Hank Barnes

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Hank Barnes
Research Director
1 years at Gartner
25 years IT Industry

Hank Barnes provides research and advisory services on go-to-market strategies for technology providers. He focuses on issues related to product marketing, positioning and customer experience. Read Full Bio

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Measuring Marketing – Is Revenue Focus Wrong?

by Hank Barnes  |  July 18, 2013  |  9 Comments

percent magnifying glass Metrics are a hot topic today and searching to find the metrics that matter.  Last year, Gartner asked marketing leaders in IT companies how they were measured and the top responses were “revenue” and “profit.” While I agree that revenue and profit are key metrics for any company, I’m not so sure they are the right metrics to truly evaluate how effective your marketing efforts are. Revenue and profit should be “whole company” metrics–but not the key metrics that one uses to evaluate marketing, particularly sense so much of aspects of those metrics are out of marketing’s control.With that in mind, how should marketing be measured?

To determine that, its important to establish what you believe the role of marketing to be.

The simplest definition of the role of marketing that I have heard (particularly in technology and B2B sectors) is “make it easier for sales to win business.”   Unless you are 100% e-commerce, with no outside or inside sales people, this still holds true.    How can you tell if you are making it easier for sales?  Here are some ideas:

  • Evaluate if sales cycle times are decreasing
  • Measure the size and quality of the top of the pipeline (not just leads, but good leads)
  • Measure the ramp time to full sales productivity
  • Measure campaign effectiveness (including cold call campaigns)
  • Measure brand awareness
  • Evaluate sales turnover

While some of these are not entirely marketing driven, they are more indicative of marketing’s contribution–and they also have a direct impact on both revenue and profit.  If marketing is too focused on revenue, they often find their time consumed becoming the hero–flying in the “close the big deal.”

This attitude of marketing as “closers”  is counterproductive.  First it devalues the sales organization (there is a ton of work to get to the position of closing a deal that is devalued by “fly-in closers”). Second, it means that the sales teams may not have been equipped to close the deal on their own—so marketing is not truly making it easier.

Don’t get me wrong, there are times when the added credibility of  a product marketing manager or executive is needed, but that should be part of an orchestrated sales decision, not a tactical approach that is used to offset shortcomings in sales enablement, competitive positioning, or other marketing programs.

Are your marketing efforts oriented to making it easier for sales to be successful?  Or are you burying the problem by being “secret sales heroes”?  How do you measure marketing effectiveness (and how do you think you should be measuring it)?

 

 

 

9 Comments »

Category: Go to Market     Tags: ,

9 responses so far ↓

  • 1 Mike Troiano   July 18, 2013 at 6:31 pm

    In enterprise tech, marketing should be adding value by enhancing the productivitty of the sales team. We focus on bookings / full time equivalent reps, and it seems to keep us on track.

  • 2 Hank Barnes   July 18, 2013 at 6:35 pm

    Thanks Mike,
    One question though. Bookings is the responsibility of the sales team, right? So do you look at the things you are doing to make it easier for sales to achieve those bookings or just worry about the end game? In some ways, bookings could be considered to be done by great reps, regardless of the marketing efforts. But if you are doing things that make it easier for them (e.g. better qualified leads through inbound marketing), then that is what you measure in terms of how bookings are achieved.

  • 3 Ben Watson   July 19, 2013 at 2:31 am

    I agree. Understanding the net effect is mostly useless except perhaps to shareholders. The most useful measurement in my experience is a true cohort report that looks at the entire lead gen funnel through to opportunity that measures marketing’s quality of contribution to pipeline over time since leads rarely convert in the month or even quarter they are acquired. From there you can do a monthly or quarterly (more useful) report of marketing contribution to revenue and margin if that is in question. Doing any of this without specificity to the channels you leveraged to get that lead and the specific channel attribution and effectiveness (ROMI) is not going to be of much use in planning.

  • 4 Hank Barnes   July 19, 2013 at 12:48 pm

    Thanks for the thoughtful commment, Ben. What do you think about other metrics that go beyond lead generation—such as reducing sales cycle time, accelerating time to rep productivity, etc. —how much should those matter or should marketing only be measured based on the deep pipeline review you advocate?

  • 5 Manpreet   July 23, 2013 at 6:12 pm

    Great post!

  • 6 Abe Kleinfeld   July 25, 2013 at 4:18 pm

    I agree that marketing is about making it easier for sales people to sell. But it’s also about making it easier for customers to buy. They are not the same thing, and often require very different tools and programs. When properly balanced across these two goals, marketing becomes highly effective at reducing the business friction that many of the metrics you list are measuring.

  • 7 Hank Barnes   July 25, 2013 at 4:32 pm

    Great comment and I agree with your thoughts on the balance between these goals. Given that, how would you measure marketing’s effectiveness, beyond metrics that are about friction?

  • 8 Jeff Julian   August 1, 2013 at 11:38 am

    We like to use “Value of a Response” to measure both the top of the funnel activity and the relative value/effectiveness of our lead gen programs. By “response” we mean a vetted lead that hasn’t been called on by a sales person yet.

    It’s useful at the top of the funnel b/c we (marketing) control our own data and can move quickly and decisively to optimize. It’s useful as a quality metric because we associate a response to actual revenue at the back end. This way we can measure quality of leads and our ability to close. We set goals of x dollars per response that we then compare to the cost of acquiring that response.

    The only issue is that it takes at least two quarters of data (if not more) to get a valid read b/c of sales cycle length. Also it doesn’t measure other types of lift (brand specific).

  • 9 Hank Barnes   August 1, 2013 at 12:16 pm

    Thanks, Jeff. I like the approach.