Revenue attribution is one of the most important KPIs a board member can review. If your CMO is not currently reporting on revenue attribution, it’s imperative that they start immediately. Download our Special Issue: Revenue Attribution.
Revenue attribution involves two views that must be measured concurrently. Both views are essential to avoid skewing the marketing discussion in a way that hurts revenue growth:
- Trace each dollar of revenue back to the marketing or sales activity that originally sourced the opportunity.
- Understand all the sales and marketing activities that helped influence the revenue booking.
In this case, marketing activities include online advertising, trade shows, content assets, webinars, and podcasts; sales activities include prospecting, referrals, demos, and the like.
Value is created only by capturing new revenue. That requires both sourcing and closing opportunities. Because customers complete over half their buyer’s journey before they engage a company’s sales team, marketing programs must move buyers along to that point. If marketing focuses too much on sourcing opportunities, buyers will be frustrated and revenue will suffer; if marketing overemphasizes sales influence, pipeline generation will suffer.
Good CMOs report on metrics such as budget, lists, programs, leads, and so forth. They speak in qualitative terms with anecdotes about what’s working. Great CMOs carry metrics all the way through to pipeline generation and ultimately revenue contribution. They speak in quantitative terms presenting return on marketing investment, with an eye toward both sourcing and influencing revenue.
An astute board understands the importance of revenue attribution and the associated value creation. It supports the CMO, knowing that revenue attribution is a directionally correct discussion. This board does not expect the CMO to tie every dollar of marketing to revenue, appreciating that exercise would not be worth the effort if it’s even possible.
By forcing an ROI discussion across both the CMO and the sales leader, the board can measure the returns each group is generating from its allocated investment dollars. Often this leads to the realization that the marketing function is producing greater returns than sales. As a result, the board allocates more budget to marketing and increases productivity per sales head count. The associated revenue growth creates value for the company and its shareholders.
Have expectations gone up and left you wondering if you can make your number? Here is a tool that will help you understand if you have a chance at success. Take the Revenue Growth Diagnostic test and rate yourself against SBI’s sales and marketing strategy to find out if:
- Your revenue goal is realistic
- You will earn your bonus
- You will keep your job