Marketing ROI in B-to-B: Why Is It So Hard, and What Can We Do About It?
Worse, the "return" part presents its own challenges. First problem is connecting a particular lead to a particular piece of revenue, which means carefully tracking a lead over its multi-month process toward closure.
Further, if a third-party distributor or agent is working the lead, it's very likely that revenue results reporting is not part of the deal. With good reason: The distributor considers the relationship with the end-customer as his, and none of the manufacturer's business. So the marketer who generated the lead often has no visibility into the associated revenue. Even if the deal was closed by a house rep, you're looking at the endless squabble between sales and marketing about who gets the credit.
You can't blame B-to-B marketers for throwing up their hands and relying on interim metrics like response rate and cost per lead. Especially when marketing staffers come and go, and may not even be in the job when the lead generated a while ago finally converts to a sale.
This is why I was so pleased at the arrival of the new book by Debbie Qaqish, The Rise of the Revenue Marketer, where she urges marketers to raise consciousness of their role in driving revenue results. "The revenue marketer uses the language of business," she says. Examples of the metrics she recommends for revenue marketers include funnel velocity, sales conversion rates, pipeline revenue and campaign ROI.
My conclusions from this investigation:
- Begin with a deep conversation with your finance counterparts to get at the best way for marketing to serve your company's financial interests, like:
- The right approach to assigning sales and marketing expense.
- Whether to calculate returns based on net sales or on gross margin.
- Decide which expenses are fixed and which are variable.
- How to attribute the contribution of sales and marketing touches across the sales cycle.
- Setting the ROI "hurdle rate" needed to support your company's profitability goals.
- Figure out where to get the revenue and expense data—not everything will be in your CRM system. Your finance counterparts should be help you source the data you need.
- If a distribution channel party is a roadblock to revenue visibility, conduct a "did you buy" survey into accounts to which qualified leads were passed.
- If the account-based revenue is captured internally, try supplementing your CRM system with data match-back to connect campaigns to sales, circumventing the arduous process of following a lead along its complex conversion process.
- Set clear objectives for each marketing expenditure, so you know how to declare ROI success when you see it.
- Get inspiration from The Rise of the Revenue Marketer, Debbie Qaqish's innovative thinking on the role of marketing in B-to-B.
- Get an education from Jim Lenskold's 2003 classic, Marketing ROI: The Path to Campaign, Customer and Corporate Profitability.
- If to many obstacles are in the way, fall back and rely on "activity-based" metrics like cost per inquiry and cost per qualified lead, which tend to be pretty easy to calculate, being mostly within the purview of marketing.
A version of this article appeared in Biznology, the digital marketing blog.