Over the past few years, I’ve noticed a brisk change from the traditional marketing approach to a revenue marketing approach. Today’s CEO is looking at the bottom line generated from marketing efforts and is not really keen to know clichéd marketing statistics such as click rates, email opens or SEO ratings. The CEO is very curious to know about what real and tangible impact the marketing function has had on the business. The daily conversation between a CMO and a CEO has changed to topics such as lead conversation rates and sales pipeline. The CMO of today needs to have the answers to pertinent questions from the CEO on revenue generated from all the marketing activities that were executed in the course of the current year.
The economic market is rough and it’s discernible that the CEO would be prudent with regards to every penny being spent. While everyone realizes the importance of branding and marketing, the ROI question is something that is often debatable. Of course, there is the element of brand equity, which is not something that is really tangible. All of this means that marketing as a function is under the microscope from a revenue point of view.
Change in Buyer Behavior
Prior to the Internet age, buyers used to speak to vendors and get whatever they needed. Buyers only had the option to pick from whatever was available or what was told to them from a limited set of vendors. In the age of the Internet, the buyer psychology has changed drastically. A lot of online research can be done by a prospect before taking the purchasing decision. The prospective buyer is also able to compare with competitive offerings with the click of a button. The rise of ecommerce websites and online payment options means that your customer can buy your product from any corner of the globe! Customers now value inputs from peers and even rely on product reviews written by complete strangers!
In this kind of scenario, customer conversations are critical for any marketing function. The marketing team needs to have an inkling of the pulse of the customer and be able to track their thought process as much as possible. The changed buyer of today is also sharing hints of his likes and dislikes through social platforms. This is where social listening using tools such as HootSuite are critical for the marketing pro. We are able to track buyer behavior and can collect customer feedback for improvement.
Previously, the marketing effort was measured in terms of number of impressions, clicks, opens etc. Marketing was just a blind spend that the CEO made, hoping to attract some customers. The impact of this spend was difficult to measure and collate. It is my belief that the marketing function should contribute to at least 40% of the pipeline for any company and the sales team should contribute the remaining 60% through hunting activities. The marketing team, especially the market research division needs to be driven by concrete measurable numbers. The marketing team’s contributions should feature prominently in the balance sheet of the company that the CFO presents to the board members.
For any marketing team, one of the important factors to consider is to focus more on the quality of leads than quantity of leads. Marketing should be measured against what closed business it has brought into the company. For this, one of the most critical aspects is the alignment of the sales and marketing teams. Demand generation is possible only when a clear strategy is in place and both teams work in tandem to get those numbers o the board. Demand generation is an activity that has to be driven from the marketing team and insights need to be shared with the sales teams, who can then move in for closure.
Over the years, there is a clear change from activity-based metrics to revenue-based metrics. The quality of leads by the market research team needs to be excellent. Also the conversation percentage of those leads to actual business is critical. The age-old debate of marketing vs ROI is something that will never go away and marketers would hold themselves in good stead if they think about their roles from a revenue point of view.
One of the key points to remember is that more than 70 % of B2B purchase decisions happen even before the sales person gets in touch with the customer. Marketing helps to form a first impression in the mind of the customer and it is the sales function that takes the deal towards the final closure. They key takeaway from this post is that marketing is moving away from being a cost center to become a revenue generating center. There is no two ways about this fact and there is no escaping it either!
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