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Revenue Velocity - A New Measurement for Lead Generation Success

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by: Will Schnabel (@wschnabel)
06 April 2009

In almost every discussion around lead management, the question arises as to which metrics are the most important to measure success. Recently, I participated in a Q&A with Craig Rosenberg, author of the Funnelholic blog, in which I highlighted my top three metrics for success, supporting some of the same metrics that were highlighted in a prior post titled, "Memo to the CFO: 3 Lead Generation Metrics that Matter."

It is true that tracking the funnel math (e.g. MQL, SAL, SQL) as SiriusDecisions has so insightfully defined, as well as the related Cost Per Opportunity and Total Pipeline Created analysis, is useful for optimizing your lead management process. As well, ROMI can still be argued to be useful in identifying the financial success of various marketing programs. However, I believe an important component missing from many metrics is the length of time it takes to convert an inquiry into revenue for your organization. Many direct marketers are familiar with the term "revenue velocity" as it is used to identify high-value customer relationships. I recommend putting a new lead-management spin on this to focus on the lead cycle and measuring the Lead Management Revenue Velocity. The following steps can help you achieve this:

- Measure the Time-to-Revenue (TTR) based on the average time it takes you to capture the first initial inquiry through your lead generation campaign to when the first revenue is booked or won. TTR could be in days, weeks, or months depending on the level of granularity you require for your average sales cycle.

- Next, take your revenue generated (or profits) and divide this by the newly calculated TTR to get your Lead Management Revenue Velocity.

- Another variation would be to use ROI instead of revenue, divided by TTR. This would be an indicator of which marketing efforts provide faster ROI than others by normalizing our ROI results and getting us closer to CFO-aligned metrics like net present value.

Of course, there is an argument for limiting our lead management metrics to only those for which we ultimately control, that being inquiries, sales qualified leads and sales opportunities. However, by keeping tabs on the entire lead cycle, we can help spot potential sales and marketing alignment issues, and facilitate cross-team discussions on the best ways to improve the overall lead management process.

Ultimately, I believe that reviewing both TTR and Revenue Velocity can help marketing better report on the overall impact they are having on sales, not just in total opportunities delivered, but by the speed by which revenue is being generated through our lead generation efforts.

And in these difficult economic times, delivering revenue is ultimately the only metric that matters.


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