In talking with B2B business owners, marketers and sales leaders, I often find myself explaining what I refer to as the “business value chain of marketing”. Basically, marketing is a cost until you convert it into value. It’s a straightforward concept. You allocate a marketing budget to buy reach into your target audience. You (hopefully) write great copy, select compelling images and maybe even split-test multiple ads to persuade this target audience to click-through to visit you website.
Great work…but from all of the activities you have completed up to this point, you have only generated costs for your business. Sure – you can claim brand awareness and talk “exposures” but what every business is looking for extends beyond these claims. Businesses are looking for sales. And in many cases, where these activities end, as costs, is where most marketing roles end as well. The outcome? Marketing is viewed as a cost center and a supporting role to the sales team.
When I ran marketing for a 7-straight year Inc 5000 company (was acquired in the seventh year), the marketing team owned 35% of the revenue plan and supported the other 65%. So when I hired marketing managers, they had to take on the direct responsibility of revenue-generation. As such, I had interviewed many marketers for marketing management roles tied directly to revenue generation and was routinely disappointed with the responses. I typically asked two questions: (1) Tell me a time when you designed and allocated your marketing budget on a campaign that generated qualified sales leads. How did you measure the success of the campaign? (2) Tell me how you tracked the sales leads you created to understand your impact on revenue?
The marketers could expertly answer the first part of question one. They designed impressively, well-thought out campaigns. They spoke about the visitors they generated to the website. They showcased their creative portfolio of postcards, landing pages and email templates. They explained how they targeted digital ads using retargeting and audience profiles. All brilliant marketing BUT – the only thing they had revealed thus far in the interview was an extraordinary ability to spend money. When pressed on what value they generated from those costs the conversation slowed down drastically. Silence ensued. The answer were more often than not, well sales said the leads were good.
Until marketing costs are converted into value, the business is at a loss.
The right answer I was hoping to hear extended beyond the building awareness and into the “converting visitors to business value” whether in the form of subscribers, sales leads or customers. I wanted marketers who managed from awareness through to revenue whether directly or through an aligned and collaborative working relationship with the sales team. I wanted to hear that we ran this campaign and it generated these results and therefore a xx% return on advertising spend at a cost per sales of $XX. I probably would have fallen off my chair if the marketer continued further with an explanation of their customer acquisition cost of $YYY and a lifetime value of $YXZ!
It’s an important concept to understand whether for hiring a marketer, executing a marketing campaign or outsourcing service work to a third party. Unfortunately, if not understood, it can also drive a wedge between sales and marketing.
When you spend money to produce content, it’s a cost until the content attracts a prospect and that prospect converts to either download more content or he or she completes a contact us form. Unfortunately there are plenty of great writers providing content marketing services. But if the content isn’t moving a customer further down their buying journey then is the content really working to create business value?
The same situation plays out across all forms of digital marketing. When you purchase Google AdWords ads for specific keywords the same value chain plays out. You set a budget to gain reach via impressions and you place effort into generating a click-through to produce a website visitor. Excellent. But up to this point, you have only spent money with an opportunity to generate value. It isn’t until you convert that website visitor using a targeted landing page and a strong call-to-action that it creates value for your business.
What’s the takeaway?
All of the “typical” marketing activities that spend money are important. However, marketing’s role should not end there. Marketing should be responsible for carrying through the opportunity into business value creation. Marketing should collaborate with sales to convert those opportunities into subscribers, sales leads or customers (depending on your buyer’s journey.)
Further, marketing should be measured on revenue generation. By aligning marketing and sales around a common metric (e.g. revenue) it keeps marketing engaged throughout the buyer’s journey and creates a more natural feedback loop between the teams around serving the customer. If you ask a marketer how well their campaign did with generating customers, you should expect a clear answer beyond money spent – it should include business value created.
Kevin Gold is a co-founder of Growing B2B. GrowingB2B helps businesses build a marketing-led lead generation effort to enable sustainable growth. To make sense of the complexity of the customer acquisition process, tools and identify how to better align your marketing and sales efforts, join GrowingB2B at the Customer Acquisition Accelerator Bootcamp. Register Now as it starts January 12, 2017. If you can’t make the bootcamp or just need help developing or improving your customer acquisition efforts, contact Kevin here.