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Revenue: The one marketing metric that matters

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What one metric should marketing track and report on? For me, it's simple: revenue. What you track, report and discuss will dictate the focus of your marketing efforts. If you focus on impressions, open rates, leads, “likes,” followers, visitors and referring sites, your team will focus on those metrics and so will your peers in other departments. Your marketing team will be branded as tactical by these nonbusiness-related, nonstrategic metrics, often fostering the perception that marketing is just one “P,” for promotion. Let's look at how to build a marketing plan that will enable you to set marketing revenue goals and report progress against them. The very first step the marketing team must take is to build an annual market plan. This should include target markets, the buyers/personas you are selling to, the pains or problems you solve and, specifically, how much you need to sell in dollars and units to achieve your revenue goals. Within those goals, you should clearly identify how much of that revenue should come from “marketing-sourced” leads and how much should be “sales-initiated.” Here's an example:
  • The goal is $10 million in new business revenue for a product.
  • For simplicity's sake, let's say the average selling price is $10,000.
  • This means that you need 1,000 new sales.
  • From here you need to lock in with sales on what the goals will be for both marketing and sales.
  • Lets say marketing's lead-generation revenue goal is 25%, that means marketing campaigns need to drive enough leads that turn into 250 deals, driving $2.5 million in revenue.
Now that you have a go-to-market strategy and clear goal, you can build a campaign plan and measure results. You can also report on what is important—revenue. Let's start at the top of the funnel. Once you start engaging the market you start collecting contact names, or “suspects.” Lead scoring and telemarketing are important components in your lead-generation efforts. Once contacts display a digital pattern of behavior that shows interest, they are passed to sales or placed in a telemarketing program. Once you have determined these contacts warrant sales' engagement, they become marketing qualified leads (MQL). (When contacts have not passed the scoring threshold or have not had telemarketing validation, they should be moved to a nurture program.) Some MQLs turn into opportunities and some opportunities turn into “marketing-sourced closed won.” With the information you gather, you can set very clear goals for every step in the process. Marketing can then report the marketing-sourced closed won revenue impact and how marketing campaign efforts are performing against revenue goals. It is still valuable for campaign managers to look at specific metrics tied to the channels they're using. They should be constantly testing, adjusting and testing again to generate the right suspects at the top of the funnel as well as to move contacts through an entire buying cycle. These metrics are not the goal. They are a means to an end, which should always be revenue. Jim Rogers is VP-marketing at Neustar Enterprise Services and a professor of digital channel management at Georgetown University.
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