Building a MARKETING revenue model that matters to the CEO and Board

For many kiwi companies, financial year is rapidly approaching and CEO’s wanting to improve end of year results will be looking to pull levers. For many, un-spent marketing funds will be high on the cost cutting agenda.

This is often the result of the CEO’s perception that it is sales who create revenue, and marketing is a supporting cost centre.

By taking responsibility for revenue and shifting the numbers you report to senior execs, you can successfully change this perception and shift marketing from a black hole of costs to the centre of growth.

Does your marketing reporting focus on the number of leads passed to sales, views and impressions of advertisements, website traffic stats, social media followers or trade show booth visitors? If yes, you are focusing on marketing activities – and not revenue-impacting metrics!

No this – just because you can count it, don’t presume it carries value with the big cheese.

Many marketers continue to use these legacy metrics that measure tactics for specific stages of the buying cycle. In realty, they’re just pieces of the puzzle. Each bit does its job, but it’s the final result that matters.

Shift your focus to think about your business unit as a revenue business centre as opposed to a cost centre.

The CEO’s View

CEOs are notoriously short on time. Their primary concern is revenue and growth.

Those legacy stats you’ve been sending your CEO? They might be important to you, but to them, they’re just colouring in for adults. They don’t help them to do their job and certainly won’t help them to report up to a board or shareholders.

Start building your revenue cycle model today, so you can provide your CEO with predictable metrics that will give him or her confidence.

Focus your model on these 4 areas;

  1. Leads: Increase in sales qualified or sales ready leads. These are pre-qualified by marketing and handed over to sales. Establish multi-touch attribution to tell you which campaigns best qualified the prospect and how many campaigns influenced a particular opportunity.
  2. Opportunities: Increase in sales velocity or speed of conversion. Effectively qualified opportunities will close fast! Use your CRM to pull your opportunity data and the deal value to give you the calculation.
  3. Pipeline: Highlight marketings impact on the pipeline by calculating the number of new customers or deals won with marketing engagement.
  4. Revenue: Highlight marketings impact on revenue through attribution. In your technology stack set up your reporting to show you your channel, your campaign name, how much it cost, the amount of revenue won and it’s ROI

Focus your reporting on revenue not credit

But, don’t end up in a battle with sales for the leads, who generates the lead doesn’t actually matter, the stats clearly say that prospects are 60-70% of the way through the sale cycle before they even engage with a sales rep. Prior to engagement, they are out there attending events, searching the web, consuming content, speaking to peers. It doesn’t actually matter who gets the credit for generating the lead, it is more about collaboration with sales rather than wasting time fighting over credit. Your CEO wants to see numbers, and is less interested in who got them, so focus on moving forward together to engage a prospect to produce revenue. Regardless of the sales relationship (i.e. I know the prospect personally) the buyer will always spend time evaluating options through research.

The metrics that matter are those that drive the alignment of sales and marketing, which in turn drives business.

Here is a list of ingredients to help you build a sales and marketing revenue cycle model

  1. Bi-Directional synch with your MAP and CRM to pull opportunity data.
  2. Define your lead lifecycle. Once leads come into your funnel, how will they move across your buyer stages?
  3. Start by outlining your definitions, i.e. MAL, MQL, SQL, SAL, etc and model your forward looking projections. Definitions provide the predictable outcomes CEO’s need for forecasting and decision making – “I can predict what my business will look like a year into the future”.
  4. Assign a value to all of your campaigns. Tag the costs to every single campaign.
  5. Measure the velocity of your sales cycle. How long did it take to go from SQL to win?
  6. Know your companies average contract or deal size.
  7. Measure your lead conversion rate. What’s your percentage of leads going from MAL to SQL.

Map out your revenue cycle model

Mapping out your revenue cycle model will help you to track all of the stages so you can actually measure your conversion ratios.

Here’s an example of a standard Marketo revenue lifecycle model. This is a basic sample, but can always be tweaked to your specific needs! We will post more on building a revenue cycle model in future blogs.

marketo revenue cycle modeller

Strategy before tactics

To recap, report to identify your leads, how they have accelerated the pipeline and the impact they have had on revenue. In summary, remember these three rules;

  • Tactics matter more to you; Strategy to the CEO
  • Measure pipeline, opportunities, sales, revenue
  • What’s important to sales is important to the CEO

Make setting up your revenue cycle model your goal and start to work towards this as your outcome. It will take time, however setting this reporting up correctly will get you the seat at the table with the CEO and that’s a satisfying reward for your time and effort. Get all of this going and you’ll find the conversation will quickly move from ‘where can we cut your budget’ to ‘how much growth can you achieve if we spend more?’