I'm excited to have one of my Silverpop colleagues, Bryan Brown, once again contributing to our Demand Generation blog. Bryan directs product strategy for Silverpop. He was a co-founder of Vtrenz, which became Engage B2B after Silverpop's acquisition and which today is the basis for the marketing automation sophstication underlying our new converged email and marketing automation platform, Engage 8. Bryan has deep insight at the crossroads of marketing strategy and technology, and he spends a lot of time thinking about how to improve revenue attribution in a closed-loop B2B demand generation environment. This is where his piece today focuses -- digging into the state of revenue attribution for B2B marketing and where it is headed. Welcome back, Bryan. ~ABN
I recently chatted with a few retail marketing customers of Silverpop. My discussion reminded me of what is a strong revenue analytics focus among many digital marketers in the mass consumer arena. With statistically-sound precision -- and often without true 'closed-loop' systems in place -- these consumer marketers can measure and forecast the revenue generated by specific marketing programs. It’s so thorough that they can tell you precisely the attribution of revenue down to a specific email message and within that message down to the various links, offers and content, itself. Of course, they can then 'bubble up' the attribution to types of email campaigns, product lines and database segments, and all of this can be reported with trending by any period.
This conversation helped me realize how much of the revenue attribution efforts by consumer marketers parallel where revenue attribution within B2B demand generation is heading these days. Yet at the same time, I was reminded of how difficult it still remains for B2B marketers to report on multi-point attribution of marketing programs -- i.e., identifying the sequence of touches and content offers that are most likely to result in a positive revenue outcome. This is particularly difficult, given the complex, lengthy sales cycles in B2B marketing. Digital consumer marketers frequently are able to see the direct impact between a specific marketing program and a revenue outcome merely because they deal in terms of simple, lower-price-point, short-run decisions, which are often direct cause-and-effect scenarios. This type of buying decision simplifies revenue attribution and overall marketing-program analysis. B2B marketing -- on the flip side -- may have dozens of touch points with a prospect over many months before (s)he makes a purchase. In fact, according to MarketingSherpa, nearly 59% of B2B buying decisions will take place in a period greater than a single financial quarter.
This perhaps explains why The Lenskold Group noted in their recent "2010 Lead Generation Marketing ROI Study" that connecting the dots between a group of marketing tactics and a revenue outcome in B2B demand generation remains a major challenge:
When asked to describe their organization’s highest level of measurement capability to assess lead generation marketing, close to half marketers (44%) reported that they credit the last marketing touchpoint as the lead source. Twenty-one percent (21%) reported that they split credit across multiple touchpoints, an approach that acknowledges how marketing impact is dependent on more than just the last touchpoint generating the lead. Only 14% use the more reliable techniques of market testing or modeling to isolate the impact of specific tactics (11% and 3%, respectively), while the balance (20%) do not track leads to specific marketing touchpoints.
It's common for B2B marketers to be able to identify the first and/or last touch points of B2B marketing programs with buyers today, but they continue to be challenged when it comes to identifying and modeling the middle-of-the-funnel touchpoints that resulted in a positive revenue outcome.
Despite these remaining challenges -- as I said at the beginning of the post -- I believe B2B marketers are making progress.
So where are B2B marketers today in this evolution towards more-accurate revenue attribution?
To begin, let’s consider that B2B marketing has been on a decade-long trend towards greater accountability. B2B marketing practice is shifting from activity based reporting to increasingly more meaningful business growth metrics.
Here’s a high level view of what this change looks like.
[caption id="attachment_842" align="aligncenter" width="600" caption="Source: Silverpop; click to enlarge"]
This wave of change continues today with emphasis on marketing’s accountability towards business value -- and specifically its influence on revenue.
This evolution makes sense when considered in parallel with marketing’s increasing ownership of the lead-to-sales funnel -- a change catalyzed by the emergence of marketing automation technology to manage this funnel more holistically. SiriusDecisions has spoken meaningfully on this topic. "We have witnessed the charter of marketing -- and thus its relationship with sales --change twice in a decade," commented the firm at its May SiriusDecisions 2010 Summit. The second sea change has turned B2B marketing's focus and accountability from merely generating inquiries at the top of the funnel to tracking and having accountability all the way to a final revenue outcome.
This has improved the alignment of B2B marketing with the businesses their programs support. In fact, in a study of more than 100 board members, these business executives listed increased revenue and profitability as the top measure for gauging the success of marketing programs. In other words, what is marketing’s impact to the bottom line as measured in revenue dollars and margin?
It’s no coincidence we see a correlation between the rise of marketing automation and growing focus on the business objectives of growing revenue while constraining costs. There is no other easy way to enable revenue attribution -- and thus total accountability of marketing -- without adopting a marketing automation platform that is integrated with a company's customer relationship management (CRM) system (i.e., 'closing the loop').
What can B2B marketers do to bring focus to -- and thus improve -- revenue attribution for their programs?
Start by asking the following questions:
1.) Is my marketing strategy aligned to increase the flow of leads through the marketing/sales funnel? To answer this you need to assess the effectiveness of your campaigns, content, tactics and offers within each stage of the marketing/sales funnel to ensure they are encouraging interactions that move leads forward through the funnel.
Simple: You could start by documenting the various programs you are running to ensure that you have addressed the needs of prospective buyers throughout the entire funnel -- i.e., an information gap analysis against the buying cycle.
[caption id="attachment_843" align="aligncenter" width="600" caption="Source: Silverpop; click to enlarge"]
Advanced: As you grow into more sophistication, you can use more-granular content attribution to determine the programs that are most effective during each stage of the funnel and which ones lead to positive revenue outcomes.
Marketing operations expert Saad Hameed has a good overview on campaign attribution in a Lead Sloth guest post on measuring marketing campaign attribution and influence.
2.) How will my company shift existing measurement practices towards identifying marketing’s impact on the bottom line, namely increasing sales/profits as well as predicting future opportunities of revenue?
Simple: A simple way to get started is to calculate revenue generated by marketing leads reaching the end of the funnel. You can get this by tagging incoming leads with an identifiable lead source and then from within CRM or marketing automation, build a report that aggregates all leads with that marketing tag, where a won opportunity exists, display revenue, where closed-won date = desired range.
Advanced: Track, trend and predict how leads are flowing through your marketing/sales funnel with emphasis on measuring marketing’s impact on revenue.
[caption id="attachment_844" align="aligncenter" width="550" caption="Source: Silverpop; click to enlarge"]
[caption id="attachment_845" align="aligncenter" width="600" caption="Source: Silverpop; click to enlarge"]
3.) What operational planning and preparation should be considered to move my company’s marketing department to revenue based accountability?
The Team: Ensure that your team is aware of what metrics the business needs to track, how they will be measured and provide training to fill in any gaps. There are a growing number of great B2B marketing educational events, including our own free B2B Marketing University series to get them up to speed. The team’s charter should be aligned with expectations from executive leadership. Marketing financials are not as clear cut as measuring a sales pipeline mainly because marketing effort is not often cleanly connected to the revenue associated with an opportunity. Not to mention, there may be a multitude of content offers as part of this marketing effort. For example, you may have nurtured a lead through the funnel but the opportunity is opened for the lead’s boss (the decision maker) who, in the marketing database, has had very little interaction. In order to understand the full story, marketers need to spend time looking for relationships in the data surrounding companies at the opportunity revenue stage. Great marketers know how to translate raw data into meaningful stories and insights to inform business strategy.
The Model: After determining the metrics to track, marketing will need to define a template, time frame and process for tracking and digesting the metrics. By creating standard dashboards, which include the key business drivers you can get into a revenue reporting rhythm aligned with sales and then begin to forecast and model future outcomes based on changes to marketing spend.
The Technology: With metrics clearly in mind, you can select the right technology to implement and fine tune your marketing automation strategy. The technology should enable you to close the loop between top of the funnel (inbound), middle funnel (nurture/MQL) and the sales process through the end of the funnel (closed won/lost).
While revenue attribution is the end goal, it’s critical that you don’t underestimate the importance of implementing the underlying processes to support solid B2B demand generation activities. Revenue is the goal, and attribution is what it takes to make your revenue outcomes more predictable.
With the end goal metrics in mind you’ll ensure you are headed on the right strategic path as you implement and execute your marketing program. Stronger revenue attribution for B2B marketing programs will allow marketing to be measured on its impact to overall revenue and not on the nitty gritty of each and every tactic, offer and source. When you can prove that marketing spend increases revenue, no one is going to care what you’re spending it on!