I recently had the pleasure of attending the American Marketing Association Boston event Actionable Marketing Metrics: Tools and Methodologies on Tuesday, 24 January, 2017.
The two guest speakers, Thor Johnson, CEO of Bedrock Data, and Kristen Hambelton, CMO of ServiceChannel, gave outstanding presentations. They raised interesting points on how businesses should approach defining metrics in both marketing and sales.
Here are a few main takeaways that are particularly pertinent to B2B businesses (though, of course, they do apply to B2C companies as well):
You need to use metrics to define goals.
Kristen explained that it is crucial for any successful company to sit down and establish the metrics used to define marketing goals. This is particularly relevant for companies with separate Marketing and Sales teams.
Essentially, the CMO must work with all team members, especially Sales, to come to an agreement to how Marketing is attributed for impact on revenue and which metrics will be used to measure performance. Will Marketing be attributed for revenue based on the number of touches (meaningful interactions between Marketing and the customer) before the deal is closed? Or will it be dependent on the how many leads were generated by Marketing that were successfully converted?
Defining metrics also avoids a hostile team environment of Marketing taking too much credit for creating revenue, much to Sales’ chagrin. “Marketing thinks they generated 50% of revenue?” thinks Sales. “Guess who had to close those deals!”
This process is designed to bring Sales and Marketing into alignment. There is a common understanding between Sales and Marketing of what metrics are being used to measure performance.
Similarly, Closed Loop Marketing introduces a broader focus on how Marketing and Sales can be integrated in a continuous, unified process. Metrics is only one facet of marketing-sales alignment. We provide a free blueprint, which is the perfect introduction to Closed Loop Marketing Architecture.
The marketing metrics you use must be directly related to revenue.
For instance, there is no point talking about how many leads you generated last quarter. This is simply an indicator of marketing activity, not revenue. Marketing doesn’t have to be congratulated just for making noise and activity, because that’s their job. What is important is what actually contributed to revenue, such as the conversion rate.
No one wants to hear about your marketing activity; what they want to see is your results.
Thor introduced a general formula for using the right metrics:
IMPACT | VELOCITY | COST
What does this mean? Your choice of metrics metrics should reflect:
- Impact: This is the aforementioned clear link between metrics and revenue. If it doesn’t demonstrate impact, it’s not the right metric.
- Velocity: How fast the sales cycle is. For some businesses, this could be as long as months or even years. For others, it could be two weeks. You need to consider the sales cycle and how its velocity affects how you measure performance.
- Cost: The total cost of expenditure. This includes processing costs, distribution costs, costs of time – everything that is required for marketing and sales.
Market to Marketing (and the rest of your company).
Thor also spoke about the importance of circulating your Marketing results throughout your organization.
One of the biggest mistakes that companies make is that they market themselves well to customers, but not to their employees. This is why your metrics need to be clearly related to revenue so that everyone in the company understands how Marketing is performing and the ROI they are generating.
Marketing’s actions influence the rest of the company, and Marketing is in turn influenced by the activities of other teams, such as Sales or R&D. Thus, there needs to be a company-wide understanding of what marketing is doing and how they are performing.
To do this, you don’t need to get fancy. You don’t need a 20-page document written up by professional copywriters that you email out every few days.
In fact, brevity is key. A one-page visual of Marketing’s timeline for the month or the key metrics of their latest performance is all that’s needed. For this reason, your metrics need to be comprehensible and self-explanatory.
Disseminating your results to your Sales team is especially important. This comes back to aligning Marketing and Sales – they need to be on the same page at all times, and to do so, Sales needs to know what Marketing is doing and vice versa.
One thing was clear from this event: metrics matter. It is the imperative of all companies to ensure that they are using the right metrics and using them in the right way.
Thank you to American Marketing Association Boston for hosting the event and the speakers, Thor Johnson and Kristen Hambelton (@KMHambelton), for their spectacular presentations.