How to calculate a defined revenue target for Marketing accountability?

Establishing A Defined Revenue Target For Marketing Accountability 

Okay, so we’ve heard about inbound marketing and the sales funnel. We know they provide great return on investment, and lead management, but, you want to go deeper. You know Enterprise Inbound Marketing Companies like Kuno Creative and Bulldog Solutions offer revenue performance management services, but, you’re a small to mid-sized business, and anything over $2500 a month will kill your budget.

In this article, I am going to share with you how to calculate what percentage of revenue marketing should be help accountable for generating. You read that correctly … marketing should be, and can be help accountable for more than a brands visibility and a company’s reputation.http://businesscenter.eloqua.com/roi-calculator/

Introducing Revenue Life-cycle for Small Business Enterprise.

Strategic Inbound Marketing is about integrating marketing to drive prospects and lead through your sales funnel. Revenue Performance Management looks at the speed of conversation from phase to phase, and monitors the behavior of your leads. Over time you can predict each set of behavior with buyer personas.

Once you accomplish this, you simply need to focus on improving the lead nurturing processes of slow decision-makers.  Doing this you will know how many leads you need to reach X dollar amount. Armed with this measurable impact on top-line revenue, you can better forecast revenue.

Now, let me simply this further.

The CEO of a 2.5 million-dollar companies says to the VP of Sales or Director of Sales, “This year we want to grow revenue by 10%”.

  • Sales will be responsible for generating $250,000.
  • Marketing will be responsible for generating 25% of the defined-revenue target. $62,500
  • Figure out your average profit on a closed deal. For this sample company we will assume it is $12,500.
  • Divide average profit from closed deal into marketing defined-revenue target. 5
  • Therefore, marketing most generate 5 leads that close. In order to achieve this scientifically we need to know how many leads marketing most generate in general. So, we work backward from close. 
Revenue LifeCycle Methology   

To get accurate numbers, you will need the following:

 

  • Your company’s conversion rate at each stage of the funnel. (Basic lead intelligence)
  • What percentage of Sales Qualified Leads do you close? For this example let us say 25%. Therefore, for every 25 SQL there are 5 that close.
  • What percentage for lead accepted by sales (SAL) from marketing end up being sales qualified lead (SQL) [aka sales-ready leads]? For this example let us say 50%. Therefore 25 / 50% = 50 SAL
  • What percentage of marketing qualified lead (MQL) are accepted by Sales. For this example let us say 75%. So 50 / 75% = 67 [Note: you can’t have a partial lead so always round up.
  • What percentage of prospect are marketing qualified lead? For this example say 10%. Therefore, 67 / 10% = 670
  • Finally, what percentage of visitor are actually prospects? For this example, let us say 5%. Therefore marketing must driven 13,400 visitor to the website in order to give sale 5 closed deals.

Of course, when you optimize your sale funnel process with Revenue-Driven marketing your visitor are more targeted and qualified. And, your visitor counts go up faster.

If you have questions, comments, and ideas about Revenue-Driven marketing are my funky math, people let us know via the form below.

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