Do you know what CEOs want most from B2B marketers? They want clarity about marketing metrics and revenue contribution.
CEOs often ask questions like, “How much revenue is our marketing contributing, and what’s our ROI?”
They expect their marketing leaders to provide clear metrics and be accountable for meeting their pipeline numbers, just like sales.
In short, CEOs want marketing leaders to go beyond metrics like marketing qualified leads, engagement reports, and squishy metrics around a brand that aren’t tied directly to revenue or growth.
For example, I read this chart via MarketingCharts about the State of B2B marketing metrics.
Current State of B2B Marketing Metrics
They report, “The majority of senior B2B marketers are using basic marketing analytics tools such as web analysis (91%) and spreadsheets (80%)…” citing a recent report [download page] from Regalix.
Additionally, I found this great comment from Ardath Albee, CEO of Marketing Interactions in TrustRadius’s new 2016 Buyer’s Guide to Marketing Automation. She sheds light on why this is such an issue. Ardath said:
They [marketers] have a hard time proving value, as they cannot tie to revenue. Many only can do last-touch attribution. They lose visibility once a lead moves into the sales realm. Marketing is often removed once it goes into sales, which is a mistake. There’s no continuous thread.
Read on to learn what you should measure.
Every CEO cares about Lifetime Value of Customer (LTV) and Customer Acquisition Cost (CAC), but what other marketing metrics do they actually care about?
6 Marketing Measures that Will Give You an Edge and your CEO Clarity
Here are six big-picture questions you can answer to solve and measure to give you an edge to help your CEO get clarity.
1. Marketing Influenced Customer Percentage
What impact are your marketing investments making on sales productivity? On the sales pipeline? On revenue velocity?
2. Return on Marketing Investment (ROMI)
- What’s your return on your marketing investment (ROMI)?
- How much are you putting in marketing, and what are you getting out in revenue? The difference between these two numbers gets expressed as a percentage.
3. Marketing Originated Customer
- How many and what percentage of your new customers are marketing generated?
- How much revenue can you attribute to sales leads from your account based marketing or demand generation efforts over a given period?
- How many customers started via marketing qualified leads?
Also, this measurement is simpler to track if you have a closed-loop system.
4) Time to Revenue
- What has your marketing done to help shorten your time-to-revenue?
- What has your marketing done to lower the combined expense-to-revenue ratio of sales and marketing activities?
5) Customer Acquisition Cost (CAC)
- What is your average expense of gaining a single customer?
- What does your combined marketing and sales cost/divided by the number of new customers?
- What does your marketing percentage of the total customer acquisition cost?
- What’s the total cost of your lead account-based marketing or demand generation efforts during a particular period? This number includes Marketing team total compensation, Vendors, marketing technology, costs, and materials)
6) What is your ratio of lifetime value to customer acquisition cost (LTV: CAC ratio)?
- Calculating this ratio will show if you’re spending too much to acquire each customer or if you’re missing opportunities from not spending enough.
- The higher the ratio, the better. 3:1 or 4:1 is excellent.
If you want help calculating LTV: CAC, check out this post.
Cheatsheet for CEO-level calculating marketing measurements via HubSpot
Conclusion
You can start working on these six key marketing measures now. I’ve seen marketers who really dig in and answer these big-picture questions get an edge. Also, they ultimately get bigger budgets and have more influence inside and outside their companies. These high-level measures will be supported by more detailed metrics you need to dig in to gather and use with your team and share with other departments.
You might also like:
How to Do Lead Management That Improves Conversion
New Research: Customer Empathy and How to Solve Buying Problems
How to Use Conversational Marketing to Get More Leads
Lead Definition: Why 61% of B2B marketers are wasting resources and how they can stop
No one has mentioned Customer Lifetime Value (CLV). I believe this is the ultimate measure as it predicts future value. Considering: churn, likelihood to buy more/ less in the future and includes ‘cost to serve’. This one measure can guide marketing towards gaining, retaining and growing the most valuable customers.
Brian,
I love your list of questions! Definitely on the right track. Marketers are always asking us at ITSMA, “What are the five most important metrics that should be on our marketing dashboard?” But there is no one-size-fits-all easy answer. It all depends on the business strategy. The metrics marketing reports must tie to the goals the business is trying to achieve. Marketers need to start by getting the answers to these questions:
•What are the outcomes that the business needs to achieve in order to meet their goals?
•What does senior management expect marketing to contribute towards these outcomes?
•How will senior management know that marketing has made a contribution?
Only when you have the answers to these questions can you begin to build a dashboard that shows how marketing generates value for the organization, the impact marketing has on the business, and what actions or course adjustments are required. So the starting point is not the metrics. It is a conversation with senior management.
@Julie Schwartz Hi Julie, thanks for reading and sharing your insights on how we should go to senior management first. I wrote a blog post a while back with some tips on
How to Get the CEO to Support Your Next Marketing Plan that readers might find relevant to helping get buy in from senior management.
Brian:
As you know I am most interested in your entire topic, but especially: How much revenue can be directly attributed to leads coming from Marketing (i.e., the lead generation program in a specific time period)? All else in my opinion pales in comparison. If you can’t prove the ROI for lead gen and support the sales channel you are ultimately failing the sales channel, the company and your CEO.
@James Obermayer Jim, Thanks for taking the time to comment. I 100% agree. It’s imperative that we understand marketing’s contribution to revenue i.e. what’s our ROMI (return on marketing investment)?
Attributing sales/revenue to your marketing is more critical than ever, and with the proliferation of smartphones, many of those conversions are now happening via a phone call rather than online via a form submission. If you aren’t measuring calls from your marketing, your ROI analytics could be way off. In terms of marketing technology that can help, my company uses Marketo (track leads from web and email), Ifbyphone (track inbound phone leads back to the marketing source that originated them), and Salesforce CRM (feed lead data in from both Marketo and Ifbyphone to follow leads through to revenue to accurately measure ROI of each source).
@Blair Symes Thank you for reading and sharing how you leverage technology to measure each of your marketing channels and ROI analytics.
Here is my 2 cents.
1. Since we are a DaaS it is all about churn. I am sure all SaaS companies feel the same way. I want to know how long the new customer is going to stay with us depending on which type of lead source.
2. I also like to know how long it takes to get a return on our lead gen programs. Being a self-funded company this is so important to us as the quicker we get the money back the quicker we can put it back in to growing the business.
Brian, I agree with all the above with the exception of “employee comp” ad part of the marketing ROI calc. Haven’t the costs for ALL employees been included in a company’s financials, profit and Loss’s, etc? No need to count them twice when figuring return on marketing spend. I kno2 this is a reoccurring issue among marketing folks and wanted to add my 2 cents…thx
@dwight Thanks for reading! I agree with your point. I’ve modified my post to include “marketing team total compensation” rather than “employee total compensation” Why? I think need to consider marketing salaries to calculate “marketing expense-to-revenue ratio.” We need to do the same thing with sales. Then we can calculate the combined total.