Whatever Happened to Revenue Performance Management?

The majority of marketers understand the importance of measuring revenue. In a perfect world, marketers would use marketing contribution to justify budget requests, make decisions on programs to continue, and work diligently to improve this metric (and that even means working collaboratively with sales) because it would be tied directly to the size of their paycheck.

Twelve to 18 months ago RPM (revenue performance management) was the industry buzz word and marketing automation vendors were jumping in trying to develop the capabilities within their product to make it ‘easy’ for marketers to capture and analyze metrics such as influenced revenue, marketing contribution to revenue, pipeline uplift, funnel conversion – all critical metrics marketing should be measuring.

But in reality, the picture is much different. In the report “Data Rich: The Payoff of Marketing Measurement on Revenue Performance” published by DemandGen Report,  only half (53%) of marketers are responsible for a revenue goal. Those not responsible for revenue are still measuring volume-based metrics such as Number of Leads and Web Traffic. However, the evidence is compelling and supports the move towards a revenue goal for marketers.  Those measuring revenue contribution consistently ranked five to 10 percentage points higher on key pipeline performance indicators such as ‘impact of lead nurturing campaigns’, ‘Lead Quality’, and ‘Lead Conversion’. 

Unfortunately, measuring RPM is not an ‘easy’ process even with marketing automation technology. In my experience there are several key strategic hurdles to overcome to get to a point where marketing can confidently report contribution to revenue and therefore be measured against it:

1. Process Challenges

Consistent processes across sales and marketing are a pre-requisite for enabling revenue contribution metrics. Every step of the process from Lead Generation to Closed Deal should be mapped out and defined. Many Annuitas blog posts have discussed this topic in detail, and it goes without saying – without a consistent process you won’t have consistent metrics. 

2. The Forgotten Buyer

Organizations are heads down creating a repeatable process that works for sales and marketing but the little ‘ol buyer – the one that signs the contract and writes the check – is forgotten along the way.  When creating the repeatable Demand Process Strategy, the backbone of your process, the buyer should be front and center.

3. Sales alignment

More often than not, sales is brought into the discussion too late in the game and will agree to process changes to ‘get marketing off their back’.  The Marketing department is the driver for process change for obvious reasons – marketing contribution to revenue measures their work.  However, new customers in complex B2B sales don’t convert after a single interaction – sales reps are the lynchpin in the process.  By involving sales early in the discussions and helping them to understand the importance of this measurement – from their perspective – the more willing sales will be to modify processes. 

4. Change Management              

Arguably, the most critical factor is the ability to implement and manage change.  In my experience sales and marketing will adhere in the early stages of change but revert back to old habits fairly quickly – especially if the optimized process includes a few extra clicks of the mouse. Marketing and sales leaders need to work together closely to ensure all resources understand the criticality of adhering to the process by conducting regular training and process refresher sessions; soliciting feedback from all parties and involving reps on the front-lines in candid discussions about how to make the process easier for them. From a management perspective the adherence to change must be monitored closely and action taken quickly to resolve any deviations.

5. Technology Challenges

Contrary to the belief of some, technology itself is not going to magically provide marketers with the golden analytics. As described in the points above, a clearly defined process must first be mapped out and then enabled by technology.  Ideally, marketing automation would be integrated with CRM which would also have feeds from the ERP system (if utilized) and feeds into a BI tool. But don’t let the lack of technology be an excuse for not implementing process.  I’ve worked with organizations that have very limited technology budgets and antiquated systems yet they are able to measure revenue and ROI.

Oftentimes when organizations get to the point where all of the above has been implemented, aligned and launched they end up like deer in the headlights – not sure where to go next. The ability to be nimble and optimize based on the metrics is difficult.  It requires a ‘revenue-team’ mindset as opposed to a ‘sales and marketing’ mindset and a commitment to continual optimization.  In traditional sales and marketing organizations the budget and strategy is set early in the year. There is a great amount of trepidation when organizations realize three months into the year that the strategy won’t support the overall revenue goals of the organization and adjustments need to be made.  Many times organizations ignore the red flag and ‘hope’ performance will improve.  Or worse yet, optimization is a reactive fire-drill to try and reverse the avalanche already set in motion.

As one of my brilliant clients has said many times – “hope is not a strategy” and fire drills most often don’t stop the avalanche. In order to get to a state of measuring and optimizing based on revenue performance, organizations need to apply these five tips and work diligently across sales, marketing and operations to build the Demand Process℠ strategy that will make revenue contribution analytics a possibility.  

Author: Missy Heilman @mheilman Vice President, Strategy, ANNUITAS