60% based on the use of more effective quoting and demand sensing and execution strategies throughout a company. The entire value chain for many companies is dependent on their ability to quickly sense and responds to customized product and service requests. At the intersection of quote-to-order strategies and increased financial performance due to greater efficiencies is the effectiveness of marketing’s role in influencing financial results.

Taking a process-centric perspective to the contribution of marketing to a company’s financial results captures the most relevant aspects of how being focused on customers pays off for the long-term. First, with a process-centric approach to analyzing the contribution of marketing to a firms’ financial performance, there’s the need of defining just who the customer is for a specific activity, development, or strategy. Trimming back on or even discontinuing processes that don’t directly influence customer growth is the most significant contribution marketing, from a process-centric approach, can make. Askegar and Columbus (2002) highlight a maturity model that specifically addresses this point from the standpoint of recruiting, growing, retaining or re-directing channel partners. This has major implications for measuring per-channel sales productivity, gross margins, and channel partner revenue contribution. Second, a process-centric view of marketing’s contribution to revenue highlights a series of financial measures that best reflect the immediate impact of changing strategies to make them more customer-centric. These metrics include average cost per order to fulfill, Days Sales Outstanding (DSO), gross contribution margin per order, inventory turns, and percentage of orders fulfilled right the first time (sometimes called the perfect order metric), costs per lead, lead escalation rates. Taking all these metrics together yields a dashboard that highlights how efficiencies gained in marketing processes directly influences the financial strength of a company.

The bottom line is that marketing’s role of revolutionizing an organization to become more agile and aligned with customers’ needs requires a process-oriented approach to removing organizational roadblocks that get in the way of helping customers. This is the strongest contribution of marketing of all to financial performance, and that is a glimpse into what levels of financial performance are possible once processes inside a company are more aligned with the needs of customers.


Askegar and Columbus (2002) – Channel Management Best Practices: It’s All About Orders. AMR Research Report. Monday September 9, 2002. Retrieved from the Internet on September 7, 2007:

AMR Research (2003) – Configuration is the Heart of Customer Fulfillment for Complex Product Manufacturers. AMR Research Report. Monday March 31, 2003. Retreived from the Internet on September 3rd, 2007 at

Columbus (2003) – Re-evaluate How Your Measure Your Channels’ Performance. AMR Research. Boston, MA December 2, 2003

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