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Marketers Feeling The Heat To Provide Detailed Revenue Performance Metrics Print E-mail
Written by Kim Zimmermann, Managing Editor   
Wednesday, 20 February 2013 08:00

shutterstock 95591146Marketing has traditionally been viewed as a cost center – money goes in, but it has been hard to measure the actual return on the investment. Marketers have been accustomed to speaking the language of clicks, page views, email open rates and other metrics, yet experts say these metrics don’t matter much to the CEO, CFO and others who are focused on the bottom line.

This dynamic is changing at a rapid pace, and marketers are being asked more frequently and more earnestly than ever before to justify marketing spend. According the IBM Global CMO Study, 75% say that return on marketing investment will be the primary measure of their effectiveness by 2015, but only half feel sufficiently prepared to provide hard numbers.

“Everyone has been talking about marketing ROI, but now we’re seeing it start to happen,” said Jon Russo, Founder and CEO of B2B Fusion Group. “Every non-marketing executive is asking ‘where is my ROI?’ and the technology has improved to provide more precise measurement. They want a higher quantity of high-quality leads and they want to be able to track the performance of a lead throughout the funnel.”

Marketing faces increasing pressure as B2B buyers look to engage with sales later in the decision-making process. “As marketers, we are trusted to own a significant and growing piece of discretionary spend and it is no longer OK for that to be loosey-goosey,” said Jon Miller, VP of Marketing for Marketo. “There is a big trend toward marketing taking a bigger role in revenue performance.”

While there have been advances in the technology behind measuring marketing revenue performance, it does require some expertise, observers noted. “It is not just a matter of flipping a switch,” Russo said.

Measuring What Matters

It is incumbent on marketers to discover the revenue performance metrics that are most important to their CEOs and CFOs, observers explained.

“It is extremely important to get a clear understanding of what measurements matter to the people who are in charge of the financial stewardship of your company,” said Julie Gibbs, VP of Marketing at Mashery, a firm that adds security, scalability, onboarding and reporting features to API platforms. The company uses Salesforce.com and Marketo, and recently added Full Circle CRM’s Marketing Performance Management Solution, which works within Salesforce.

Gibbs said velocity is a key metric that many CEOs and CFOs want to track. “Velocity is extremely important, but most companies are completely unable to track this, and if they do they rely on manually entered data that can be suspect,” she said. “[CEOs and CFOs] want to know how long it takes for a lead to be qualified and how long it takes sales to convert that lead into a deal. Who doesn’t want to speed it up? But first you have to have a clear understanding of the sales velocity of your organization to be able to identify opportunities to shorten the cycle.”

In addition, CEOs and CFOs want to know if leads are getting stuck in a particular portion of the sales pipeline, Gibbs said. “Do things get all the way to the evaluation stage and then just seem to stop?” she asked. “If you have that information, you can look at what is creating inertia. Is it a budget problem, are prospects not getting the right information, is the sales staff not able to create a sense of urgency, or are they having a bad experience with your company?”

The fact that so much of the marketing department’s interaction with prospects happens digitally is making it easier to provide metrics along the path to purchase. “It used to be that the middle of the journey from initial contact to purchase wasn’t measureable,” said Bonnie Crater, CEO of Full Circle CRM. “Now that 70% of the customer’s journey is through the digital path, it is quite measurable.”

Adding Weight To Campaigns

Crater said one of the trends she is seeing is the desire to measure the impact of individual campaigns on the overall decision to purchase. This is particularly important in a B2B environment, where the sales cycle can be long and buyers are not generally influenced by a single campaign.

“Typically in B2B, the customer doesn’t buy on the first campaign,” Crater said. “The buyer has multiple experiences in multiple formats and there might be five to 10 touches before a decision is made. If you look at it in basic ROI terms, every time someone buys, each campaign gets full credit for all revenue, but that isn’t the case.”

She said the model is moving toward spreading out the credit for all of the campaigns and basing it on their level of influence on the purchasing decision. This can be based on the company’s current sales objectives. “Some companies may value generating new interest more heavily, while others might be placing higher value on campaigns that help sales people close deals. Weighted campaigns not only help assign the appropriate revenue to each campaign but can help you see which campaigns are driving new leads and which moved existing prospects further into the sales cycle.”

In the future, investments in various campaigns could be changed automatically based on their contributions to profits or other metrics, experts said.

“The inevitable trend is to dynamically allocate dollars to those things that are working better,” said Marketo’s Miller.

Systems are also becoming more sophisticated to enable the proper crediting of a lead to sales or marketing, providing a more complete picture of revenue performance. “B2B sales people, and sales people in general, will want to take credit for a lead; it’s just the nature of the business,” said Jeff Winsper, President of Black Ink. Black Ink, a business unit of Winsper, recently released its Eye On Enterprise Marketing ROI Suite that integrates with marketing automation systems and other enterprise platforms to track marketing’s contribution to the bottom line.

The Eye On Enterprise Marketing ROI Suite sits on top of the marketing and sales automation systems to provide data on the origin of a lead, among other things. “If the first engagement with a customer comes through a webinar, for example, it is hard for sales to say that is a sales-qualified lead,” he said. “Now, when the CEO sees that revenue is $100 million a month and wants to know how much marketing contributed, there is a clear picture.”

Another important metric for the marketing department is to evaluate the lead pipeline to ensure that there are enough targets to help sales meet its goal. “You want to look at new target prospects in a period and how you are doing versus plan,” Miller said.

Marketing measures captured through results tracking are only a jumping off point, experts said. “Marketers must avoid the ‘tracking trap,’ which leads to tactical evaluations based on isolated outcomes in place of more strategic insights that consider multi-contact impact,” said Jim Lenskold, President of Lenskold Group and author of Marketing ROI.

The top priority measurements should provide insights into the incremental contribution to the buyer path to purchase, assessing short term outcomes and the progression to sales, and understanding marketing impact on increasing customer value, Lenskold said, adding that “this last metric of incremental customer value is especially important for content marketing which has great potential to influence this outcome in addition to incremental leads and sales.”

Good Analysis Requires Clean Data

The quality of the data is only as good as the process, which relies on the sales and marketing team to effectively use the CRM system for accurate reporting.

“Without a good analytics platform, relying on Salesforce/CRM reporting and manually combining it with other system, it is very easy to be reporting on incorrect numbers,” said Mike Smitheman, VP of Marketing for GoodData. “One small mistake in the calculations could completely change the story as it relates to marketing’s contribution.”

Marketing automation is helping to close many data gaps, and the next challenge is applying the measurement and analytic techniques to tap into that rich data set, observers said. “Marketers can get past many challenges by proactively planning measurements concurrently with strategic and campaign planning,” Lenskold concluded.

 

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