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April 23, 2012   Posted by: Dale Underwood

How Valuable Is B2B Marketing?

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Jon Miller of Marketo made an excellent point in Paul Dunay’s podcast Sales is from Mars, Marketing is from Venus. Jon said “Sales is very measurable in terms of outcomes (results), but it’s very hard to measure the activities of sales. Marketing is the other way around. It is really easy to measure all the marketing activities, but it is hard to measure the outcomes.”

In that single quote lies the dilemma for B2B Marketers trying to generate sales ready leads for their organizations. Figure 1 shows his statement visually:

emarketing before

Figure 1 – Marketing activities are easy to quantify, results are not

So, if Sales contributes $100 Million in VALUE to the organization, what is Marketing’s value?

This is where most Marketers get off track because they don’t think about selling their value to the organization. They tend to fall into the trap of looking at total sales and trying to “map back” individual deals to specific marketing influences (Figure 2).

That explains the excruciating methods marketers use to try and keep track of every customer touch point so it can get credit. Marketing desperately needs to justify its existence, and more accurately, its budget. It’s a painful process to watch, much less manage, and marketers need a better approach.

marketing mid

Figure 2 – Working backward from total sales is a BIG marketing justification mistake

The main problem with this approach is that it will always undervalue marketing’s contribution to the organization. I’ve actually heard Marketing Executives boast that they influence 25-50% of the sales opportunities. Slicing up the pipeline pie implies that marketing always generates less than what is shown in the sales forecast and that is just not a valid number.

So, what is the B2B Marketer left with to quantify her value to the organization? She must create measurement in some other fashion, usually in the form of lead count, lead rank, analytics and page clicks, etc. All of these traditional measurement methods are coming under greater scrutiny because they don’t map to the real goal: revenue.

Marketing’s real VALUE

To solve this problem, B2B Marketers need to find a way to capture the real, top-line contribution to the organization and stop counting useless data points. Marketers need to look at the actual products and services an organization sells and tie their results to the potential lead value generated based on the price of those items. If an organization sells widgets for $100,000 and marketing has generated leads for 5000 widgets then the marketing forecast/funnel is $500,000,000, or 5 times annual sales (Figure 3). Taking that and mapping it into our original chart we have:

marketing_measure_after.gif

Figure 3 – Marketing’s real value is 5-10 times annual sales

When I present this to marketing people during our EchoQuote demo, their first reaction is often “we can’t do that, not all of those deals in the marketing funnel are going to generate revenue”. My answer is twofold; marketing is not responsible for closing the deals just helping locate them and second, all the deals in the sales funnel are not going to close either, believe me. Quit being afraid to post a big, potential number, the VP of Sales does.

If you are a Marketer engaged in B2B marketing activities, see if you can come up with a way to map your lead generation activities to sales oriented numbers like revenue potential. Think in terms of generating a marketing funnel that is 5 times the sales funnel. You will gain a lot of traction, and respect, inside your organization.

Now it’s your turn.

Take your company’s annual sales number and multiply by 5. That’s impressive!

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