Uh oh. It’s budget time. Do you know where your metrics are?
It seemed like everyone had one thing on their mind at this year’s first MarketingSherpa B2B Marketing Summit: metrics. Well, a few people had shopping and cocktails on their mind too, as we were minutes from the shopping Mecca known as Union Square in San Francisco, not to mention a million great restaurants.
My own sidebar conversations and those of my MarketingExperiments, MarketingSherpa and MECLABS colleagues circled around a basic belief that 20 to 30 percent of the sales pipeline should come from marketing leads.
For the most part, we can all thank SiriusDecisions for this advancement in our collective understanding of funnel metrics. Everyone at budget time has a “Demand Waterfall” funnel model.
That percentage of revenue issue raises two questions for me. The first one is why 20 to 30 percent should be the correct answer.
First of all, there is a wide, wide disparity in how companies attribute revenue to leads. For some, there has to be unequivocal causality. For others, the slightest influence counts. Guess what? The more stringent the criteria, the lower the percentage contribution. And vice versa.
Of course, there are other mitigating factors:
- Is outbound tele-prospecting contributing to the marketing lead pool (that will make a big, big difference)
- How commoditized is the product or solution?
Do you think Microsoft needs to generate 30 percent of the B2B demand for Office? No, it’s a classic cash cow. Lots us of just get it when we get new computers. We often don’t even have a choice. Others have IT dictate the desktop decision, based upon computer refreshes and who knows what.
On the other hand, a start up enterprise SaaS firm has no installed base. For them, the percentage of revenue from leads should be higher. Usually much higher.
Then there is the second question – is revenue contribution even the right thing to measure? I don’t think so. But more about that next week.