The Changing Dimensions of Lead Flow

One of the more interesting ways of assessing the revenue performance of an organization that we looked at in thinking about revenue benchmarking was via an overall plan (whether just an adjustment of historicals, or a forward-looking revenue projection). However, in building an end-to-end plan for managing your overall revenue performance, it is important to stay aware of how the “dimensions” change over time. As a marketer or salesperson interacting with a prospective buying audience, how that audience is defined changes as a more direct connection is made with them. While this change is unimportant if each stage is dealt with separately, it becomes important to understand and model correctly as the entire process begins to be viewed with the same lens.

- At the earliest stages of interaction with buyers, as they are just entering into the awareness and education stage, the metrics that are trackable are around interactions and views. Whether it is views of a banner ad, anonymous visitors on a website, or searches being performed against key phrases, these views are often anonymous and may occur multiple times for the same individual.

- As individual prospects become known, uniquely identifying them by an identifier such as an email address or other id becomes possible. At this point, multiple interactions with one person can be tied together and that individuals actions can begin to qualify them as potentially being a marketing qualified lead.

- As a marketing qualified lead is handed to the sales team, and an opportunity is created to explore the interest that is expressed, the opportunity is generally with the purchasing company, with multiple interested individuals associated to it.

- The opportunity itself, as it is explored in further detail, will begin to have an approximation of size associated with it. Depending on what is being sold, this is associated with an annual contract value, total deal size, or other measurement of bookings.

- When a deal is closed, and services begin to be rendered, this bookings number will translate to a flow of revenue, based on the appropriate accounting standards being used.

At each point in an overall plan that a change in the "dimension" of what we're measuring will take place, this transition must be taken into account. If a conversion rate between website traffic and inquiries, or between leads and sales opportunities, is being benchmarked against as part of the plan, it must take this change in dimension into account. In most cases, this shift in dimensions can be built in as part of any conversion rate that is used in an applicable situation. For example, if 15 opportunities are created out of 1000 leads, a 1.5% conversion rate can be quoted (although I'm sure that the more rigorous mathematicians amongst us will cringe), and planned against without problem.

However, it’s important to realize that this change in dimensions did take place, and if any change in buying pattern or marketing approach takes place, a change in the number of individuals involved in a deal could shift this number without any underlying change in the likelihood of an opportunity to be created.

In your planning, are you clear on what the "dimension" is that you're measuring at each stage? An individual? A company? A dollar? Read More...

Building Benchmarks - 3 Main Approaches

In order to build a high performance revenue management process, not only must it be instrumented and measured to allow you to understand current state, but it must be continually improved. As the market, technologies, competitors, and your own capabilities change, you must continually adapt, learn, and optimize.

However, to do so, it’s important to understand where in the overall revenue process you are performing well, and where you are performing poorly. This requires benchmarking your performance and guiding continual improvements in areas that are most in need or most critical for overall revenue performance. Over the next few posts, we'll look at ways to think about building these benchmarks.

Before we do that, however, we need to look at how we are approaching the challenge. Revenue performance benchmarks can be built in three main ways; against alternatives to ensure that the most effective and efficient way of accomplishing a tactical objective is being used, against a plan to ensure that each element of the revenue performance process is contributing at the required level, and against best in class companies to ensure that the performance levels being seen are maximized to the level that the best performers in your industry are seeing.

Against Alternatives

The best way to start with benchmarking is to look at individual components of the revenue process and ensure that each element of the process is performing as well as alternative options. To accomplish this, a clear comparison metric needs to be established that can be seen as equivalent. If, for example, a webinar and a whitepaper marketing campaign are being compared as alternatives, they can only be reasonably compared with a clear definition of what the outputs are.

If, for example, the immediate goal of the two marketing campaigns is driving marketing qualified leads for sales, then that metric allows a fair comparison. Metrics such as website traffic and raw inquiries will be too high in the funnel to be meaningful, and metrics such as sales pipeline movement or closed business will be too disconnected from the initiative to be useful.
For this reason, when benchmarking alternatives, only initiatives that are truly alternatives for each other in that they drive the same intended outcome can reasonably be compared. A humorous video that drives awareness cannot be reasonably compared to a webinar campaign that creates marketing qualified leads, and neither can be compared to an inside sales campaign that drives business towards close.

Against a Plan

To benchmark efforts across the entire revenue performance spectrum, we first need to develop a comprehensive plan that models the full buying process from beginning to end, and provides conversion metrics at each stage in the process. With this plan in place, the volumes, velocity, and conversion rates that are achieved can be compared to the planned rates, and adjustments can be made accordingly.

In building this plan, key gaps in revenue performance often become visible, especially at points where a transition between siloed groups takes place. Understanding these gaps, and planning efforts and investments to remedy them and bring the conversion rates within the gaps to a reasonable benchmark level can have a very positive effect on overall revenue performance.

While the ultimate goal is, of course, a plan that looks into the future and maps revenue efforts to company objectives, the simplest plan to get started with is an incremental adjustment of past performance. For this reason, clear dashboarding of the existing state is vital in building a forward looking plan.

Against Best in Class

With the comprehensive view of revenue performance that this planning effort allows, benchmarking can now be done against best in class companies. Although each business experiences a different situation, benchmarking revenue funnel metrics against best in class companies allows quick identification of potential areas of improvement.

With an industry vertical, similar realities of buyer dynamics and sophistication may allow insightful comparisons of funnel sizes, overall buying velocity, and conversion rates. Similarly, comparisons against other organizations that share the same general go-to-market strategy (such as through a free trial program), or are comparable in terms of deal sizes, may provide valuable insights in terms of conversion rates and response profiles to specific marketing or sales efforts.

Now that marketing automation has made analysis of the entire revenue engine more readily available, we are beginning to see the ability to provide cross-company and cross-industry marketing benchmarks that provide insight into what best in class performance truly looks like.

Each style of benchmarking adds value in its own unique way, and the more visibility you gain into the performance of your revenue engine, the more you are able to make needed optimizations and improvements.

Current State of Benchmarking?

As we begin a series of posts to look at benchmarking, how are you approaching the challenge today? Do you feel you have dashboards in place? Do you compare tactical alternatives? Is there a quarterly or annual plan that you measure your performance against across the entire revenue engine? Do you compare yourself to best in class benchmarks? Read More...

The Flywheel and the Lightning Strike

There seems to be a bit of schizophrenia in B2B marketing these days. The excitement and interest in social media, and all it can do, is palpable. However, the number of companies that are making significant hard dollar investments in social media as a marketing initiative is not as large as one might expect. By “significant” I mean investments on the level of the other major marketing programs such as search or event marketing, with teams creating great content, engaging with audiences and finding creative ways to add value to potential buyers.

Most B2B marketing teams appear to be experimenting, rather than heavily investing. Sure, they have a Twitter account, and may have put up a blog and even a Facebook fan page, but the level of investment falls far shy of the amounts we invest in Google search campaigns, trade shows or sponsorships. Why is this?

Investment Dynamics: The Flywheel and the Lightning Strike

The most significant challenge in making comparable investments is in the way that investments are made and pay off. With most typical marketing investments, a “lightning strike” pattern is what is seen. A big investment is made, and a big payoff is realized. We run a large campaign, attend a major show or increase our investment in search ad spending, and we see the results immediately.

However, with social media, investments follow a “flywheel” pattern. Over time a steady pattern of investments builds more of a “presence” in social media, a community of interested participants and relationships with key influencers. The building of this “asset” takes significant time and effort – often years – but once it is built it pays off tremendously in terms of awareness, interest and lead flow.

Budgets and Planning

The challenge is that we, as marketing organizations, do not plan this way. Our planning and budgeting cycles are driven by an underlying assumption of a “lightning strike” pattern. Thus, when looking at which investments will drive leads and revenue this quarter or next quarter, a significant investment in social media does not generally make the top of the list.

Other departments have found ways to model, value, and plan for investments that pay off in the long run, but not in a short-term budget. Today’s CMOs must tackle this budgeting and planning challenge if they are to correctly prioritize the marketing investments we must make between those with short-term, “lightning strike” patterns of investment and long-term, “flywheel” patterns such as social media.

(this article first appeared as a guest post on ZoomInfo's "Follow the Lead" blog) Read More...