Don’t agree yet with the past posts? Here is the final, and hopefully best reason why CMOs should be wary of using Marketing Contribution to Revenue (MCtR) as a statistic. Marketing is essentially a parts supplier to the big sales factory that creates revenue. As a parts supplier, marketing has to hit supplier goals to keep the sales assembling line rolling. Those parts are leads. Marketing needs to deliver leads to sales at a defect rate (the opposite of the acceptance rate), that enables sales to create opportunities that come out of the factory and ultimately get closed. Hence the request sales needs to make to marketing is that it needs x leads per week at an opportunity creation rate of y% to keep opportunity production going. This is a measurable, attainable goal that marketing can strive for. Each week, marketing must deliver, for example, 50 leads per telesales rep and these leads need to result in an opportunity 10% of the time. This metric of required volume and opportunity creation rate is a tangible goal marketing can push for and is a goal they can control assuming you have a properly trained sales team (also partially marketing’s job).
What happens to these opportunities when they leave the factory is a completely different story and one outside of marketing’s control. Is it a big opportunity? Small opportunity? Deep discounts? No discount? Who knows. The sales team will maximize revenue, but marketing has done its part in providing the parts required to build the opportunity. Now it is the sales team to take over and close the deal. Using MCtR as a metric would be similar to asking a bumper supplier to “give me enough bumpers so I can sell $1M of cars”. Hugh? How do you figure that out? You can’t. Sales needs to place a parts order based on the leads they need to keep the opportunity assembly line going. That order is a discrete order of leads that convert at a fixed percentage to opportunities.
Convinced? I hope so.
Now that this is out of our heads, we can talk about how to measure the impact marketing should have on revenue in the next posting.