After the previous four postings, are you still not convinced that MCtR (marketing contribution to revenue) is a dicey metric for sales and marketing management? Here comes reason #5 – Skewed Marketing Results.
Marketers love to show that their efforts generate revenue. In B2B marketing who wouldn’t? The problem is that unlike consumer marketing where there is no sales team, in B2B sales there is a sales team that carries anywhere from a little to a lot of the burden of revenue generation. In all but the simplest cases, the sales team carries a lot of the burden in generating revenue. So while it is nice to claim that a program generated revenue, the reality is that it did not. The program created the situation where a sales rep could start a sales cycle and close a deal.
Therein lies the problem with MCtR – the sales rep and deal size quotient. If programs get evaluated on the revenue generated by the program, a program’s success gets influenced by measures that could be beyond marketing’s control – namely deal size and sales team effectiveness. Sales team effectiveness theoretically impacts all programs equally. But deal size may not and is the more troublesome number in this scenario. If a program cost $10,000, but generated an opportunity for $100,000 that closed, is the program successful? Perhaps as a single program yes, since it generated revenue. But the program may not be repeatable if the response rate was .0001%. In other words, for the $10,000 spending, you got only 10 leads, and one closed, these statistics are so low, that it is unlikely if you reran the program, you would get similar results. If there is such a thing, the marketer in this case got lucky.
Luck and hope are both not strategies.
Now take another example. What about the very same spending of $10,000, that generated $100,000 in closed deals, but did so with 100 deals at $1,000 each, that came from 1,000 leads that came from a 10% response rate offer. This scenario seems repeatable. And it is!
Just looking at the “ROI” on a spend can lead you down the wrong path. It is one more reason why MCtR is not a great metric.
Still not convinced? We have one more reason to cover.
Top Six Reasons CMOs Should Be Cautious Using Marketing Contribution to Revenue
- #1: Marketing Does More than Lead Generation
- #2: B2B Sales Cycles have Many Touch Points
- #3: Closed Deal Forensics are Notoriously Difficult to Understand
- #4: Transformers
- #5: Using Revenue as a Measure Can Skew Marketing Program Results in Either Direction
- #6: Marketing is a Parts Supplier to Sales