I wrote the original article on performance measurement in B2B marketing back in 2010. It is as relevant today as it was then - arguably more so, given that market disruption of the type created by a pandemic tends to lead inexorably to cuts in marketing budgets. In the intervening 10 years I want to focus on 5 key tips that have stood out in my experience as determinants of the success of Marketing performance measurement.
1. Focus measurement on the handover to Sales
The historical conflict between sales and marketing boils down to a difference in the understanding of what constitutes a ‘lead’. This gap between what Sales wants – ideally a prospect who will sign an order next week! – and what Marketing often delivers – anyone who has ever completed a form anywhere at any time! – has to be bridged before anything else can work.
Generally it is good practice to define this as part of a written SLA (Service Level Agreement) between Sales and Marketing, which will include how the actual handover process is completed and how it is recorded at a systems level – usually in the CRM. Narrowing the gap in expectations between the two functions is often achieved in the lead qualification process, so that what is passed to sales is a Marketing Qualified Lead (MQL). In ABM, this concept is still relevant but an MQL definition may be replaced by a demand unit.
2. Funnel conversion rates need to be informed by actual results, not broadly accepted industry benchmarks
In technology marketing, Marketing performance measurement (MPM) ultimately hinges on the relationship between the value of sales pipeline and/ or closed orders and the cost of the marketing resources and activities required to generate the sale – so it is heavily top line oriented. This relationship is strongly influenced by conversion rates in the end-to-end lead management process.
It is therefore not sufficient to generate the target volume of ‘leads’ (see 1) if these do not qualify at the rate needed to feed the sales engine. Nor is it of value for Marketing to ‘convince’ their sales colleagues to accept a lead as qualified in the CRM, if it does not convert to an opportunity (so beware of incentivising this pratice!). There is no way to play the system – buyers will only buy what they want at the rate that they need, so it is important that systems are set up so that this reality is captured and used to inform sales and marketing targets and forecasts.
Needless to say, if we model Marketing performance on the basis that 50% of MQLs turn into opportunities and the reality is that only 20% convert, then the outcome is unlikely to be achieved – and we need to understand why, so as to work on optimisation of this funnel stage.
3. Marketing tactics need to align to the sales opportunity stage, particularly with ABM
Marketing performance results are a function of how well marketing tactics support the customer buying process. In my experience, Marketing is more successful in generating brand awareness and positioning in the right category(ies) than at supporting Sales in, for example, the supplier selection (why you? why now?) process. The answer to every sales performance challenge is not necessarily to do more, but to do the right things - informed by the data. 'Data-driven' is the new mantra, but let’s be clear: that doesn’t just apply to PPC optimisation, but to the whole funnel.
In ABM, we need to consider the performance relationship between contacts, accounts, opportunities and activities – this is a lot of data that needs to be modelled and measured through the buyers’ journey. Only the most sophisticated organisations have begun to tackle this challenge in any meaningful way, but directionally it is where marketing needs to be to stay relevant in competitive market segments of very few companies.
4. Marketing automation is process automation: you need a clearly defined, standardised process
As I reference below, the first question of marketing automation needs to be: what are we automating, why and with what expected outcome? I referred to this in a recent post but it bears repeating since process remains anathema to many Marketers it seems.
When most business functions are subjected to TQM, ISO9000, LEAN and six-sigma and other similar process quality measures, it is time for Marketing to accept that it needs to be more science than art to fully adopt marketing operations that increase productivity and performance. Marketing as an art remains crucial to creative marketing but it must still be conducted inside a performance-driven system if Marketing wants to be an investment centre, not merely an ‘unavoidable’ cost centre.
5. Data and a measurement framework are just the start
It is easy to get hung up on ‘big data’, KPIs, dashboards and the latest BI tools, but none of this is of any value unless Marketing can interpret and apply the insights that performance metrics provide – and then change something, test and increase confidence in the data. This is a cycle of optimisation that I know from experience that we are not often good at. We love activity: getting on with the next exciting campaign; we don’t stop long enough to see what’s working at a process level. This is not just about marketing operations, it needs to be part of the DNA of all B2B Marketing teams. This will take training and skills development.
Performance can not be a bolt-on!
My 2010 Blog in Full
Marketing in technology markets has become increasingly focused on measurable outcomes. As Marketing execution becomes more and more digital, Marketers are benchmarking email opens, clicks, conversions to leads and so on. But these are merely Marketing metrics - the rubber hits the road where Marketing hands over to Sales and we begin to monetise (to use a modish word) our investment in Marketing.
In short, Marketing needs to prove the Return On Investment (ROI) - sooner rather than later. The closer Marketing metrics are to the money end of the business, the better for the credibility of Marketing. And these are metrics that are primarily influenced by Sales: e.g. lead to opportunity conversion ratios; rate of opportunity leakage from marketing-driven leads; average value of orders derived from marketing leads and so on.
For complex sales cycles, these metrics also help Marketing to determine what tactics work most effectively to nurture sales opportunities and help move them through the pipeline. Events and ROI calculators may be appropriate tactics later in the sales cycle to overcome objections and help drive prospect engagement.
Process First, Automation Second
Marketing automation platforms, such as Eloqua, Marketo, Genius, Silverpop et al, all offer some form of workflow-like automation of marketing processes to make lead scoring, routing and nurturing much easier in the digital world (off-line activity still presents a challenge). But these systems will only provide business value if you have:
a clearly defined marketing strategy
clearly defined and understood marketing processes
a clean and segmented contact database
well-trained staff who understand the process and how to set up and execute digital campaigns, and, above all
clear financial and marketing metrics and targets
Metrics must be appropriate to their user and their role: Digital Marketers need real-time dashboards for email opens, web hits etc. Marketing Directors want standardised reports for volume of leads generated, percentage of leads converted to opportunities, cost per lead/ opportunity. Ultimately, measurement of overall marketing performance is defined by contribution to revenue and profit, so Marketing must be able to account for its total contribution from generating demand through to closed business. These are measurements that the CFO and COO understand.
Marketing Comes of Age
Marketing's contribution to revenue can no longer be the 'magic' that happens somewhere between the Web hit and the Sales team; ROI has to be more directly linked to specific activity. We need to understand marketing operations in detail and be able to explain to the C-suite the value of its contribution. Telling them we generated 1,000 leads this month and that this is more than the same time last year, is just not good enough anymore. If Marketing is not an investment, it is simply a cost - and the pressure on costs is always downward.
'You can't manage what you don't measure', the old management adage, must finally be applied to marketing.