“The discipline of marketing is a science. As a science, it must be measured.” When I first read The End of Marketing as We Know It more than a decade ago, the words of legendary marketer and former Coca-Cola CMO Sergio Zyman had a huge impact on my view of marketing. In the book, Zyman outlines a new definition of marketing – moving beyond the traditional creative focus of most marketers and marketing campaigns to a more results-focused, data driven approach.
For B2B marketers with a complex sales cycle, it can be challenging to measure marketing’s impact on revenue. To make matters worse, the marketing organization frequently loses control and visibility into a lead after it gets passed to the sales team.
But despite the difficulty in measuring revenue impact, the benefits make the effort well worth it. Knowing the impact every marketing dollar has on the bottom line makes it easier to plan, obtain budget approval, get buy-in from the sales team and ultimately elevate marketing’s role in the organization.
To effectively measure and manage the revenue impact of marketing investments in your organization, follow these three steps:
1) Identify the right revenue attribution model.
Start by identifying the metrics that are most valuable to track. The two most common models for tracking marketing contribution to revenue are single attribution and multi-touch attribution. There are other more complex and arguably more accurate models, but if you’re new to tracking revenue contribution, one of these two models is a good place to start.
Single attribution simply means that you attribute closed revenue to a single marketing tactic, program or campaign. Marketers using this method typically attribute the revenue to the first marketing touch (original lead source) or the last marketing touch before the opportunity was created. For example, a new lead searches Google and finds your website through a search ad; they then view your online demonstration and become a hot lead for your sales team. The sales team qualifies the lead, and six weeks later closes the deal. In this example, the lead source, Google Adwords, would get credit for generating the opportunity.
In a multi-touch attribution model, revenue credit is given to each marketing activity that may have touched a given closed deal. For example, if during a six-week sales cycle, a prospect visited your booth at a trade show, signed up for a Webinar and downloaded a white paper on your website, each of those marketing activities would share the revenue.
The exact distribution of attribution share is something that varies from company to company. Some organizations split credit evenly among all touches, while others weight activities differently based on factors such as timing, investment, sequence, etc. My suggestion is to keep it simple and distribute attribution evenly when you’re starting out. Once you’re able to analyze influence, you can change the weighting as necessary.
If you haven’t implemented a revenue attribution model, you’re not alone. According to a recent study by B2B magazine, over 40 percent of B2B marketing organizations have no tracking in place. Of the remaining organizations surveyed, 27 percent use a single attribution model and 41 percent utilize multi-touch attribution.
2) Get the sales team on board.
Sales and marketing alignment is the Holy Grail for B2B organizations. According to MarketingProfs, organizations with tightly aligned sales and marketing had 36 percent higher customer retention rates and achieved 38 percent higher sales win rates. There’s no better way to bring sales and marketing together than focusing on common goals. And at the end of the day, sales leaders and individual reps don’t care about how many MQLs they’re getting or what the latest and greatest marketing campaign is – they care about closed business.
There’s no better way to get a sales team excited about marketing than to show them the results of marketing investments. This shouldn’t be a once-a-year exercise– as often as your organization is sharing pipeline results and revenue information, review data on the most successful marketing campaigns, as well as which ones are falling short. You’ll find that your sales team becomes much more engaged and supportive of marketing initiatives. Keep feeding the machine and showing results, and you’ll have a happy sales team.
3) Use data to drive future marketing investment.
Measuring the impact of marketing investment on revenue is only valuable if you utilize that information to drive future decisions. It can be challenging to determine what programs are working and what’s not, and sometimes it just easier to continue with the status quo. However, following that path will not only lead to inefficiencies and wasted money, but also poor results.
With that in mind, spend the extra time to follow the money. Being able to track the right metrics and really understand the success of your marketing programs will enable you to shift gears as needed and give you more confidence in trying new things. As an added bonus, you may be surprised what happens when you share data and goals along with your marketing budget requests – your budget will grow and you’ll get to experiment more.
In fact, 58 percent of highly effective and efficient companies (as defined by the Lenskold Group) are using marketing ROI measures to justify marketing spend, versus 34 percent for their lower-performing peers. The results are clear – organizations that measure the impact of marketing on sales revenue outperform those that don’t.
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3) “3 Ways Behavioral Marketing Improves Sales and Marketing Alignment”