A Guide to Measuring Marketing's Impact on Revenue

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A Guide To Measuring Marketing’s Impact on Revenue Want to get the attention of the C-Suite? Learn how to transition your current marketing metrics to show marketing’s contribution to revenue outcomes.

PREPARED BY

B2B Strategy & Development Team at Goodway Group May 2023

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Turn Your Marketing Team Into a Revenue Center Many B2B business leaders consider a marketing team a “nice to have.”

When it comes to trimming budgets, it usually isn’t the operations or engineering team that’s cutting back.

It’s time to turn the tide and take control of marketing’s impact on revenue.

To get your C-Suite’s attention, you must translate marketing KPIs to business outcomes and prove that your marketing team is a revenue center — a department that increases profitability or helps grow your client base.

But if your current metrics are full of jargon that fails to show exactly how you’re reaching and engaging your buying committee, you need to pivot.

What’s Covered

In this guide, we explore innovative marketing metrics that measure revenue impact and how to generate this data. Then, we share how to communicate your success.

• Transform Your Current Marketing Metrics • Implement These 4 Revenue-Based KPIs To Show Marketing Impact • How To Track Revenue-Based KPIs • Show the Correlation Between Pipeline Movement and Marketing Contribution

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Transform Your Current Marketing Metrics Do you currently measure campaign success with common marketing metrics like impressions, clicks and cost-per-click?

This data is important for gauging brand awareness and ensuring your campaign is running properly.

But if you find yourself wondering how an impression or click relates to real buyer intent, here are three options to further coordinate your data with revenue goals.

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Impressions Versus Reach Most B2B marketers at some point in their careers have asked the question: “How do we know if these impressions are building brand awareness with our target audience?”

An impression tracks each time your ad is displayed. But your C-Suite cares less about how often an ad was shown and more about if the right audience viewed it. Ad reach, on the other hand, tracks the number of people who viewed your ad at least once. Measuring both impressions and reach provides a better picture of how many times your ad was displayed within your target audience.

Takeaway: Track impressions and reach for your campaign KPIs.

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Clicks Versus Engaged Accounts In the scope of marketing metrics, clicks are a place to start, but do a poor job of showing real engagement.

That’s because 92% of B2B buyers will research your company, solution or product via search engines versus clicking your ad. The good news is that if your buying committees aren’t clicking, their buying intent signals will be visible through intent data.

To validate and measure beyond clicks, consider measuring engaged accounts, too. If your top-funnel marketing campaign is causing your audience to research you, you’ve engaged them even without click data.

Takeaway: Besides clicks, track your accounts and evaluate their engagement using intent data.

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Cost-Per-Click Versus Cost-Per-Result Does your C-Suite care about how much you spent on a click — or how much you spent on a tangible, measurable result? The main difference in measuring cost-per-result compared to cost-per-click is that a “result” is more granular and more meaningful to your business.

Examples include downloading content, signing up for a newsletter, filling out a form or following you on social media.

Takeaway: When presenting marketing metrics to the C-Suite, skip cost-per-click in favor of cost-per-result.

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Implement These 4 Revenue-Based KPIs To Show Marketing Impact Start measuring these metrics to prove to your C-Suite how your marketing efforts are impacting your company’s revenue.

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Customer Acquisition Cost Customer acquisition cost (CAC) is an estimation of the total cost it takes to acquire a new customer.

It includes all aspects of your sales and marketing expenses, including advertising spend, event marketing, commissions and bonuses, team member salaries and overhead costs.

Customer Acquisition Cost =

Sales and Marketing Expenses Number of New Customers

Data shows that the average B2B SMB spends nearly $1,500 to acquire a new customer, while enterprise B2B SaaS companies spend more than $15,000.

CAC is important because it measures the long-term effectiveness of your sales and marketing strategies. It also gives potential investors an idea of how your business scales over time. If your CAC is trending downward, you know you’re generating market lift and leveraging effective channels for business growth.

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Customer Lifetime Value Customer lifetime value (CLV) is the measurement of how valuable a customer is to your company across the entire customer journey. This goes beyond a single purchase. It represents the total worth of a customer to your business over the course of your relationship.

Customer Revenue Per Year * Duration of the Relationship in Years – Total Costs of Acquiring & Serving the Customer = Customer Lifetime Value

How To Calculate CLV

CLV is often used when building a customer experience program since it’s one of the best metrics to show how customer loyalty impacts your revenue.

• The first step in calculating CLV is understanding your existing customers’ lifetime value by looking back at historical sales data. You can then adapt this data to calculate predictive customer lifetime value to help build your ideal client profile and target account list for account-based marketing initiatives.

• Shoot for a 3:1 ratio between your customer lifetime value and customer acquisition cost. For example, if your customer acquisition cost is $10,000, that customer’s lifetime value to your business should be at least $30,000.

• When you break down your CLV:CAC ratio, you may find that your acquisition cost and lifetime value numbers are similar. This is an important metric to determine if your business is breaking even or even losing money.

• You always want your CLV to be higher than your CAC.

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Sales Funnel Velocity Sales funnel velocity — also known as pipeline velocity — measures the rate at which your target accounts move through the sales funnel.

The Sales Velocity Formula Sales Velocity (V) = [Number of Opportunities (#) x Deal Value ($) x Win Rate (%)] ÷ Sales Cycle Length (L) V = [# x $ x %] ÷ L

While you probably review your sales funnel often, it’s best to start viewing it from the lens of how accounts have moved stages since the previous month or quarter.

Have your top-funnel efforts driven prospects from an unaware stage to an awareness or engagement stage? And have your middle-funnel efforts been effective at driving demo signups? Sales funnel velocity data answers these questions and helps guide your future sales and marketing strategy.

Plus, if you’re using an account-based approach, you can easily align funnel velocity to “target account progression” for your best-fit accounts.

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Lead-to-Close Conversions Lead-to-close conversions measure the combined sales and marketing efforts of converting leads to customers. This metric often uses lead-nurture strategies like retargeting, email marketing and behavior-based nurturing to drive pre-existing leads into marketing-qualified leads (MQLs), then sales-qualified leads (SQLs) and then further down the sales funnel.

Total Conversions Total Leads

x 100 = LCR

However, lead-to-close conversions shouldn’t be confused with lead generation, which focuses on turning prospects into leads in the first place.

Most tactics to improve lead conversion are related to your CRM data. It’s important to understand and track your lead source, company, revenue, employee size, industry and pain points. Once you have a strong idea of which channels your leads are most often coming from and what they’re most engaging with, you can create a lead-nurturing strategy that best fits their buying behavior.

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How To Track Revenue-Based KPIs Now that you know which KPIs to track, you need the right processes to collect the data, measure it and communicate it to your C-Suite. Here are three key strategies for putting this into practice.

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Properly Measure Attribution Marketers have spent years justifying how the pipeline has been influenced by marketing activities.

But simply having the right lead source doesn’t explain the full buyer journey. As B2B marketing increases in complexity, so does marketing’s influence over all funnel stages, not just the first or last touch.

Forrester data shows that 65% of B2B companies surveyed measure marketing-influenced pipeline, and 70% measure marketing-sourced pipeline. While it’s important to have a clear view of marketing’s contribution to pipeline, as your business grows, your team may be less focused on new customer acquisition and more on client retention.

Once you formalize your business growth goals, tailor your sales and marketing attribution accordingly.

For example, it may be useful to incorporate additional attribution language into your reports, such as “marketing-influenced” pipeline as well as MQLs. Or, if you’re focusing more on client retention, you could track average customer tenure.

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Leverage First-Party Data Retargeting is a great strategy for increasing lead-to-close conversions. However, with the future sunsetting of third-party cookies, advertisers will need to rely more heavily on first-party data for advertising. First-party data is data that is directly collected by your business via your audience, customers, and prospects. It can be sourced through declarative methods, like someone filling out a form on your website, or behavioral data, which is tracked through a pixel on your site.

Unfortunately, many B2B companies leave critical first-party data on the table via their website. They spend time and resources driving website traffic but can’t determine which companies are viewing their site.

Leveraging intent data and ABM platforms such as 6sense and Demandbase can help de-anonymize this valuable information — and show your impact on high-priority sales accounts.

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Clean Up Your CRM It’s critical to take the time and decide on data quality best practices to avoid running into differences in how your sales and marketing teams log and report CRM data. When you decide which data is mandatory for accounts and leads, and how often it needs to be updated, your reports will be much more accurate.

Comprehensive Guide to Whole Brand Thinking Learn about the importance of whole brand thinking and how it can help your company, plus tactics and strategies to build your brand.

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Show the Correlation Between Pipeline Movement and Marketing Contribution While you work to transition your current marketing metrics or add new revenue-based options, keep in mind that proving marketing’s impact takes time. It requires an all-hands-on-deck approach to ensure your platforms are tracking this new information, or vetting new platforms if your current ones are less advanced.

You should also consider that some deals require more marketing engagement than others. When you can show that deals with marketing support moved faster and more smoothly compared to those without, you’ll be on your way.

About Goodway Group

The ultimate goal is to change the conversation from viewing marketing as a cost center to a pipeline supporter — and then a revenue generator.

Goodway Group is a global data-driven and technology-enabled digital media and marketing services firm that helps B2B brands reach high-value buyers and increase revenue. Our diverse team of digital strategists, media practitioners, technologists and data scientists have won the most prestigious awards for innovative marketing technology, impactful work and inclusive remote-first places to work including being honored as a multiyear Ad Age Best Places to Work, AdExchanger’s Best Use of Technology by an Agency Award and three MarTech Breakthrough Awards. We use data and technology to help B2B brands connect with decision-makers across the buying journey, build relationships and unlock unparalleled growth.

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