Transforming from Cost Center to Revenue Generator
Marketing is viewed almost equally today as both a cost center and a revenue driver according to a 2015 survey of 478 CMOs and senior marketing executives worldwide by the Economist[i], sponsored by Marketo. Going forward, it will be more often viewed as a revenue driver, less as a cost center, according to expectations of survey participants.
Currently, 68% of survey respondents say marketing is viewed as a cost center now and 69% say business leaders view marketing as a revenue generator. Fast forward 3-5 years, the number of survey respondents viewing marketing as a cost center drops by a few points to 65%, while there’s a significant uptick to 79% on the revenue-generating outlook.
This shift is going to make marketing much more accountable for bottom line results and amp up the need to realize more revenue from each lead. “Hasn’t marketing always been accountable?,” you may ask, and to some degree that’s true, but it’s never been as closely linked as, say, a salesperson’s quarterly quota.
Overall budgets for marketing are on the rise[ii] and in particular driven by digital marketing that includes email, custom content, web and social media. Let’s face it, marketing right now is in the driver’s seat, so it’s important to grab the wheel and steer in the right direction. As with any license to drive, it also requires accountability.
The Economist survey report offers these words of wisdom from Houghton Mifflin Harcourt CMO John Dragoon: “If you don’t accept accountability for being measured in terms of your contributions and outputs, then you are viewed as a cost center. If you aggressively pursue an agenda of accountability and transparency, then you’ll be viewed as a trusted partner and adviser.”
As budgets go up, CFOs are going to want more metrics and insights into what those dollars are buying and how well they’re being spent. Never forget, Lori Wizdo at Forrester Research recently wrote[iii], “without demonstrable benefits your [lead-to-revenue management program] is a demonstrable waste of time and money.” Wizdo pointed out that marketers are great at forecasting top and bottom-line results, but when the numbers don’t pan out, it “leaves marketing leaders in a risky situation — no safety net, no assurances, and no soft landing — when it comes to accounting for the return on all that investment.”
Amy Abascal at marketing analytics firm Radius earlier this year chided[iv] marketers for relying on “vanity metrics” such as the number of followers on Twitter or Facebook, net new leads from online form completions and so forth. “Being data driven, not only means reporting on data, you must use the data to drive decisions that will lead to pipeline and revenue,” she wrote.
Metrics can help smooth the long-simmering tension between marketing and sales over the quantity and quality of leads. Marketing must go beyond quantity to measure not just revenue, but also the lifetime and initial revenue per cost in generating the lead, as well as how much sales enablement is impacted by higher quality leads.
It’s no secret we advocate prospect surveys as a crucial element in improving the quality, commercial insight and revenue-impact of leads. They are effective for:
Developing more effective contact lists.
Mining knowledge about key prospects by company, title and role.
Creating material for content marketing that can be used by sales and as components in nurturing campaigns.
Contacting and engaging decision-making executives. Take a look at our Solving 4 Marketing Challenges at Once to get some ideas on how to make your marketing efforts more impactful in generating revenue.