Measure Everything!!

I went to a Business Marketing Association (BMA) meeting sponsored by the Indianapolis chapter recently. Jill Snyder (Schneider) and Shawn Herring (Harlan) gave a very good talk on “Revenue Driven Marketing.” According to the presenters in order to defend a marketing budget from cuts all dollars spent must be tied to top line business revenue. If you can’t relate it back to sales don’t do the tactic. The more directly the correlation the easier it is to defend. We as marketers need to be able to say to management “If my budget is cut by $X, revenue will decrease by $Y” and have the data to prove it.

How do you start?

You need to ask before the process begins what is the revenue objective for the year? Then work backwards to determine the number of leads that needs to enter your funnel to make the objective. Remember marketing is in charge of attracting and cultivating leads. Sales closes them.

For example if your company’s revenue objective is $10 Million & the average contract is $10,000 your company will need 1,000 closed contracts to meet target. If on average 1 in 5 proposals close your sales team will need to prepare 5,000 proposals. If 25% of prospects get proposals you will need 20,000 prospects. If 1 in 5 leads are qualified as prospects you will need 100,000 leads. Your marketing team now needs to create a plan that will attract 100,000 leads.

Take your plan and break it down by tactic (i.e. trade show 1, trade show 2, advertising, public relations, email marketing, referral programs, SEO, social media). What is the cost of each? How many leads are expected? What is the cost/lead?

Prioritize your tactics based on cost/lead. What is the most cost effective way to attract 100,000 leads? Which tactics can be expanded? Where are the gaps?

Fund the things that are effective and cut the tactics that are not. A key part of the model is your sales and marketing team needs to accurately track where leads are coming from. Otherwise valuable sources of information will get dropped from the mix.

It is not an exact science!

Nothing is easy especially when it comes to money. The presenters said that this is not an exact science. Many variables are hard to measure. For example what is the value of brand equity? If a current customer orders again or increases a purchase how is that tracked? What is the negative value of NOT attending a trade show or industry event?

Get started

The first time you do this you won’t know the answers. You can track on line with complicated analogs, you can compute on your PC on an Excel spreadsheet or pick something in between. The most important thing is to start. The more Marketing is seen as a strategic partner for revenue generation instead of a cost center the better it is for all of us.

Until next time – all the best!

RolandB