As customers ways of buying have changed, marketing as a discipline has increased in importance. Consequently, many marketing teams have undergone a transformation from being a support function focused on sales collateral and trade shows to a lead-generating entity that proactively contributes to the business. While this step change has been warranted it also comes with a range of new challenges:
- Too much focus on creating a high volume of “leads” instead of creating “leads of high quality” that turn into revenue.
- A too loose definition of what a “lead” is, which drives friction with the sales team that spend loads of time on following up on (poor) leads
- As leads aren’t tracked all the way to revenue, messages, channels and formats are optimized based on their ability to generate traffic or leads which often have no correlation with revenue realization
- Overemphasis on activation and direct digital marketing tactics based at the expense of building a brand and creating demand
- Too much content gating which leads to 80-90 % reduction in consumption of that content due to a blind focus on a pure lead number
So, while much progress has been done for most BtB marketing teams, there is still much more ground to cover in order to become truly revenue-centric and show tangible impact on the business.
A new path: Marketing as a revenue-contributing function
The next development stage for marketing teams (for some it is their “NOW”) is to start assigning revenue to the marketing function. While the customers path to purchase in complex BtB will always be somewhat opaque, there are more possibilities than ever to track and quantify marketing´s contribution to the bottom-line. The three crude development stages of BtB Marketing functions are outlined in the following table:
Marketing as a revenue contributor: the seven transformation components
In markets where organic demand is not abundant and competition is intense, simply harvesting existing demand and optimizing against “leads generated” is not a winning strategy. At Kvadrant we have through our work and experience identified seven components that revenue-centric marketing functions excel at.
1. Move away from optimizing for lead volumes to optimizing for revenue
As opposed to having a one-size fits all approach to marketing and sales pipeline management, revenue centric marketing organizations work much more multi-stringed on how they handle so called leads of where many actually isn’t “leads” but merely “contacts”):
- Disqualified contacts (Low fit, low or high intent): Never pass on to sales teams. They are disqualified and should stay be entirely removed from future engagement and communication.
- Marketing contacts (High fit, Low intent): Converted on a white paper, webinar or similar but haven’t showed any interest in buying: Stay in the marketing pool but potentially also pass on to sales for very soft conversion such as connecting with the lead on social media and / or send some related content or an event invitation. Never try to push product, book a meeting, or sell anything directly after converting. Communicate passively through social media updates, paid social and scaled e-mail. Should not be labeled lead, but rather a “contact”. Lead scoring can be used to trigger marketing tactics but not sales outreach.
- Business leads (High-fit, high intent): Converted on product-based conversion point (e.g contact form, demo request, free trial, want to move from free to paid model etc.) or have directly expressed that they are actively looking to buy through a form or survey.
It is only pool number three (business leads) that should be passed onto sales and be registered in the lead management and CRM systems as a “lead”. By firming up of the definition of a lead also allows for better collaboration with sales and much better conversion rates through the different phases of the pipeline.
2. Invest in lead qualification, routing, and enrichment capabilities
The move towards quality leads instead of lead volumes also entails for marketing teams to build lead qualification, routing and enrichment capabilities. In many ways, generating leads is the easy part of the process – qualification is where the rubber truly meets the road. These capabilities are often neglected in “lead-centric” marketing organization that simply pass on leads in bulk to the sales team. While you can instill an automated rough sorting of the inbound leads based on objective “fit” criteria or basic lead scoring, some leads will need further qualification through manual procedures. Some of the activities that the lead qualification team should drive (some manual, some automated):
- Pass leads to the right sales rep with the best-fit experience and expertise. Also includes following up with sales teams on the progression on high potential leads.
- Ongoing and structured dialogues with sales teams on how “great” leads look like, and the type of information that the sales teams need to improve seller / buyer interactions and ultimately increase win-rate and shorten the sales cycle. This information should be directed back to the product and demand marketing team.
- Adding additional data and insights to leads – either through manual research or the brief first touch dialogue with the lead on the phone.
As Jens Olivarius, CMO Stibo Systems said on our CRO podcast:
“One of the most important metrics within lead generation is to measure how many of the leads that we pass on from marketing to sales that get passed back to us. We are constantly working together with sales to lower that number”
3. Revisit performance measurement and reporting
Aligned to the prior topics, you should only look at the “business lead” when you consider which leads to pass on to sales and how to assign value to your efforts. This also means that you should move away from leading indicators such as MQLs as the golden standard of value creation. Instead track and report on metrics like pipeline value generated, marketing sourced revenue realized and sales velocity of marketing-sourced leads. This change in metrics entails that marketing teams need a broader time horizon to show value as effects on these metrics often comes with a lack.
4. Practice buyer enablement
Make all the relevant, un-biased information and tools needed to drive a buying process within your domain. Everything from guides, calculators, comparison sheets and pricing. Completely ungated, un-biased and readily available. The modern buyer will find the information anyways – you might as well provide it – to build trust and speed up the customers´ buying process. While these activities will not show up as lead generating tactics, they will lead to much more qualified and nurtured inbound leads, that in turn convert faster and usually at a high deal size.
5. Ramp up ABM capabilities:
In many companies the “deal” domain has been alien territory for marketing teams, as sales usually has managed this part of the pipeline. Yet, due to changing buyer behavior and improve collaboration between sales & marketing, marketing is increasingly seen as a co-pilot to acquiring, expanding, and accelerating accounts. Through an efficient and scalable ABM engine, marketing will be able to show direct impact on sales cycle length, order size and win-rates on chosen deals. That also means that ABM becomes a critical capability for revenue-centered marketing teams.
6. Set up dedicated revenue operations function.
Too often marketing and sales technology are bought separately, governed differently and data are poorly connected. More and more companies are closing this gap by creating a unified revenue operations functions that takes responsibility for the technology, processes, and data for all the revenue-generating teams inside a company. This function – or at the very least the capabilities it represents – is a crucial component of tracking leads to revenue and ensuring a strong coordination across the involved functions.
7. Address the people & culture challenges
In many ways it’s easy to look at lead and revenue generation as a numbers game – and to a certain extent it is. But many of the pitfalls for B2B companies on that journey have their roots in the culture and working modes in the different teams. Whether it is “old school” marketers wanting to focus on campaigns or colors, “lone-wolf” sales mentality or simply a lack of empathy and understanding between the departments, the problem is fundamentally a human, not a technical one. Without addressing the culture and individuals in play, you run the risk of the transformation going nowhere.
While the transformation to a revenue-centricity is a multi-year journey with many levers in play, we see some common patters that are crucial to get in place in order to succeed.
Align your approach with the CEO and sales leaders: the transformation towards marketing as a revenue-contributor is not merely something that affects the marketing function. Sales teams and the CEO will also need to be brought onboard, as both strategies, tactics, budgets, mandates, and metrics will change quite dramatically. Some companies are ready for this, and some or not. As a CMO you need to bring your peers in sales and your boss (usually the CEO) with you on the journey very early. And if they aren’t ready to make the commitments and change the mindset, consider whether it actually worth it to commence the transformation.
Be frank about the investment and time horizon: In many companies marketing spend is a fraction of the sales spend, and marketing is often grossly underfunded. Many CMOs need to double or triple the resources they have at their disposal if the marketing function needs to move away from being a support function to becoming a revenue contributor. Also, many marketing teams are effectively measured on short term metrics and asked to deliver leads from the get-go. The above stated transformation is much more long term, and due to the long sales cycles in many industries, results might not show for months.
Connect the technology and data in order to stablish a shared view of the lead-to-revenue pipeline: If the data isn’t flowing and is incomplete if it close to impossible for marketing to even understand revenue impact. While there are many levels to this game, setting up the basic infrastructure that allow you to track incoming leads to revenue and derive insights on which tactics, messages, conversion points and channels that are actually driving the revenue
While transformation to become a revenue-centric marketing organization entails uprooting many of the current practices it is journey worth taking – for both the company and the marketing function