The New Revenue Engine and the Role of Marketing Analytics

by Guest Author on February 10, 2012

Kyle Milko

Kyle Milko

I keep a library of articles, blogs, white papers, etc., on B2B sales and marketing strategies. Recently, while doing some research on the topic of B2B lead development, I dusted off a great article about  generating revenue in the B2B marketplace, “The New Revenue Engine: Drive Predictable Revenue by Managing Your Revenue Machine” via Modern B2B Marketing, Marketo Blog. I found the article to be more relevant now than when I first read it, so I thought it made sense to revisit the great points from the post. In summary:

The old revenue engine is focused on the sales team. When companies want to double revenue, they double their sales force.  In the past, this model worked. Information that prospects wanted was not readily available with just a few clicks, so prospects were willing to speak with a sales rep to get it.

But things change. Recent years have highlighted the flaws of the old revenue machine, including:

1. It’s outdated. The way buyers research and buy solutions has changed forever, and the old sales process can’t keep up.

2. It’s expensive. Having sales reps doing their own prospecting is a terrible idea, especially for companies that sell products with less than $250,000 contract values. And even if a rep does some prospecting successfully, as soon as they generate some pipeline, they become too busy to prospect. It’s not sustainable.

3. It’s not predictable. The old revenue engine suffers from feast or famine. We see this all the time with hockey sticks at the end of the quarter, followed by complaints to marketing since there are no sales leads and the pipeline is now cleared out, followed by panicked prospecting to try to make something happen in time to make the numbers.

A sales machine on its own is no longer sufficient to drive a company’s revenue growth. Companies need a new revenue engine.

The new revenue engine consists of systematic, repeatable processes and sales to drive consistent, predictable revenue. It recognizes that demand generation is the key source of new customer acquisition, and it knows the primary job of a sales rep is to sell and close business, not create new opportunities.

The new revenue engine works best when all of these processes are in place and working effectively:

Lead generation. Marketing leads are the fuel that powers the revenue engine, so a predictable flow of new qualified sales leads into the top of the funnel is essential to driving predictable revenue.

Lead nurturing. Nurturing is all about staying in touch with prospects as they educate themselves, until they’re ready to engage with a sales rep. Since some prospects will be ready quickly, and others will take longer, it has the effect of “smoothing” out lumpy lead generation to help deliver a steady stream of leads.

Lead scoring. Scoring goes hand-in-hand with lead nurturing, since it tells you when a lead is “ripe” and possibly ready to engage with sales.  The key is to focus not on self-reported and often inaccurate firmographic and BANT criteria, but on the actual buying behaviors the prospect exhibits (repeatedly visiting the website, downloading later stage content, using your company brand name as search term, etc.).

Lead qualification. Once inbound leads are determined to be marketing-qualified, don’t send them directly to an account executive. When salespeople qualify their own leads, leads get lost, and lead scoring by itself is insufficient since it at best indicates accounts that are likely to be qualified.  Instead, between marketing and sales there should be a “human touch” in which someone actually speaks to the prospect to determine if they want to engage with a sales rep. If so, pass the sales-qualified lead on; if not, mark the lead as truly disqualified or more likely send it back for further nurturing.

Sales development /prospecting. This is the function that prospects into accounts where there is no active or pre-existing interest.  Even companies that generate a great flow of inbound leads can still benefit from this, since (1) the competitors are prospecting into accounts, so waiting for inbound interest can be a recipe for ending up as “column b” and (2) it’s an important way to generate business in new markets where the inbound interest is not as high.  Some companies have their sales reps perform this function (which can be expensive) and some have the lead qualification team do it, but some of the best companies have teams that specialize on this function alone.

Traditional sales. Even when reps get a steady flow of highly qualified leads, there’s still a lot to be done to turn qualified interest into revenue, ranging from building ROI cases and positioning versus competitors to negotiating discounts and managing contracts.  The new revenue engine doesn’t change the skills and best practices that are required here, but it does help reps focus their time and energy on the activities that are most likely to drive business.

The New Role for B2B Marketing Analytics

A strategic analytic capability is essential in the new revenue engine.  Marketing analytics play a significant role in identifying and prioritizing ALL the opportunities for customer and market share growth.

In addition, marketing analytics can be the foundation of sales development and prospecting.

Using predictive B2B marketing analytics, you can scale the level of understanding of the target market and create a repeatable process to identify the best opportunities by salesperson, by product/service for customer expansion and new customer acquisition.

In my view, in addition to all the great points by the author, the New Revenue Generation Model closes the loop from opportunity identification through the ultimate sale, demonstrating the success of the integrated effort while laying the foundation for a going-forward process of sales planning, territory investment, marketing investment and focus.

About the Author:

Kyle Milko serves as Business Practice Leader for technology markets at SIGMA Marketing Group. Connect with Kyle on LinkedIn, or follow him on Twitter.

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