Recently, I spoke with the chief sales officer of a $1 billion-plus enterprise software company and asked him what percentage of his sales pipeline should be directly attributable to marketing-related efforts. He quickly answered: 60% to 70%.
While that may sound reasonable on first glance, it's never going to happen; nor should it. In the benchmarks SiriusDecisions has done on b-to-b companies of this size, the deals in the sales pipeline directly attributable to marketing-related efforts average 18%.
Given this discrepancy between expectations and reality, it is no wonder there is often a significant chasm between sales' and marketing's ideas. Beyond that, there is also a problem in how sales and marketing measure ROI. Here are three areas to focus on that will help improve the ROI of your sales force and make marketing more accountable:
Make marketing accountable for the sales pipeline, not close ratios: The average close ratio (calculated by taking qualified sales pipelines to closed deals) for sales organizations is 30.74% for companies with revenues greater than $1 billion and 26.90% for all companies. Marketing won't change that average. Where marketing can impact sales, however, is by increasing the number of qualified leads in the sales pipeline. While the close ratio won't change, more deals will be closed.
Measure marketing-sourced leads and marketing-influenced deals: To truly understand the contribution of marketing to sales, it is important to differentiate deals that end up in the sales pipeline that are "influenced" by marketing from those that are uniquely "sourced" by marketing.
Influenced deals are touched through marketing's campaign efforts but didn't originate through marketing. A marketing "sourced" lead, however, only came to sales' attention because of marketing's efforts. By measuring both, you get a better picture of marketing's effectiveness.
Focus marketing on 20% of revenue: As most organizations scale, they typically derive 80% of their revenue from only 20% of clients. Sales, building on relationships with a firm, is the key driver of this business. Where it is more difficult to drive new business is that last 20% of revenue, which comes from the remaining 80% of clients. For that reason, marketing should focus its efforts on that higher-hanging fruit and by doing so increase the percentage of marketing-sourced leads.
As one senior marketing executive shared with us, "Measuring marketing is like fuzzy math. But fuzzy math tracked consistently will show trends." The best place to start is to clearly delineate where marketing can be most effective and begin with realistic and achievable goals.
John Neeson is a co-founder and managing director of SiriusDecisions, a marketing and sales research consultancy in Wilton, Conn. He can be reached at [email protected]