A marketing team has a lot to offer; sometimes, more than business leaders realize. Marketers can optimize activities, create sustainable growth, and directly impact revenue. It's helpful to focus on measuring what marketing does to give them a voice and gain insight on what they can do—change a business for the better.
However, it can be challenging to determine how marketing directly and measurably contributes to revenue. If that data is gathered accurately, marketers can receive more budget, resources, support (and credit!) to keep doing their job right.
Direct contribution to revenue isn't the only information that matters, especially for marketers, who have to work on non-revenue activities, but it is still an important metric. Fortunately, there are straightforward ways to align and measure marketing tactics to show that together, they drive revenue.
Revenue marketing suggests a holistic approach to marketing that emphasizes aligning marketing and sales teams to foster predictable growth. These three fundamental approaches and KPIs will allow you to track revenue directly in relation to marketing efforts so you can find out what's working and what's not. You can pay attention to:
Perhaps the most commonly thought-of way marketers can show their contribution is by gauging how much business was sourced by marketing. When marketers source leads and can prove that those leads came from a specific campaign or channel, then that is a direct contribution to revenue.
In order to prove the direct attribution, it's crucial to have an integrated marketing and sales reporting solution. Reporting solutions should give you comprehensive data on KPIs, like marketing ROI, and provide you with insight on sales, marketing, and how the two interact. This tracking and reporting alignment allows you to track revenue and predict future outcomes.
But even with the best system in place, there are limits to the data we can collect. When attribution data collecting, beware of the dark funnel. The dark funnel is the area of the buyer's journey that's hidden in the shadows, done outside of a marketer's scope of knowledge. This includes other websites a buyer might be visiting, podcasts, social media impacts, and more. Marketers might miss key insights on consumers and not have a comprehensive understanding of how leads became a buyer, making measuring direct attribution a trickier but not impossible (the best way to get that info? Ask your prospects!).
The Trap of The First-touch Attribution Model
It's also helpful to avoid the trap of only considering the first interaction attribution model. Numerous business leaders rely on this attribution model, where only the first interaction between a lead and the company is credited for acquiring the eventual sale. They want to know: did marketing source this lead?
Only using the first-touch attribution model is massively counterproductive, though. It takes at least 18 touches from different sources on average to close a deal and when buyers spend less than 17% of their time with sales rep during their buying journey.
"80% of B2B sales interactions between suppliers and buyers will occur in digital channels. This is because 33% of all buyers desire a seller-free sales experience – a preference that climbs to 44% for millennials." Gartner, 2020
So, we recommend using multiple models to track marketing's impact, which can happen beyond that first touch. And in the end, no attribution model is perfect, so be sure to use several to get a fuller picture.
If you run account-based marketing (ABM), you'll be especially familiar with the sourcing issue that arises when marketing and sales work the same leads and accounts. Marketing rarely "sources" the deal in this situation; the sales team usually lists accounts and leads to target. While "revenue source" may not be a solid metric, in that case, marketers can look at the lift in opportunity and closed sales to evaluate their contribution to revenue by:
A. Comparing historical data to current data
This method analyzes how many opportunities were closed before implementing ABM versus now. Similarly, look at what percentage of deals closed before ABM versus now. The differences in that data, the lift in sales, will clarify how much revenue marketing contributed to generating revenue.
B. Performing cohort analysis
Like with any good experiment, it's a good idea to have a control group to use as a comparison. Create a group of accounts touched by your campaigns (Group A) and another one with accounts that will not be touched by your campaigns (Group B). Then compare results such as Account to Opportunity rates, Opportunity to Close rates and Time To Close between both groups. This will shed light on marketing's impact.
These methods of measuring the impact of marketing on closed rates are essential to avoid depending on multitouch attribution to prove marketing's impact on revenue.
Even though a time decay or U shape model can be pretty powerful, it will seem intangible to the executive team. If you want to compare the impact of campaigns internally to optimize your efforts, multitouch attribution is the perfect tool. But if you want to prove value to your board, an increase in close rates associated with a dollar amount will be much more impactful.
If deals close twice as fast when they're touched by marketing, that's a clear indicator that marketing directly impacts revenue each month. This can also be measured using historical data and by performing cohort analysis. See how fast deals are closed without marketing's involvement and prior to ABM, and that will enable you to quantify revenue marketing contribution.
If marketers want a seat at the table, they need to show their impact on revenue numbers. If CEOs want to properly lead their teams and the company at large, they need to do the same. The three methods we detailed above are the most direct and comprehensive ways to measure the impact of marketing campaigns (and spend) on revenue. Using them to measure success will help you build better strategies, invest in what matters that impact, take your business to the next level.