Entries Tagged as 'B2B marketing ROI'

How to Improve Your Marketing Automation ROI

Effective B2B marketing processes plus automation yield outsized returns

Calculating the return on marketing automationA recent research study by Sirius Decisions (sponsored by Marketo), Calculating the Return on Marketing Automation, shares a framework for establishing a return on marketing automation, and discusses why the purchase of a Marketing Automation Platform (MAP) alone – without the proper processes and skills wrapped around it – will likely produce disappointing results.

According to the study results, Marketing Automation technology paired with appropriate, systemic processes can yield four to five times the number of closed deals when compared to deployed technology alone. The magic lies in realizing higher conversion rates throughout the Sales cycle. It’s not about generating more leads; it’s about identifying the right leads.

Companies using technology alone to solve their demand creation issues experience lower returns than companies who have no marketing automation AND no processes. The report breaks companies into three segments:

  1. No Marketing Automation with no processes
  2. Marketing Automation with no/weak processes
  3. Marketing Automation with average processes.

No MAP / No Processes

This group features organizations that exhibit a complete set of legacy demand creation tendencies. They have a funnel with an extremely wide top that quickly narrows to a trickle by its end. With no shared processes in place between Sales and Marketing (e.g. target market definitions, lead handoff criteria, service-level agreements), lead generators have little choice but to flood the funnel with any prospect who shows the slightest interest. Email is the most typical tool, yielding a response rate of roughly two percent.

Almost all responses are passed on to a qualification function (usually inside sales). Conversion rates from response to ‘lead’ can range as high as 85 percent. The lack of qualification at the top results in abysmal conversion rates at the middle and bottom. An average of only five percent will be qualified as true leads by telemarketing. “Sales fatigue” sets in over time in terms of leads that come from Marketing. Telemarketing finds out these leads are of low quality, so reps turn to cold calling, preferring to control the quality of their lead destiny themselves. Field reps will likely ignore Marketing’s output even more. Given a starting marketing database of 50,000, this scenario yields roughly one closed deal (or average additional revenue of $100,000) per marketing program.

MAP Plus No / Weak Processes

This group is made up of organizations that purchase a MAP, but don’t spend the time building all (or any) of the processes that drive true MAP performance. By itself, a MAP can help marketers refine their targeting and the assignment of specific content to prospects; together these drive greater response rates. This yields a response rate of three percent. Improved data quality within the MAP means that Marketing will reject more inquiries, dropping the conversion rate at the first juncture to 75 percent. This rate is still too high, overflowing the telemarketing function with even more unqualified leads. The middle and bottom conversion rates are unchanged from the first scenario. The close rate remains the same, but costs increase.

According to the study, a typical software-as-a-service-based MAP runs roughly $100,000 in the first year – when one includes the platform, implementation, integration, training and support. In this “MAC plus NO or Weak Processes” scenario, an organization with a database of 50,000 will see revenues increase only about $100,000 in the first year. In addition, if Marketing has raised expectations that lead quality will increase due to this MAP purchase, greater friction between Sales and Marketing results.

MAP Plus Average Processes

Process plus marketing automation equals higher ROIThe third group consists of organizations that purchase a MAP and drive alignment between Sales and Marketing around target market definitions, lead handoff criteria and service-level agreements. When this occurs, marketers are able to take advantage of broader MAP functionality including lead scoring, portfolio marketing and lead routing. The value of this functionality shows in performance. Improved focus on the best targets raises the response rate to roughly four percent. A significantly lower conversion rate of only four (compared to 85 and 75 above) percent ultimately yields much better results, because these are true Marketing Qualified Leads (MQLs).

With a handoff process in place, Sales now accepts and processes more than 58 percent of MQLs. The higher quality of these leads in turn yields an increased close rate of a bit more than 23 percent. An organization can expect to close roughly five deals per program based on a 50,000-name database. That’s a revenue increase of about $400,000.

Lessons Learned

Processes should always precede technology. Deploying technology without Sales and Marketing processes in place will only highlight the problems you always had. The key is to rethink your approach and use technology to leverage your processes, not the other way around.

How does this align with your experience?

Please join the discussion by clicking on the word “Comments” in the line below the Share button.

If you are reading this as an RSS feed or via email, please use this link to add your comments: http://sales-lead-insights.com/?p=2523

 

Measuring and Managing Marketing ROI: An interview with Jim Lenskold

This is one of a series of occasional interviews with top practitioners on topics of interest to B2B lead generation, marketing and new business development professionals.

Jim LenskoldMy guest today is Jim Lenskold, President, Lenskold Group, a consulting firm specializing in measuring and managing marketing ROI and author of the award-winning book ‘Marketing ROI’.

Jim’s company has published several research studies covering marketing metrics and ROI. One of the studies surveyed B2B marketers concerning Lead Generation Measurements & ROI. It delivers some interesting findings on the most effective tactics and opportunities for lead nurturing. The full report is available for download at www.lenskold.com/LeadGenROI.

Jim, It seems to me that in today’s accountable business world, marketers must track and measure the results of their programs. Am I right?

Yes, Mac – you’re right about the increased need to track and measure marketing results. But it’s even more important for Marketing to demonstrate the ability to improve performance and profitability. Marketing earns credibility when it leverages measurement insights to improve targeting, contact strategy, marketing mix integration, and offers.

Also keep in mind that running ROI scenarios to show the expected financial contribution from a campaign investment – even without measurements – demonstrates a level of accountability.

I’ve heard B2B marketers say things like, “I don’t control the sales process, so why should I be held responsible for the sales results of my marketing programs?” Jim, how would you answer that statement?

We’re all hired as professionals to deliver business results. If Sales can’t convert leads from Marketing, regardless of who’s responsible, why should the company invest in lead generation marketing programs?

Measurements and performance analysis must drive good business decisions, helping to diagnose problem areas that can be addressed. In some cases, these problem areas can be addressed strategically, such as by improving lead quality. In other situations, the problems may be operational or cultural, and are resolved only when marketing and sales align to address issues like sales capacity or compensation.

There are many challenges to measuring the contribution of B2B lead generation marketing. What are some of the basic steps to get started with measurements?

A good starting point, in terms of big impact, is to better assess lead quality as determined by the projected sales conversion rate and the projected customer value. Projected values allow quick evaluation and decisions regardless of long sales cycles and customer revenues coming in over time.

Note: Jim delivered a webinar on lead quality which is available on demand at ‘How To Increase the Quality of Your Leads’

More advanced and highly valuable measurements are those that determine the contribution of specific tactics within a complex multi-touch marketing environment. Measurements using modeling and carefully designed market testing can identify the contribution of tactics beyond either first touch or last touch attribution and therefore guide decisions on the marketing mix.

Jim, how do you define ROI as it applies to marketing? Does it include savings or improvements, or is it purely a financial calculation of cost vs. sales revenue?

Marketing ROI should be used to guide marketing investments toward the most profitable returns. The incremental investment is assessed against the incremental returns to the company, which are driven by sales, revenue and margins. When the investment results in a reduced cost to the business, such as marketing to drive customer service online instead of through inbound calls, those savings can be considered part of the return. In order to maintain integrity, it’s important that ROI be calculated accurately and that calculations are consistent with the way that Finance runs them.

What role does marketing and/or CRM automation play in supporting measurements and ROI?

Marketing automation provides a significant benefit in terms of capturing critical data for measurements, analysis, and ROI. When linked to a CRM or sales automation system, additional tracking of lead progression and conversions provides a better measure of marketing contribution. Marketing automation typically includes a base level of campaign results tracking and may also include functionality to create test and control groups.

Jim, thanks for taking the time to share your thoughts on measuring and managing Marketing ROI.

Readers, what are your thoughts on the subject?

Please add your comments by clicking on the word “comments” in the line below the Share button.

 

Revenue Performance Management: An interview with Jon Miller, VP Marketing and Co-founder of Marketo

This is one of a series of occasional interviews with top practitioners on topics of interest to B2B lead generation, marketing and new business development professionals.

Jon MillerJon Miller is VP marketing and co-founder of Marketo, one of the marketing automation solutions supported by AcquireB2B, our B2B agency specializing in driving more leads and sales with B2B marketing automation.

Jon, named a Top 10 CMO for companies under $250 million revenue by The CMO Institute, graduated magna cum laude in physics from Harvard College and has an MBA from the Stanford Graduate School of Business.

I had a conversation with Jon about Revenue Performance Management and the current state of Sales and Marketing:

Jon, what is Revenue Performance Management?

Revenue Performance Management, or RPM, is a strategy to optimize interactions with buyers across the revenue cycle in order to accelerate predictable revenue growth. RPM is a systematic approach to identifying the drivers and impediments to revenue, measuring them, and then optimizing them for top line growth.

Marketo provides the tools, thought leadership, and best practices to change how Marketing and Sales work, and how they work together, to help companies adopt RPM and accelerate predictable revenue growth.

What’s your take on the current state of Marketing and Sales? 

The fact is the current sales and marketing model is at best obsolete, and at worst, totally dysfunctional. The following two data points help to tell the story:

  • 52% of Sales reps do not achieve their Sales goals (CSO Insights 2010)
  • 94% of Marketing qualified leads will never close (SiriusDecisions 2009)

The dysfunctional state of the revenue creation process is partly a result of the longstanding inability of Sales and Marketing to work effectively together. And it’s also due to the volatile and increasingly complex business environment in which digital media, and especially social networks, have caused a sea change in buying behavior. This has given even more control to customers and prospects, enabling them to actively search online and collect information from trusted sources before making their buying decisions.

In the new model, companies transform the way their Marketing and Sales teams work by:

  • Managing the Marketing department as a true revenue-generating organization;
  • Implementing a systematic process of nurturing prospective buyers through the revenue cycle, and measuring buyer engagement at every step of the process;
  • Providing Sales teams with the information and tools they need to prioritize their time so they can engage with the most qualified prospects, at the right moment;
  • Measuring the effectiveness and ROI of spending on people and programs at every step of the Revenue Cycle across Marketing and Sales; and
  • Allocating investments to accelerate results and revenue performance.

Jon, you mentioned the “Revenue Cycle.” How about giving us your definition?

The Revenue Cycle starts from the first contact with a prospect and continues through the sale and beyond to the customer relationship. This is important since when Marketing and Sales coordinate their activities as part of a unified Revenue Cycle, companies get better at properly identifying and prioritizing opportunities… and better quality leads result in more sales wins and ultimately more revenue.

The Revenue Cycle requires coordinating Marketing and Sales activities throughout the entire cycle to generate maximum impact. The old model of a linear handoff from Marketing to Sales must give way to an intertwined model where both organizations jointly own prospect relationships and coordinate their activities.

The Revenue Cycle requires collaboration between Marketing and Sales activities, but this is easier said than done. The key challenge is that each function works differently, thinks differently, and is measured differently.

In the past we discussed the idea of applying the Six Sigma process to the Revenue Cycle. Could you please share some of your thoughts about that?

In the past 30-plus years there has been a significant transformation in supply chain operations. Businesses have been able to make them quicker, cheaper and more predictable, mainly due to advances in technology. Six Sigma and other quality improvement programs strip inefficiencies out of the system. As a result, lean businesses have increased productivity and saved trillions of dollars through just-in-time inventories, speed-to-market processes, etc.

In contrast, progress to improve productivity in the demand chain has been almost glacier-like. The reason is many Sales, Marketing and Service operations continue to use antiquated processes in a marketplace that has changed dramatically due to the Internet. So why not apply the Six Sigma process to demand chain operations?

To do this, best practice companies are measuring performance indicators in order to continuously improve their revenue-producing processes in the same ways they did on the cost side. To continuously improve revenue performance, organizations must measure and analyze the operational and financial impact of each Sales and Marketing activity across the revenue cycle.

For instance, with lead generation campaigns, measurements include the speed and volume of leads gained, nurtured and converted via multi-marketing platforms with varying calls-to-action… as well as calculating the costs and revenue impact of each activity. By understanding the results of these disparate activities by channel, product and buyer, organizations can identify and remove defects, and improve on those efforts that have the greatest positive revenue impacts.

So how do we get there from here?

The last frontier of productivity is how companies choose to manage and generate revenue. In today’s budget constrained environment, this commitment to measurement and operational excellence is more needed than ever.

By measuring and installing processes to continuously improve the demand chain, companies can significantly increase Sales and Marketing effectiveness (revenue capture) and efficiency (cost reductions) quickly, cheaply and more predictably.

Jon, thanks for taking the time to share your thoughts on Revenue Performance Management and the current state of Sales and Marketing.

Readers, what are your thoughts on the subject?

Please add your comments by clicking on the word “comments” in the line below the Share button.
 

 

Increasing B2B Lead Management ROI: 4 Key Performance Indicators

Although the findings are not news to me or my clients, a recent research study about increasing B2B sales lead management ROI is worth mentioning.

Why? Because it validates some of what I’ve been recommending to my clients for years.

B2B sales lead management KPIs

The Forrester research study and white paper about sales lead management, commissioned by Silverpop, reports that when it comes to increasing the ROI from B2B sales lead management, there are four key performance indicators (KPIs) that pay off in more qualified leads and sales.

The numbered items below are the four KPIs from the white paper, but the comments about each are mine:
 

  1. Profiling and targeting. By understanding your customers and using them as a model for the right prospects to target with your lead generation activities, and by targeting those right prospects, you will get a better ROI.
  2. Lead scoring. This is the latest name for the process of determining which leads are qualified leads that meet the minimum definition of a “sales-ready lead.” Lead scoring provides us with the criteria for determining which leads need further development and which are ready for sales follow-up.
  3. Content. Developing and offering information that meets the needs of your prospects, particularly as they move from awareness to inquiry to consideration and on to purchase, is essential both for getting prospects to identify themselves to you and for helping move your prospects forward in their buying process.
  4. Nurture early-stage buyers. B2B research about sales leads repeatedly shows that the B2B buyers who are still in the early stages of their buying process represent three out of four of the total sales opportunities you will net from your leads. Only one in four sales opportunities comes from those prospects who are already at the later stages of their buying process.

Want a quick summary of how to take advantage of these four KPIs? Read my short post titled B2B Sales Lead Generation Is Easy: Four Rights Will Get You There.

What are your thoughts about the four KPIs that increase the ROI from B2B sales lead management?

Please add your comments by clicking on the word “Comments” in the line below the Share button.

If you are reading this as an RSS feed, please use this link to add your comments:
http://sales-lead-insights.com/2010/b2b-lead-management-kpis/ 

 
Need help with B2B lead generation, marketing and sales?
For more information, please call Mac McIntosh at +1-401-294-7730, send him email at or visit www.sales-lead-experts.com