Marketers have it tough. Unlike sales, where the direct relationship between effort and revenue are more clear cut, marketers often struggle to connect their contributions to the company's bottom line. Without a clear connection to revenue, marketers risk having their department treated as a secondary priority and, worse still, a cost center. Any department without a clear relationship to revenue means a harder fight for budget, and being first in line if cuts need to be made.
To transition from a cost center to a profit center, marketers need to clearly showcase how their efforts lead to revenue. As a result, effective measurement is critical to success.
So where to start? We’ve boiled this down to 7 questions you need to answer to connect your marketing efforts to revenue outcomes. We define what’s required to answer each question, and what you will need, how you need to structure your systems and marketing strategy to develop an effective measurement framework. Once you can accurately and quickly answer these questions, you’ll be able to quantify the ROI of the marketing department.
The most fundamental question. Marketers must track how many leads they've sourced. While tracking leads is straightforward, tracking where and when you sourced them is more of a challenge. You need to establish a consistent, and comprehensive lead attribution process that ensures you know how you generated each lead.
The most effective method of tracking new leads is to implement and configure a CRM. Most CRMs enable marketers to develop custom automation rules to streamline lead attribution. Doing attribution manually quickly becomes unsustainable (and inaccurate), so it’s best to start using a CRM as early as possible as a marketer.
After quantifying how many leads you're generating (and where they came from), you need to assess their quality. This is usually done by developing a Lead Scoring framework that allows you to segment and prioritize how you engage your leads. Most modern Marketing Automation Platforms (MAPs) and CRMs have this functionality.
To build an effective lead score, we recommend your scoring incorporates both fit and engagement criteria. Fit measures how "similar" this lead is to your idealized buyer profile (e.g. correct title, job department, industry, etc.). Engagement measures how they have interacted with your marketing content (e.g. website visits, white-papers downloaded, emails clicked, etc.). A combination of these two "axes" should create a score that can effectively help you prioritize your leads and also assess if your marketing strategy is leading to higher quality leads over time.
Marketing ROI doesn't end at the sales handoff. To transition from cost center to profit center, marketers need to connect the marketing funnel to the sales funnel. Generating MQLs doesn't matter if those MQLs don't convert to deals – so you need to track which ones convert.
This process can be particularly challenging if marketing and sales are using different, siloed systems. Full funnel tracking requires that you integrate your systems into a cohesive revenue architecture.
Read more: 3 Reasons Why You Must Integrate Your Marketing Automation and CRM Platforms.
Once you can measure how many leads you create and how many of them progress to opportunities and customers, the next requirement is to understand how long the lead to conversion process takes. If it takes an average of 30 days to nurture leads to sales-readiness, and the sales cycle normally takes 90 days, any leads you source now will begin to bear fruit in the next quarter. The amount of nurturing time required will be critical to informing your marketing strategy.
Leads must be acquired in a cost effective manner to retain high margins. Cost can also be balanced against other factors to determine the optimal customer acquisition strategy (e.g. conference-sourced leads are sales ready faster than digital-sourced leads, but they cost 2X more to acquire).
When calculating costs, you should combine direct marketing costs (paid ads, conference prices, etc.) as well as secondary costs (travel, entertainment, salaries). This can quickly become a complex process, so working closely with your finance team to correctly map marketing expenses will go a long way in streamlining cost per lead analysis.
True insights often emerge when you are able to answer the above 5 questions across each of your marketing channels and campaigns. You can compare your baseline lead metrics against specific channel trends to identify areas of opportunity for refining your marketing strategy. This will help you quickly determine which marketing efforts warrant further investment, which should be dialed-back, and which are meeting their lead generation goals.
While exploring trends by channel and campaign, you should also answer these questions:
The channels sourcing the most leads may not be converting at the highest rates. And the channels converting at the highest rates may be converting at a slower pace. By comparing your baseline lead generation and conversion rates across channels, you may uncover ways to further accelerate your revenue traction. Effective attribution and data hygiene in your lead generation efforts is critical to ensure you can explore channel-specific insights.
Different channels may be better for capturing different kinds of customers. When exploring your channel performance, you should analyze performance within each of your Customer Personas and target Industries. For example Medical Professionals may prefer Conferences while Software developers prefer informational Webinars. The best marketing feels personalized to the recipient, and understanding how different customer segments want you to communicate with you goes a long way to improving the experience of their buying journey with you.