Does Your Marketing Organization Own a Revenue Number?

Michele Hudnall December 12, 2018 0 Marketing, Sales Alignment, Strategy

S Y N O P S I S

In an editorial note of the latest Harvard Business Review Nov-Dec 2018 – Page 24, it is cited that Board of Directors with a Marketing expert positively affect revenue growth by up to 8% (from a study performed by Journal of Marketing -When and how Board Members with Marketing Experience Facilitate Firm Growth), while the latest Gartner – CMO Spend Survery 2018-2019 cites the most important measure to CMO’s is still “Awareness”.

Why are marketing organizations not aligning their measurements to company revenue targets in lock step with their sales counterparts? The days of celebrating hitting awareness, lead, impressions, clicks, etc. targets are waning when the company misses revenue targets. For marketing to “be at the table” in the C-Suite, marketing needs to participate in the revenue contribution conversation.

It’s time for marketing to “Own a Number” (OAN). 30% of new bookings revenue, assess, plan, execute and then rinse and repeat – one iteration at a time. Leading, innovative and growth driven marketing teams are taking the bold step, will your marketing organization be one of them?

Today’s Situation	The Opportunity	The Outcome
How will leading growth marketing organizations measure revenue contribution, marketing attribution, customer churn, etc. and change the C-Suite conversation strategically over the long-term, while executing tactically short-term?	Marketing organizations are perceived as a key component to growth and customer retention. It is time to be bold and change the conversation by becoming accountable to revenue contribution and ROI based upon marketing attribution.	By taking the bold step, marketing organizations will not only support the growth goals of the company, but have the opportunity to turn their companies into market leaders by breaking out of the “me too” practices of their competitors.

Step out of the comfort zone into the uncomfortable where the magic happens and lead.

TODAY’S SITUATION

It’s that time of year when the year is reflected upon and the aspirations for the coming year begin to flourish. I enjoy participating in these prediction posts and last year I predicted better alignment to revenue goals between sales and marketing, marketing being held accountable and rewarded via budget in a post on Sword and the Script by a colleague of mine, Frank Strong.

A year later and this partnership between sales and marketing has accelerated for organizations driving sustainable growth faster than anticipated. Driving growth with differentiation in mature markets is being led by sales and marketing partners who choose to not “just operate” OR be “me too with best practices”, but rather choose to take an “innovative” sales and marketing leadership approach.

IBM Institute for Business Value – The Modern Marketing Mandate: CMO reports number one on the CMO must-do list is increasing revenue, while in the latest Gartner – CMO Spend Survey 2018-2019 the most important metric to to CMOs is “Awareness”. Awareness does not equal revenue and does not equal top of funnel.

It is difficult for marketing to measure engagement, much less revenue contribution and marketing attribution. Just because it is difficult, does not mean strives shouldn’t be made to get to equal footing in the conversation. Afterall, leading growth organizations are measuring and managing to revenue, ROI and marketing as an investment instead of a cost center.

The days of Marketing reporting and celebrating “activity” while the rest of the C-Suite discusses revenue targets and customer experiences are waning. Customer expectations have changed, not “changing”, they have already changed as they seek partners who can assist them in meeting the revenue growth challenges they face in their companies.

2019 PREDICTION AND OPPORTUNITY

The opportunity is there for those stepping up to be the consultant and advisor and are rewarded with premium sales and loyalty. Those who continue pitching products with generic and inconsistent experiences and content are competing on price and have been left behind, in favor of those who speak to customer outcomes with consistent and proactive experiences and content. Help your customers solve their business challenges in their language, consistently and help them navigate their network of influencers with proactive content.

As I progressed through the year engaging with sales, marketing, private equity organizations, the theme of marketing’s revenue contribution and becoming a manageable investment, as opposed to an unknown cost to control, was consistent. The prediction I contributed to the Sword and the Script’s annual post by Frank Strong was as follows:

Driving growth with differentiation in mature markets is being led by sales and marketing. Partners who choose to not ‘just operate’ or be ‘me too with best practices,’ but rather choose to take an ‘innovative’ sales and marketing leadership approach.

Marketing organizations are transforming from a cost center to an investment center: sign-up-for-a-number, commit to it, and partner with sales to measure marketing attribution to the business that is closed. The days of marketing celebrating meeting activity goals in the boardroom, while revenue targets are missed, are a thing of the past.

Once partnered and driving the common goals of the organization, sales and marketing differentiate in how they engage with customers. Buying motions are not linear and require content – and consistent content – as the influencers in the agreement network of the buying committee engage with your organization digitally, in-person, socially, with external influencers, for example.

Buyers must see you often, with consistency and authentically. Marketing organizations who do not carry a committed revenue target are operating with ‘me too best practices’ that their competitors are and are competing on price, not value and are behind. 2019 leading growth organizations will be driven by a revenue engine with sales and marketing functions.

DECIPHERING THE OPPORTUNITY

The Gartner report also cites that:

~30% of the marketing budget is going towards marketing automation
1 in 6 dollars spent (or 16% of the marketing budget) is targeting innovation
Mainstay activities email, search and website make up another 25% of the budget

This leaves me wondering, “What is marketing innovation?”. Technology is not innovation, driving awareness as the highest priority is not innovation and mainstay activities continue to claim a fourth of the budget is also not innovative. Yet the innovation target has garnered additional spend. Without the ability to measure return, this investment will soon fall flat in C-Suite conversations. Innovation, automation and mainstay plans make up 71% of the marketing budget and leaves me wondering how this addresses the number one must do for CMOs – Drive Revenue.

Starting with automation investments without the fuel to execute can be costly and ineffective, exacerbating today’s situation of inconsistent and ineffective messaging, tactics with high volume leads and low quality outcomes with missed revenue targets. Automation is the opportunity to execute at scale, however, first marketing needs to:

ALIGN to targets
Map a STRATEGY
Define MEASUREMENTS
Plan the EXECUTION activities.

Marketing has great opportunity to lead the organization and drive revenue growth. Some will step up to this challenge, while others scramble to apply automation, call it innovation and continue to generate high quantity, low quality tactics and not participate, much less drive, the revenue growth conversation in the C-Suite.

RECOMMENDATION FOR OUTCOME

Marketing organizations transforming from a cost center to an investment center will sign up for a revenue number, commit to it and partner with sales to measure marketing contribution and attribution to business closed. Once partnered and driving to the common goals, sales and marketing will differentiate in how they engage with customers.

Buying motions are not linear and require content that is consistent and proactive in meeting the requirements of the influencers in the agreement network of the buying committee. Regardless of who and how the customer engages with your organization, whether it be digitally, in-person, socially, with external influencers, etc., buyers and influencers must see you often, with consistency and authentically.

Growth focused marketing organizations will change their long-term strategic conversation with sales and the C-Suite. The objective of the conversation will shift from awareness to revenue. The following chart illustrates the shift that growth focused marketing organizations will make regarding: Objectives, Results, Activity, Source Citing and Measurements.

SHIFTING THE CONVERSATION

The focus on awareness is a lazy, meaningless metric. It is a category often used when market and customer definitions and strategy are missing and thus segmentation, targeting and personalization are impossible leading to “random acts of marketing” with high volumes of low quality leads, or as I call them – contact records that are mostly trash.

Ok, I can feel the anxiety. How will we measure against revenue? Our systems are not set up to track marketing against revenue or attribute revenue against a marketing campaign or asset. How do we set a reasonable target? How can we commit to this and be held accountable? You will never know if you don’t try and don’t over complicate it, take it a step at a time:

Set a target of 30% of the new bookings target
Assess your data, systems and processes to start measuring
Set a strategy – this has two faces: current customers and new business
Define the go-to-market plan to execute
Audit your assets, create and polish for consistency against the plan

So what and why do I care about this now? Marketing organizations who do not carry a committed revenue target are operating with “me too practices” that their competitors are and are competing on price, not value and are behind. Still not convinced?

Let me ask you how your marketing organization will get to marketing innovation with an AI-based Hyper-Personalization Strategy? Innovation strategies leveraging technology will rely on the content and strategy regarding your market and customers. Measuring your impact to revenue and customer experience will keep your marketing plan and execution agile and adjusting to customer engagement, cost and investments.

LET’S WRAP THIS UP

Marketing organizations have found themselves in a cycle to drive “activity” (leads, impressions, clicks) because the rest of the organization does not know what else to drive out of marketing. Yes, these are “metrics” that are leading indicators to “measures” leading to revenue, but micro managing metrics only leads to higher volumes of activity, or as I’ve recently dubbed – “more crap at the speed of light”. It is up to the marketing organizations to drive the strategy and change the conversation or stay in the endless whirlpool of producing more activities and being considered a cost center to control.

Growth organizations have evolved from being led by products and feature functionality to those focused on desired customer experiences and their requirements to drive outcomes for their businesses. Unfortunately at this time, there are now ~7,000 MarTech tools on the horizon, further exacerbating the challenge for today’s markerter. In marketing organizations without fuel, a strategy, automation leads to pushing higher volumes of useless things, instead of automation being used for strategic innovation driving quality engagement at scale.

TAKE AWAYS

I’ll use the following chart to summarize the take aways. Earlier I cited opportunities to: Align to Targets, Map a Strategy, Define Measurements and Define Execution Activities. Beneath each action are suggested activities and finally desired outcomes for each of these recommended actions.

Remember, agile and iterations to achieve small improvements in the long-term, strategic shift in the conversation and driver of growth. Tactical execution in the short-term within the zip code of where you are headed is inevitable, but do not let it de-rail the long-term strategy.

Changing the conversation will alleviate control and will turn marketing into an investment center. Resist the urge to report and discuss leading metrics with the C-Suite. Leading metrics are your guides to agility and target measures are the conversation for the C-Suite.

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Now I ask you: Are you ready to change the marketing conversation, take a seat at the table and lead revenue growth?

Share your comments below or connect with me!

Michele Hudnall