Tuesday, June 26, 2012

3 Ways to Connect Marketing Activity to Revenue

Discussions of revenue attribution often remind me of the famous recipe* that begins “First, catch your hare”.  Specifically, they assume that marketers know which marketing-generated lead is associated with each bit of revenue, and then go on like medieval theologians to debate how credit should be shared among promotions to that lead.  The missing hare is that marketers often can’t link leads to revenue in the first place.

The issues will be painfully familiar to anyone who’s ever tried this. For those who haven’t, let’s start with the mechanics.  In most configurations, leads are created in marketing automation and later transferred to Sales, which creates an opportunity that eventually becomes a closed sale with revenue attached.  If all goes smoothly, the original marketing campaign and marketing-generated lead are named on the opportunity to provide the lead-to-revenue connection. 

But – spoiler alert! – things don’t always go smoothly.  When Sales creates the opportunity, it often links it to a contact record other than the original marketing lead.  Perhaps the salesperson was already working with someone else, perhaps the marketing lead wasn’t the real decision maker, or perhaps Sales just doesn’t want to give acknowledge Marketing’s contribution.  The original marketing campaign is often lost for similar reasons.

All those beautiful attribution recipes are moot if you don’t know which lead is linked to which revenue.  So let’s put down the cooking pots and go hare hunting.

The first approach is simply to get Sales to retain the marketing information when it creates the opportunity.  Let’s not dismiss this out of hand – yes, salespeople can be uncooperative, but appropriate training and management support can convince them it’s important to retain the information.  So it’s worth a try.

But let’s say you don’t have time to wait for better data or can’t get Sales to do what you need.  Now you’ll need to work a bit harder with the data on hand. 

One approach is to look for matches at the account level: build a list of marketing-generated leads, find the accounts associated with them, find the revenues associated with those accounts, and assume there’s a connection.  This could hugely overstate marketing-related revenue, since it potentially takes credit for sales that had nothing to do with marketing activity.  So you’ll probably want to put some parameters on the matches such as only including accounts with no pre-existing contacts, leads that Sales followed up on, and opportunities created soon after the marketing lead was submitted.  Setting these rules may take some serious discussion between Sales and Marketing, but that’s a good thing.

Unfortunately, there’s no guarantee that Sales will retain the leads sent by marketing or attach them to the correct accounts.  Nor is it certain that the companies listed in the marketing automation system will match the accounts listed by Sales.  In this case, you may need to build an even looser relationship, looking at company names in both systems – or even ignoring the Sales system altogether and taking data from accounting records.  Because the same company may be listed differently in different systems, this sort of matching requires either knowledgeable people or comprehensive reference databases that can make the non-obvious connections.  Fortunately, this is a well understood problem and plenty of resources are available to help.

Company-to-company matching casts an even wider net than lead-to-account matching, so it’s correspondingly harder to give marketing credit for every connection.  But you can rate how likely it was that marketing played a role in a given opportunity by looking at factors like timing, pre-existing relationships, and amount of marketing activity.  This could translate into allocating a fraction of the revenue to marketing, ultimately a more realistic, if less satisfying, approach than taking full credit for some deals and no credit for others. 

If fractional allocation strikes you as too complicated, you can also start with a much simpler question: did companies that interacted with marketing programs show more sales than similar companies that didn’t interact with marketing programs?  You won’t be able to prove that any particular contact generated any particular deal, but a strong correlation between marketing programs and revenue growth is good evidence that marketing had an impact.  Once you’ve captured that hare, you can think about the details of how you’ll cook it.


*Jugged Hare in Hannah Grasse’s The Art of Cookery Made Plain and Easy, although it apparently  doesn’t include the “catch your hare” part.

1 comment:

NeilPassero said...

Great article on the issues and best-practice, if manual, processes, David. Thanks for your insight. A growing number of thought-leaders who seek to automate these processes use SetLogik.