Digital Marketing Opens Doors To Revenue Center
According to Duke University’s Fuqua School of Business The CMO Survey, marketers continue to shift budgets away from traditional marketing towards digital marketing. Spending on digital marketing is forecasted to grow by 10.2%, a slower rate than the 11.5% increase forecast in August 2012, but a healthy rate nonetheless. Another similar study by Accenture, indicates digital marketing is going to get more of the overall marketing budget next year. About 2 in 3 CMO respondents said they would be devoting at least 25% of their budgets to digital marketing in 2014, up from 46% who said they would allocate that much this year.
Separate results from the survey shows CMO confidence in their preparedness for implementation and extracting value from digital marketing is falling. That is, in 2012, 61% felt prepared, down from 66% in 2011. In 2012, CMOs also indicated more difficulty in improving the efficiency of their marketing operations and improving their workforce’s responsiveness to digital shifts and changing consumers. Sounds like the same problem John Wanamaker, founder of the great Philadelphia department store, had a hundred years ago when he complained that … “Half the money I spend on advertising is wasted; the trouble is, I don’t know which half.”, because he did not measure and even worst did not know what to measure.
It’s probably fair to say that most companies still see marketing as a cost, a necessary evil that is needed to reach its customers — hopefully, but, the science of it is still unclear. That is a real shame, because marketing can be measured, marketing can generate revenue, even more … it can become a revenue center with an approach called “Revenue-Driven Marketing“.
What is Revenue-Driven Marketing?
Revenue-Driven Marketing is a process that focuses on achieving sales goals by identifying buyer behaviors at each stage of the sales funnel and understanding the drivers and impediments to close, rigorously measures various data points, and then pulls the economic levers that will optimize top line growth.
How do you apply it in real life marketing?
To simplify let us look at each section of this definition in a series of blog posts – – beginning with … “achieving sales goals”.
Legendary author of “Think & Grow Rich“, Napoleon Hill, once wrote “To be successful, you must at this moment decide exactly what your goal is and layout the steps by which you intend to reach it”. While this quote was written as a self-help inspiration for individuals, it is applicable to every business regardless of size. When we begin the Revenue-Driven Marketing process we start by assessing the need for the solution by asking things like; “What is the purpose of this? What do you hope to achieve? What type of budget have you allocated to solving the problem? What timeframe do you foresee in solving this problem? Sadly, 80% of the time the response is either “I don’t know ” or “I was hoping you could tell me”.
Certainly, we can assess a situation, but, if you do not have a goal, no amount of marketing or budget is going to bring success. Once you have set realistic goals, and have established key performance indicators to measure the performance of your revenue-driven marketing, we help you to turn your business goals into SMART marketing goals.
Why is this important?
The role of marketing and the funding it receives need to be defined and planned in order to measure the profitability it delivers. There are many moving parts to Revenue-Driven Marketing and therefore many different things that can be measure and each needs to be prioritized, including:
• Organizational Goal Alignment – revenue growth, market expansion, market share, company growth (employees, locations, divisions etc.), talent accrual, capital formation, liquidity and profitability
• Planning and Budget Optimization– revenue targets, cost of goods sold, cost to acquire a customer (CAC), customer lifetime value (LTV or CLTV), retention rates (churn), sales cycle, close rates, sales productivity (revenues per rep, % of targets achieved), ROI
• Lead Management and Process Flow – revenues attributable to marketing, opportunities delivered to sales (sales accepted leads or SAL), cost per lead (CPL), lifecycle stage conversion rates, campaign conversion rates, channel conversion rates, lifecycle stage timing (velocity), brand awareness and PR (visits, likes, follows, comments, mentions, links, syndication, etc.), thought leadership, retention rates (churn), ROI
• Operational Intelligence – free trial conversions to sales, retention (churn), Lifetime Value/CLTV, support plan sales, upsells and upgrades, brand reputation (sentiment, reviews & ratings, brand advocacy, response time).
Often marketers talk about sales and marketing alignment, however, since all successful revenue-driven marketing transformations begin with a clearly defined strategy aligned to business goals. It is important to examine all layers of your marketing ecosystem: audience, messaging, lead and sales processes, program execution, technology, content and data.
Once these goals are laid out you can develop a Revenue-Driven Blueprint to optimize the four critical competencies that determine an effective, measurable strategy.
If this is your first exposure to Revenue-Driven Marketing, it can be quite exhausting. Hopefully, this “bits and pieces” approach will help you get a better idea of how it can lead to a revenue center for your organization. In my next blog post, I will lightly address the four critical competencies mentions above, and then I will follow-up with the next series of blogs regarding “buyer personas“. This is, “identifying buyer behaviors at each stage of the sales funnel”.
Photo Credits: Lululemon Athletica (Goal Setting), iMarketing Profs (Accenture CMO Chart)
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If you liked this post, you will love the Revenue-Driven Blueprint:
Every month, every quarter and every year you are concerned with one thing, the financial health of your company. Everything else is secondary. This perspective means that you must be obsessed with the bottom line.
Your company will not survive unless you are able to continuously grow revenues. Yes, controlling costs is important, but revenues feed the engine. Stagnancy is not an option, because your competitors are working hard to displace you from the market.
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In the Revenue-Driven Blueprint, we will address today’s changing marketplace and show you how to grow revenue through new lead generation strategies. We will show you how to increase qualified sales leads through a new kind of marketing, Revenue-Driven marketing.