HOW MARKETERS CAN
EARN RESPECT AT
THE REVENUE TABLE
INTRODUCTION
How would a 10% increase in
your marketing budget affect the
profitability of your company?
Today’s CMOs have technology
on their side.
If you can’t answer that question, budget
combined with smart organizational and
meetings probably aren’t your favorite part
process alignment, makes it possible to connect
of the job. When you walk into your CEO’s
the dots between that promotional email you
office, maybe you bring activity reports,
sent last month, that webinar you hosted last
industry awards, examples of jobs well
year, and the revenue your CEO sees this week
done…but does she care? Enough to
or can expect to see next quarter.
The right marketing automation platform,
increase — or even maintain — your budget?
Enterprises increasingly look to marketing to
The truth is, your CEO might not care about
drive top-line growth, which is great for building
how many emails you sent last week. In her
credibility. But to meet the demands of what’s
mind, if marketing isn’t driving revenue, it’s a
being called margin marketing (driving top line
cost center — pure and simple.
growth and keeping the bottom line constant)
But it doesn’t have to be that way.
marketing organizations must transform the way
they have historically operated — streamlining
processes and people, and designing each
program and tactic so that it can be measured
relative to its effect on the bottom line.
In addition, marketers must be acutely aware of
the types of metrics they are tracking. To earn
respect at the revenue table, a CMO must walk
into the boardroom on a regular basis with a
simple spreadsheet that answers the questions
her CEO and board care about most.
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LEAD-TO-REVENUE MANAGEMENT:
OWNING THE SALES AND MARKETING CONNECTION
Forrester Research defines lead-to-revenue
management (L2RM) as the practices,
processes, and technologies deployed
to acquire, retain, and enrich customer
relationships. Enterprise companies
have embraced L2RM frameworks because
they help marketers:
L2RM Philosophy, in a Nutshell
The internet has changed the way people buy
things, whether we’re making purchases for
ourselves or for our companies. These days,
“ 70%of the
most of us like to check in with our networks
and do significant online research before we
walk into a store or talk to a sales person.
• Contribute more to the sales pipeline
• Achieve higher levels of process maturity
So if your marketing department is driving online
conversations about your company — the
• Measure results holistically
information available about your products and
• Collaborate better with their sales colleagues
services — you better believe that marketing is
Before you roll out your marketing automation
platform, we recommend you implement key
L2RM methodologies. To understand how it
directly affecting revenue. L2RM methodologies
buying process is
complete by the
time a prospect is
ready to engage
with sales.”
– SiriusDecisions, Inc.
seek to quantify that effect and continually
improve it.
works, let’s start with how the marketing world
has evolved in the past few years.
SALES
MARKETING
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L2RM’s Secret Sauce:
Create a Common Language
L2RM Funnel Taxonomy and Definitions
Funnel Stage
Demand
Gen
Name
Suspect
SFDC Status
N/A
Owner
Mktg
Definition
A marketing target about whom very little is known
The secret to making L2RM work is to think
through the stages of the sales funnel and
articulate clear definitions of each milestone a
buyer passes through on the way to a sale.
Nurturing
Prospect
Open
Mktg
A respondent to a marketing campaign with a known
name and valid email address
Nurturing >
Qualification
Lead (MQL)
Sales
Ready
Mktg
A prospect who meets the minimum fit criteria and has
displayed enough interest to be handed over to sales
Qualification
Sales
Accepted
Lead (SAL)
Working
Inside
Sales or
Sales
Dev.
An MQL that has been accepted by sales (or inside
sales team) for further qualification to determine
pipeline readiness
Qualification
Sales
Qualified
Lead (SQL)
Qualified
Sales
An SAL that has progressed to an opportunity and is
now committed to pipeline
Revenue
Closed
Won
Closed
Won
Sales
An opportunity that has resulted in revenue
For example:
• What do prospects, marketing-qualified leads,
sales-accepted leads, and sales-qualified
leads look and behave like?
• How can you translate that information into
programmatic characteristics that you can
identify in an automated way?
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Where Traditional Metrics Go
Horribly Wrong
We’re talking about metrics like:
The sales and marketing connection may seem
It feels good to know that a million people on
obvious to you, as a marketing professional. In
Facebook “like” your company, or that you
fact, you may think you’re collecting reams of
have 38,000 Twitter followers. Those numbers
metrics that prove it beyond a doubt. But time
impress people, but they don’t do the work of
after time, these numbers aren’t taken seriously
measuring business outcomes or improving
by your CEO. Where are you going wrong?
marketing performance and profitability.
As you can see, those traditional marketing
Of course, you have reasons for collecting
Activity Metrics
metrics are doing you very few favors. So
the metrics you do. They may even help you
You may be busy recording webinars,
how do you get the good metrics — the ones
make good marketing decisions. The problem
writing blog posts, or running campaigns.
your CEO will sit up and listen to? In three
is that they don’t map directly to revenue, so
But if you take that busy schedule into the
words: alignment with sales. Luckily, your new
they don’t matter to your CEO, CFO, or board
boardroom, they’re still going to see you as a
marketing automation platform can help
members — and they certainly don’t help to
cost center — unless you can connect your
you both align to sales, and measure metrics
prove your revenue contribution.
activities to actual revenue.
that matter.
Vanity Metrics
How do you get the good
metrics — the ones your
CEO will sit up and listen to?
Cost Metrics
Cost metrics are the worst, because they
actually frame marketing as a cost center.
When you tell your CFO that you’ve improved
cost per lead by $10, he’s going to ask you to
improve it by $12 next quarter so that he can
hire more salespeople.
Alignment
with sales
How Marketers Can Earn Respect at the Revenue Table
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The Key to Credible Metrics:
Sales and Marketing Alignment
Whatever route you take, make sure you cover
You know marketing plays a critical role when
Strategy Alignment
it comes to revenue, and by now, your sales
Define sales and marketing strategies at the
counterparts may understand the same. To
corporate and divisional levels. If your sales
get the real goods — to accurately measure
team is looking to expand into new markets, for
the impact marketing has on revenue — you
example, make sure your marketing efforts are
have to partner with the sales team. There’s no
focused on helping them succeed. In this way,
way around it, so before you roll out a new
you set up common goals, so you are being
marketing automation solution, sit down with
measured on the same outcomes.
your sales team and make sure you’re all on
the same page.
these basic points:
Cross-Functional Alignment
Sales Funnel Language and
Process Alignment
How do you define your revenue cycle? What
qualifies as a lead or opportunity? Good
metrics are about everyone speaking the
same language and using the same methods
to achieve well-defined goals. Bring your
marketing and sales departments together to
create and document a common language, so
that people at all levels of the organization
can measure results accurately and act on
them appropriately.
Most enterprises have several marketing teams,
Aligning sales and marketing may be a relatively
each focused on a different, siloed aspect of the
simple process if your company is already fairly
business: products, sales, corporate brand. But
agile and well integrated. But if your company
to measure the effect of all the marketing efforts
is a large enterprise and comes with many
that move customers through the sales funnel
entrenched mindsets and processes, you
to the revenue stage, you must streamline
may have to initiate a comprehensive change
these marketing teams and bring your entire
management process.
organization together in a comprehensive way.
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Metrics That Matter to Your C-Suite
Different companies prioritize different revenue
milestones. If you’re in growth mode, you’re
going to be focused on the number of leads,
Flow (Lead Generation)
Velocity
How many people are entering each stage of
What is the average revenue cycle time? How
your cycle in a given period? Are those trending
does it break down by stage?
up or down?
Metrics: Are healthcare industry leads
your lead-to-opportunity ratio, and net new
Metrics: How many new prospects did we
converting faster than financial services? How
wins. A more mature business, on the other
create last month? How many marketing
long does an SMB purchase take, compared
hand, may be more focused on the customer
qualified leads did we pass on last week? How
to enterprise?
lifecycle — nurturing existing customers, diving
many opportunities can sales expect to have
deeper into their business, or upgrading them to
next quarter?
the next level of service.
The first step in identifying your key revenue
metrics is to define the stages of your revenue
cycle, as you’ve done in the alignment stage.
With that model in place, you can begin to
explore the key types of metrics that matter to
your C-suite:
Balance (Lead Counts)
How many people are in each pipeline stage?
How many accounts? How does that vary by
lead type? Are the balances going up or down
over time?
Metrics: How many active prospects do I
have? How many opportunities is sales working
right now?
Conversion
Pipeline to Investment
What return are you seeing on your
marketing investments?
Metrics: Which programs bring in quality leads
that eventually convert to dollars for your team?
How much revenue results from individual
programs, and how much did you spend to
generate that revenue?
Opportunity Influencers
How are all of your marketing programs working
together to bring in sales?
What is the conversion ratio from stage to
Metrics: What programs influence sales in the
stage? Which types of leads have the best
mid-funnel stage? What types of influencers are
conversion rate?
interacting with programs at the mid- and
Metrics: How many leads generated from
bottom-funnel stages?
pay-per-click ads covert? How many leads
generated from purchased lists convert? How
do those two numbers compare?
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Keep it Simple: Identify Your Top 5
Understanding the conversion rates and
velocities of each stage in your revenue cycle
helps you understand — and communicate
— your revenue cycle economics. Looking at
how your marketing programs influence sales
helps you defend your current planning cycle.
This information is invaluable when it comes
time to set and defend the marketing budget.
At Marketo, we set the demand generation
budget by working backwards from how many
customers we want to close in future months.
When you walk into the boardroom, don’t arrive
with a stack of reports. To make your case
cleanly and effectively, focus on the five metrics
your CEO, CFO, and board care about most.
Know why they are important, be able to defend
them, and most importantly, make sure you’re
looking at the same numbers as your CEO.
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CONNECTING THE DOTS:
PROGRAM MEASUREMENT
We’ve covered how to identify the metrics
that matter to your C-suite, but how can you
connect individual marketing programs to
revenue? Here are some of the questions
marketers must answer along the way:
• What should I measure? Last month’s trade
show may deliver results next month or next
year. How do I decide where to invest my
budget today?
Dream Big, Start Small:
Taking a Phased Approach
Fortunately, marketing maturity isn’t an
all-or-nothing game. You can start by simply
taking your current marketing efforts and
experimenting with various ways to improve
and measure their success rates.
Each sequential method on the following list
gives you a more accurate view into your
customer value data — but this additional
insight comes with a corollary rise in investment
and complexity. As you go through the
alignment process and progress along
the marketing maturity curve, you can try
increasingly complex approaches.
• Which touch? Converting a cold lead into a
sale takes at least seven touches, according
to industry rule of thumb. How do I allocate
revenue to any specific touch?
• Which influencer? The average buying
committee for a complex purchase can
involve over 20 different people, and different
marketing programs affect each individual
differently. How do I know which program had
the most impact?
• How do I account for other variables?
The economy, the weather, whether or not
the sales rep had his coffee that morning
— many factors outside of our control can
affect the sale. If revenues increase because
the economy is on the mend, can I claim my
programs delivered better ROI?
Less Accurate
Less Cost
Increased
Insight
Increased
Complexity
1. Single Attribution (First Touch / Last Touch)
2. Single Attribution with Revenue Cycle Projection
3. Attribute across Multiple Programs and People
4. Test and Control Groups
5. Full Market Mix Modeling
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Method 1:
Single Attribution
Method 3:
Multiple Touch Attribution
After a sale is made, assign all the credit in your
Measuring the contribution of multiple touches
marketing automation solution to the first or
toward closing a sale in your marketing
last program that touched a sale. This usually
automation tool gives you valuable insight into
means allocating the deal to the email, webinar,
the effectiveness of your mid-funnel programs
or website visit that caused the first person (or
— not just the programs that affect the top
the key person) from the target company to
or the bottom. This is our recommended
enter your sales funnel.
approach, as you can see the results of all your
Example: If you held a webinar that generated
a lead that closed a deal one year later, give full
credit to the initial webinar.
marketing programs as a whole. This can be
achieved through running program attribution
reports in your marketing automation tool.
Example: Assume a $100,000 deal recently
Method 2:
Single Attribution with Revenue
Cycle Projections
Adding revenue cycle projections to single
attribution gives you deeper insight into the
long-term impact of your programs.
Example: Instead of waiting to see the actual
results of the webinar, look at its impact at the
top of the revenue cycle and then estimate its
long-term impact, based on historical webinar
conversion metrics.
closed. Three people on the customer side were
involved in the deal:
Person A attended a trade show and
a webinar.
Person B attended only the trade show.
Person C saw a direct mail piece and clicked
to the company website.
In this scenario, you might give $50K credit to
the trade show, $25K to the webinar, and $25K
to the direct mail piece.
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Method 4:
Test and Control Groups
Method 5:
Full Market Mix Modeling
You can measure the true impact of a particular
Market Mix Modeling (MMM) uses statistical
marketing program by testing its effectiveness
techniques, such as regression, to show how
against a control group. Of course, this means
sales outcomes depend on various marketing
you must plan your programs to be testable
touches and other non-marketing factors. As
from the get-go.
you might expect, MMM requires a lot of data
Example: To measure the impact of a brand
advertising campaign, split your market into
two equal geographic parts, and spend twice
and sophisticated analytical skills. Only 3%
of B2B marketers currently use this model to
measure marketing ROI.
as much on one group as on the other. Then
Example: Company X has an MMM equation
compare the behaviors of those two market
showing that, without marketing, they would
segments. Did you experience more growth in
have made $125M in sales. Of the $40M in
direct and branded search from the area where
revenue generated by marketing:
you spent more? Assuming all other influences
were the same, you can credit any difference to
your brand advertising spend.
• Search advertising gets credit for $15M
• Display advertising gets credit for $10M
• Trade shows get credit for $15M
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KEY LESSONS:
TAKE YOUR SEAT WITH CONFIDENCE
As you continuously evolve and adapt your
marketing measurement system over time, it
will only improve. Remember these key points,
and take your seat at the revenue table with full
confidence in the value of your work:
• Find a rock-solid marketing automation
partner. Your software vendor should have
the experience and knowledge to help you
implement L2RM in your organization and
build the business case internally.
• Establish goals and ROI estimates
up-front. Pick your five most important
metrics and use them to your advantage.
• Design programs to be measurable. Set
goals and run scenarios for all marketing
programs — prior to spending money.
• Focus on “improving ROI” rather than just
“proving ROI.” Apply the insights you gained
from prior measurements to your current cycle
of planning.
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Marketo (NASDAQ: MKTO) provides the leading marketing
software for companies of all sizes to build and sustain
engaging customer relationships. Spanning today’s digital,
social, mobile and offline channels, Marketo’s® customer
engagement platform powers a set of breakthrough
applications to help marketers tackle all aspects of digital
marketing from the planning and orchestration of marketing
activities to the delivery of personalized interactions that
can be optimized in real-time. Marketo’s applications are
known for their ease-of-use, and are complemented by the
Marketing Nation™, a thriving network of more than 250
third-party solutions through our LaunchPoint™ ecosystem
and over 40,000 marketers who share and learn from
each other to grow their collective marketing expertise.
The result for modern marketers is unprecedented agility
and superior results. Headquartered in San Mateo, CA
with offices in Europe, Australia and a joint-venture in
Japan, Marketo serves as a strategic marketing partner to
more than 3,000 large enterprises and fast-growing small
companies across a wide variety of industries. For more
information, visit www.marketo.com.
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