I went to a Business Marketing Association (BMA) meeting sponsored by the Indianapolis chapter recently. Jill Snyder (Schneider) and Shawn Herring (Harlan) gave a very good talk on “Revenue Driven Marketing.” According to the presenters in order to defend a marketing budget from cuts all dollars spent must be tied to top line business revenue. If you can’t relate it back to sales don’t do the tactic. The more directly the correlation the easier it is to defend. We as marketers need to be able to say to management “If my budget is cut by $X, revenue will decrease by $Y” and have the data to prove it.
How do you start?
For example if your company’s revenue objective is $10 Million & the average contract is $10,000 your company will need 1,000 closed contracts to meet target. If on average 1 in 5 proposals close your sales team will need to prepare 5,000 proposals. If 25% of prospects get proposals you will need 20,000 prospects. If 1 in 5 leads are qualified as prospects you will need 100,000 leads. Your marketing team now needs to create a plan that will attract 100,000 leads.
Take your plan and break it down by tactic (i.e. trade show 1, trade show 2, advertising, public relations, email marketing, referral programs, SEO, social media). What is the cost of each? How many leads are expected? What is the cost/lead?
Prioritize your tactics based on cost/lead. What is the most cost effective way to attract 100,000 leads? Which tactics can be expanded? Where are the gaps?
Fund the things that are effective and cut the tactics that are not. A key part of the model is your sales and marketing team needs to accurately track where leads are coming from. Otherwise valuable sources of information will get dropped from the mix.
It is not an exact science!
Until next time – all the best!