Why You Might Want to Rethink B2B Revenue Attribution
Usually, the head of marketing operations advocates measuring revenue. So when I spoke to someone in that position who raised concerns about going too far with revenue attribution, I thought there was wisdom in what he said.
I interviewed David McKie on my podcast. (You can listen to him here, here and here). He’s running marketing operations at Medidata Solutions now, but he shared valuable insights from his years as VP of Marketing Operations at SAP.
We talked about what it takes to build a results-driven marketing team.
David also touched on these topics:
- The danger of linking marketing to revenue-generating activities
- The difficulty in creating marketing campaigns to fill a gap in the pipeline
- The error in taking on tasks better left to the sales team
Is your marketing team focused on the right outcomes?
It’s a tough question.
One I’m sure makes you hesitate a little before answering.
Of course, it’s essential every department contribute to the bottom line, but there’s a danger when using revenue as the scorecard for your marketing operation.
A check-the-box culture causes marketers to only view activities that lead to revenue as being worth their time.
There is so much more to marketing, like empathy, storytelling, and messaging.
With the wrong focus, you risk a team trying to uncover or even create revenue links that don’t exist.
The key, according to David, is to look at the big picture. “If you look at, say, a nice round number like 25 percent of contribution, and all marketing can say is, ‘Here’s what I did to help the 25 percent,’ you’re really missing out on a big story around the impact you could have on the whole pipeline.”
A marketing team rarely brings in even half of the business in the pipeline, and as an organization grows, the percentage of marketing’s influence drops even lower.
But what if there were a way marketing could impact the entire pipeline?
Across the entire organization?
That’s what smart companies do. David shares his thoughts on achieving this outcome.
A look into a non-optimal system
Early in his career with SAP, David was part of a demand-management team.
The goal was to help sales analyze their pipeline per quarter, using historical trends to spot problems and launching campaigns to fill the gaps.
But sales and marketing aren’t on the same timeline.
A marketing campaign typically focuses on an overarching value proposition. A big theme, with a big bet. Additionally, these campaigns take months to plan, some up to a year in advance. Refocusing and helping sales fill the pipeline for a specific quarter creates chaos for marketing. These short time horizons are necessary in sales just as longer time horizons are necessary in marketing to achieve optimal results.
Plans get thrown out the window as marketing scrambles to help.
Consider different product areas. Different sales groups. Different quarters.
Suddenly, the marketing team is trying to create campaigns to fill over 120 separate pieces of the “sales” pipeline. Add in the respective marketing teams at SAP, and you’re looking at potentially 600 categories to manage. It just doesn’t happen.
David feels that intentions should focus on the customer, not on filling tiny buckets of data. He says, “If I’m a marketer, I don’t want to be looking at a spreadsheet with six hundred different cells and trying to figure out how I fill up each one of those that happens to be a little bit red. I want to be thinking about what my customer wants. What is my customer struggling with? How can I help my customer? Delivering those messages at a higher volume.”
The Spillover Effect
With marketing teams spread across the world, all the different campaigns would create leads and opportunities in different sections of the pipeline.
Those 600-cell spreadsheets only create an illusion in which it is possible to measure what one marketer is doing to impact one of those cells.
The reality is much messier. At SAP, the North American team created content and generated leads all over the world. In those North American campaigns, who gets credit for out-of-market leads in India or the UK? The North American team or the in-country team?
What if the in-country team used or repurposed content from the North American team? What if the UK team used proven processes worked out by the North American team?
You can see how convoluted assigning credit becomes.
Marketing is not sales
Focusing on filling those gaps leads to a crisis of purpose. Marketing teams begin to be an add-on to sales and their role becomes diminished.
“Fundamentally, marketing does something very different than sales,” said David McKie. “I saw the marketing organization trying to contort itself to become more like a sales organization.”
David says that marketing should build top-of-funnel awareness and overall conditions to tee up sales for future success. When marketing starts watchdogging the pipeline and trying to fill gaps in a scramble to link to revenue, marketing loses valuable parts of its true purpose.
In a big enterprise operation with multiple product lines and multiple sales teams, fluid boundaries and co-dependent relationships between marketing and sales can further confuse the operation for both teams.
David puts it in perspective: “The idea of conversion rate from marketing-sourced opportunities creates a dynamic and incentive for marketers to get up into the sales person’s pipeline and start inspecting specific aspects of the pipeline. That creates a domino effect where now, as a marketer, I’m not only trying to tie everything to revenue, but I’m spending a good chunk of my time looking at sales and wondering what they are doing in their pipeline, how are they managing their opportunities, and whether they are managing my opportunities effectively.”
Is this what marketing should be focusing on or is it better left to sales? David feels that revenue obsession distracts marketing teams from coming up with creative campaigns and stories that explain value to the customer.
Sales also loses out because they, in turn, take on tasks better left to marketing.
Consider the 25 percent contribution from marketing sourced leads. There is 75% left over.
“There’s a lot of value that marketing can provide to that other 75 percent that is not coming in through a marketing channel… a story and a value proposition. Often, the sales teams can have trouble with that. That’s not their day job, to come up with those stories. Frankly, if you let the sales teams do that, you’d have wild variations across different sales teams and even salespeople, depending on their sophistication,” says David.
The ideal focus for a marketing team
Instead of trying to connect marketing’s actions to a bottom-line figure, smart companies look at the entire pipeline.
David said, “I saw that the people who got traction on the marketing team were the ones who were better at delivering messages or stories rather than trying to deliver on the sales number or the revenue number.”
Any targets you give need to align with the real goal of marketing: to focus on key outcomes like these:
- Telling creative stories.
- Launching great campaigns that drive interest.
- Explaining product value to move prospects closer to a sale.
David explains how he applied this tactic at Medidata Solutions.
Marketing was spending big to have sales reps attend trade conferences. But it appeared sales wasn’t creating opportunities at these events because the data wasn’t in Salesforce. The leadership team wasn’t even sure it was worth continuing the investment.
David tells the story:
“We said, ‘Look. You guys need to show us what value this is driving.’ We started following up with sales and asking them and badgering them and pestering them… We just kept hammering home that message, ‘Look. Every time you start a conversation, record it. Every time we create an opportunity, let’s record it,’ so we can see what’s helping to drive pipeline creation.”
However, his focus wasn’t on revenue.
David had his marketing team targeting a single outcome, a measurable result, that his team could impact: creating opportunities at each sales event. In time, he changed their sales culture. Marketing pushed so hard, sales reps started scheduling meetings on-site at the trade show. Reaching out to prospects to schedule a demo was an easy win. Sales began selling instead of “just manning the booth.”
Marketing had found their role in the process.
Then it was up to sales to close.
Don’t forget the importance of a good handshake
Now here’s the tricky part of the process.
The handshake. The handshake is the bridge to better sales and marketing alignment.
The handshake is the point in the sales pipeline where marketing gives their leads to sales. Here are the key elements:
- Both sides agree what constitutes a marketing qualified lead;
- Sales then evaluates each lead:
- First through a visual inspection: is the must-have information present?
- Then by reaching out to the prospects and resolving each lead, one way or the other (e.g., unreachable, not interested, qualified, etc.,)
Both sides pay attention to the handshake. Did marketing deliver what it promised? Did sales follow up and report back as promised?
Both sides can learn from these handshakes:
- Marketing can find out that it is inadvertently passing unqualified leads to sales.
- Sales can find out that a salesperson doesn’t understand or isn’t complying with his or her obligations.
- Both sides can learn that the handshake framework needs adjustment.
David recommends nailing the handshake because it’s also a natural handover point for marketing to step back from the sales process. Work closely with both teams to create a shared understanding of “qualified leads.”
Then let marketing find the leads.
And trust sales to close the deal.
Because marketing’s job has ended. Marketing doesn’t need to get involved with sales. They need to provide everything sales needs to do their job and step back and trust they’ll get it done. This perspective is another pillar of sales and marketing alignment.
“Whether something falls out on the sales side has nothing to do with what I gave them. It has more to do with either the product itself, the competitive market, the specific budget situation of the customer, or a sales training issue.” David said.
Where a marketing team can add real value
For a marketing team to be truly successful, you need to empower marketers to create their own culture of performance management.
David says, “I think a culture of performance is absolutely imperative. Even though we can’t necessarily track all the way through to that final signature on the contract, there’s a lot we can be doing within marketing to make sure we drive accountability and performance across the organization.”
But not only that.
Marketing needs to support the sales team. Help refine their sales material, craft the brand story, and create a strong value proposition. Arm sales with the tools they need to sell while focusing on the outcomes marketing can track and be accountable for. Get your job done and trust the rest of the organization is doing theirs.
The Value in Measurement for Marketers
Marketing should still pay keen attention to measurement and what’s going on in the pipeline, but as David points out, “We should measure the work that we do to the outcome we’re trying to achieve, but not get 10 steps ahead of where we are today.”
It’s tough to ascertain what’s coming in from where.
As David says, “We should be managing to specific outcomes, but I just think that sometimes managing to revenue outcome is a couple of steps too far.”
Change the paradigm within marketing to say, “It’s not about driving contacts. It’s about driving interest.” Driving interest is just another way of saying, “demand generation.”
David’s final thoughts?
“While I am not necessarily a big proponent of marketing trying to tie ourselves directly to revenue—I think that can be taken too far—I think there are going to be some markets and some companies where it does make sense.
“But regardless,” David continued, “whether marketing can have a direct tie to all the revenue that comes into the company, there are a lot of things that marketing can be doing and that we should be measuring and managing, too. I think a culture of performance is absolutely imperative. Even though we can’t necessarily track all the way through to that final signature on the contract, there’s a lot we can be doing within marketing to make sure we drive accountability and performance across the organization.”
Listen to my podcast interviews with David McKie to hear the full details on these stories and more: