From Organizational Goal Alignment to Planning & Budget Optimization
Today, we are going to look at the second of four components critical to Revenue-Driven marketing — Planning & Budget Optimization for metrics such as; 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.
Hopefully, you read my last blog post and are following this series on building the foundation of a revenue center for SMB’s. In it we have concluded that the best-in-class companies plan their sales and marketing activities together, and they establish them in a common language that is centered around business goals.
Now that your Sales & Marketing team have aligned goals [see prior blog post] and can jointly tackle establishing a marketing budget to attain those goals, we need to ensure these goals are based on predictive modeling [benchmarking]; that is, a model that gives the ability to look at past performance—which tactics were most successful at optimizing strategy? What failed, and what remedies are available, if any? Which worked, but, were a drag on resources and budget with little to show for it? etc.
It’s also critical to make sure budget allocations are directly- aligned to the different stages of the buyer’s journey. More on the buyer’s journey when we get past the four critical components of Revenue-Driven Marketing. If your goals are truly revenue-based and you are looking at the sales funnel, then you’ll have a pretty fair understanding of the number of leads that need to come in from the top of your sales funnel, how well they need to be nurtured in the middle and bottom of the sales funnel and what those conversion rates should be at each stage. This offers deep insight into how you should spend marketing dollars.
Making a case for Revenue-Driven Marketing as a Planning & Budget Optimization Solution
One way DIR Incorporated helps SMB’s, like yours optimize and align their budgets to business goals is with our business case model report; a detailed analysis that helps you understand opportunities and risks of implementing Revenue-Driven marketing. The business case model report is broken down into 3 sections briefly discussed below; [ each of which will be detailed independently in future blog posts ].
1) Revenue-LifeCycling : Identifies what channels are/or could be making the biggest possible impact on revenue by using the principles behind Revenue Performance Management (RPM); a strategy for managing a company’s interactions with buyers through the entire sales process to enable dramatically more predictable, rapid and profitable revenue growth. Using RPM principles, fast growing businesses can identify the drivers and impediments to revenue, rigorously measure them, and then pull the economic levers that will optimize revenue production.
During the Revenue-LifeCycling interview we will ask you about the performance areas of each conversion stage, marketing budget and revenue target. Here’s a brief look at the specific questions:
- Revenue Goals –
- Touches to inquiry –
- Inquiry to MQL –
- MQL to SAL –
- SAL to SQL –
- SQL to Close –
- Marketing Spend – What are the cost of each marketing campaign?
- MROI – What is the return on each marketing campaign by stage?
Based on your response rate to each conversion phase , we will know how many times marketing will need to touch the prospect database to deliver a closes sales and whether or not optimizing your digital marketing and sales funnel can have a measurable impact on top-line revenue.
For those of you DIYers, two great free tools for figuring out the numbers is Eloqua’s Revenue Lifecycle ROI Calculator and Marketo’s Marketing Automation ROI Calculator
2) Inbound Marketing Score : We review the current state of marketing and programs performance. We do this by analyzing your website and social media activity and providing actionable insights to improve your marketing. A great tool for beginner’s to see a more holistic score is Hubspot’s Marketing Grader
3) Revenue-Performance Preparedness – We look at how well does your organization maximize revenue generated by your marketing initiatives? We will access how your business stacks up against your industry peers?
Together, we want to learn about your infrastructure and want are realistic key performance metrics to set for your programs. You’ll be given a 5-10 minute survey that we help us answer questions like:
- Conversion Opportunities – How can we best improve your marketing ROI? What conversion rates you should expect at each funnel stage?
- Accountability Improvement – What percentage of your revenue pipeline should come from marketing?
- Sales Efficiency – How much time is your sales teams wasting on poor leads? And, how do we fix it?
- Planning & Budget Optimization – What percentage of your revenue you should spend on marketing?
A similar review survey by Marketo can be taken here.
Once all three sections of the business case model are complete, we will schedule a follow-up meeting to review a customized report detailing your organization’s strengths and highlighting opportunities for growth. You will also be able to see how your organization compares to others in your industry, and learn the best practices that have enabled top performers to maximize revenue. Our ultimate goal is to ensure you’re deploying the right tactics at the right time within your market environment.
For those of you who choose to go at it alone, please note that we are still here to help you decipher what it all means. When you set out you may not know whether your business case will ‘stack up’, however by the time you finish you should have a detailed understanding of the business opportunities and risks of revenue-driven marketing deliver for your business. In addition, not only can you report on what you did last quarter as far as your contribution to pipeline and sales, but you can also predict future contribution. What are you waiting for; build the business case to investors, management and peers today.
Here is a summary of best practices we help deliver to our clients in the area of planning and budget optimization:
- Budgets are based on predictive business modeling aligned with business goals
- Budgets are allocated and adjusted across the buyer’s journey to maximize pipeline productivity
- Marketing tactics are chosen based on their predicted impact
- Marketing is responsible for a defined revenue target
Next time we will take a look at the third critical component of creating a revenue center; Lead Management and Process Flow which takes into consideration 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.