In this day and age, there is really no reason that marketers have to only rely on their gut to make marketing decisions as they might have in the past. Technology is advanced, and the collection of data is abundant. In fact, experts believe that by the year 2020, as much as 1.7 megabytes of data will be produced for every person on Earth each second.
With access to so much data, it seems crazy that marketers wouldn’t use it to make sound business decisions, instead of using old methods based mainly on intuition. But that’s what appears to be happening with over half of today’s marketers. In a recent report of 145 marketing influencers (mostly B2B-focused), about 56% said that data management was the most difficult technology to implement, with marketing analytics coming in a close second at 55%.
Why Aren’t B2B Marketing Analytics Giving Marketers What They Need?
So, what is it that is keeping B2B marketers from using data and analytics to make solid marketing decisions that drive revenue? Perhaps it’s that they simply are not looking at the right data.
The CMO Survey reports that during the next three years, marketers estimate they will spend nearly 200% more on analytics, even though they also report that the impact of analytics on overall company performance continues to be modest. Essentially, marketing analytics are not providing marketers with what they need to prove their value to company executives.
While there are some metrics that marketers use, it seems that the ones that they are actually looking at are not found to have the same importance to business leaders for driving revenue. Marketers reported that lead-based metrics are the most important, while business leaders believe that conversion metrics are more important for driving revenue. Additionally, while marketers and business leaders agree that metrics around revenue are important, less than half of the marketers surveyed (45%) said they actually track how much revenue they influence.
Driving Revenue with Marketing Analytics
Why is there such a gap in the goals of marketers vs. business leaders? And why haven’t many marketers moved past the archaic measurement of just leads and clicks to also measure key conversion metrics that show the effects of their efforts on revenue?
I believe that it’s because many marketers haven’t considered aligning marketing department objectives with the overall goals of the organizations they work for. Perhaps aligning the objectives and goals of these two areas would help close that gap and we would see more marketing departments modify (and modernize) how they are measuring success.
Measuring the Right Revenue Metrics
One of the biggest challenges for marketers is understanding which metrics they should be tracking. The good news is, it doesn’t have to include every possible data point to be an effective strategy. Keep in mind that the goal is to assess the measurements that allow marketers to make the best marketing decisions and that illustrate the impact marketing is having on overall revenue. Those are the metrics that are important to show the CEO, CFO, and Board of Directors so they understand marketing’s contribution to revenue and business growth.
The following revenue-related metrics are a good place to start:
- Customer Acquisition Cost (CAC) – This is the total sales and marketing cost it takes to acquire a new customer.
- Marketing Percentage of CAC – This is the portion of CAC that is attributable to marketing costs.
- Ratio of Customer Lifetime Value to CAC – This ratio helps to compare the revenue that will potentially be earned from customers to what was spent to acquire them.
- Marketing Originated Customer Percentage – This shows the portion of new business that was driven by marketing efforts.
- Marketing Influenced Customer Percentage – This, like the Marketing Originated Customer Percentage, measures the portion of marketing efforts, but includes situations in which marketing touched and nurtured the customer at any stage during the sales process, not only by originating the lead.
The key takeaway from this post is that marketers who continue to stick just with what they’re used to measuring (leads and clicks), they will never be making the most of the data and analytics they have at their fingertips. It won’t provide marketers or business leaders with what they need to know – how much revenue each individual marketing campaign is influencing. This isn’t to say that measuring click-through rates and lead generation is unimportant, but it needs to be considered in conjunction with revenue metrics to see the full picture.
Without the alignment of the objectives of the marketing department with company goals, it’s difficult to measure and forecast the influence and performance of the marketing department on revenue. Being on the same page with the organization’s executives regarding revenue metrics is the way marketers can bridge the gap and make the most of data and analytics.