Success or failure in marketing centers on how effectively we drive results. Over the past several years, those results increasingly rely on tracking and proving revenue. In fact, according to recent research conducted by eDynamic and the DMA, 79% marketers were held more accountable for revenue in 2014 than 2013, a significant shift.
But how does the C-Suite actually think about measuring revenue? To learn more about the Sr. Executive’s approach to ROI, we sat down with Warren Raisch to cover four key questions marketers should incorporate to effectively measure revenue in their campaigns today.
Question 1: How important is the alignment of sales and marketing strategy when it comes to optimizing a firm’s digital initiatives?
It is now more important than ever to have sales and marketing aligned around revenue. There has been a growing movement towards “Revenue Marketing” which aligns marketing metrics to measurable revenue attainment. Marketing has historically been measured around metrics that focused on activity. For example, the number of email campaigns, number of leads, number of events, number of articles published and campaign reach as measured by impressions etc. Many of these were what is known as “Top of the Funnel” metrics, showing what marketing was doing to drive brand awareness and interest. One of the findings from the DMA research was that almost 50% of CMO’s surveyed said that they now have a revenue number associated with their success metrics. This is game changing for many marketers. The reality is that the old activity metrics have not gone away but a new set of revenue metrics have been added to the marketers performance metrics. Now Sales and Marketing need to align early in the marketing strategy development and marketing needs to stay engaged longer in the sales cycle all the way through key conversion points.
Sales and Marketing leadership need to jointly define their targets, their channels and the hand off points from lead creation to lead nurturing and conversion.
Question Two: Does a revenue-focused approach to marketing contribute only to the bottom-line of the business, or is there a way to measure top line impact as well?
To measure revenue, I look at it holistically across the whole enterprise from a full customer life cycle perspective. A revenue focused marketing approach should impact both top line and bottom line impact. For me it’s always been important to focus not only on top line revenue but on generating the right kind of revenue. What I mean is, that marketing should focus on the right type of target clients that are aligned with the value proposition and value delivery systems of the company and that will be repeat customers over a long term relationship. When I build programs and systems to generate top line revenue I look at it first from a targeted customer perspective looking at the company from the outside in. Asking key questions such as; What value do we offer the customer? what are the most customer centric ways to deliver that value to the customer that will create outstanding experiences? Should we sell online, offline, through channel partners, through self-serve models or through a high touch experiences? What is the right mix of these options? Driving top line revenues to an organization has an associated set of experiences associated with it and a cost model that needs to be right sized to reflected the delivery of the products or services as a profitable, repeatable and scalable level. This right sizing can dramatically impact both the top line and bottom line performance of a company. Getting one right without considering the other can make for an un-sustainable growth model.
Question Three: How can we connect social media investments with revenue?
The way I view Social Media is that it has become a mainstream marketing channel, but equally important, when managed properly, it can become a customer support, retention and customer insights channel as well.
Through the lenses of market research, customer care/retention, PR & marketing we can apply revenue related metrics such as qualified lead generation, registrations, downloads and higher conversion rates when associated with content that drives revenue and market insights that inform product development as well as higher retention rates etc..
One of the most powerful impacts on revenue is associated with adding customer generated content along the path to purchase such as ratings and reviews. We have seen this impact drive 30-50% or more revenue conversion by having this added to the purchase path through reviews from Yelp, Google and companies like Bazaarvoice . Recent research from Bazaarvoice indicate that 54% of online buyers read online reviews before purchasing and 39% of in-store buyers read reviews before purchasing.
Question Four: What metrics will let us measure how our leads are being qualified – so that we establish high conversion rate?
There has long been a rub between sales and marketing related to the quality vs. quantity of leads. Simply increasing the quantity of leads without increasing the quality can be damaging to the productivity of the sales organization as well as the trust and relationship between sales and marketing. So I believe that the sales and marketing teams need to be in lock step with each other on identifying the highest target rich markets to go after and align around the metrics that move the needle on revenue. Most sales organizations would be willing to have marketing provide less leads but with more quality that were further down the qualification and sales funnel.
The process that really matters as much as the metrics. In terms of specific metrics, they are going to vary by company. You have to establish your specific optimal funnel to reflect your true sales cycles and really look at your target customer profiles and close-win rates.
When you have a cohesive joint Sales & Marketing strategy where marketing is responsible for generating and maturing leads until they are “sales-ready.” You are playing to the strengths of both sales and marketing.