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30 November 2012
Sales Technology – Metrics for the Growth Imperative

Sales Technology – Metrics for the Growth Imperative

By Ben Turner @ 08:54 :: 7396 Views :: 8 Comments :: Article Rating :: Featured Articles
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Across the Globe, senior corporate executives (including boards of directors) are pretty obsessed with one thing: growth. It’s the business imperative that consistently trumps every other goal. Fergus Gloster, Managing Director EMEA for Marketo analyses the journey from analyses to automation.

In recent years thisgrowth imperative has been amplified because of the post-recession economic challenges with which we’ve all had to grapple. Companies are doing everything they can to re-ignite their revenue-building capacities, like implementing marketing automation for example. They are also using strategies including tapping overseas markets, driving innovation, investing in new talent, and exploring M&A opportunities.

Thanks to technology, companies today can measure almost every aspect of a business process or investment with a variety of interesting metrics to support that growth. As the amount of computing power and number of solutions targeted at the front office increases, so too has the appetite to measure sales and marketing productivity and effectiveness.

ERP and other back office systems have provided manufacturing, finance, logistics and other departments with key measurements which have allowed those functions to achieve huge productivity gains over recent years.

Traditionally, Sales teams have been  a little ahead of marketing in terms of their comfort level when talking with management about conversion rates, win-loss ratios, pipe-to-close, sales velocity etc.

Sales managers have taken those low level metrics and used them to help build sophisticated models for forecasting and trending bookings. Marketing executives are beginning to understand that they also need to bring more science to a critical business process that was for too long seen as an art form rather than being seen as a key part of the company that should be accountable to sales, finance and the CEO.

A Multitude of Metrics

As marketing and sales teams become more aligned in the modern economy, it’s important for business to not only focus on soft or “vanity metrics,” but to learn to convey revenue language that matters to CEOs and CFOs. The arrival of digital platforms (Web, Search, Content) and the availability of business process solutions such as
marketing automation and CRM have accelerated the adoption of key sales and marketing metrics.

To stay ahead of the curve, most savvy marketers now understand the need to keep on top of their own marketing mix and how it aligns with changes in buyer behavior. The best practices are those that combine lead generation, scoring and nurturing, and marketing analysis. The changing nature of buyer behavior, particularly in today’s online jungle, is a challenge that B2B marketing and sales teams must address with dynamic strategies and flexible mindsets.

The truth about the modern digital consumer atmosphere is simple: The customer is in charge. Buyers are no longer dependent upon vendors to inform their purchasing decisions. Now, the Internet allows them to find all the details they need.

Today’s sales and marketing meetings are often full of ratios, metrics and numbers floating around like a math class. These metrics have evolved from the very simple notion of counting website visitors, to prospect conversion rates by category over time, to cost per lead, to cost per click, to marginal and cumulative conversion rates etc. So there is now a serious risk of blinding people with too much science. All of this detail is useful and has its place, but a CMO needs to have a clear view of some key

The sales and marketing funnel has great potential for endless numbers of metrics, which can be evaluated as point in time data points or trends. A top-of-the-funnel measurement such as cost per name/prospect or web visitor conversion rate can be as valuable as a middle-of-the-funnel metric such as a
Qualified Lead to Sales Lead conversion rates, but they don’t give a quick, easy-to-track metric that describes the likely health of the total funnel.

Achieving alignment between marketing and sales departments is the largest opportunity for improving business performance today. When marketing and sales teams align around a single revenue cycle, they can create dramatic improvements in marketing ROI, sales productivity, and most importantly top-line growth.

One Metric to Rule Them All

One that does, and my personal favourite metric, is Pipe-to-Spend because it brings the marketing, sales and finance functions together. If a business spends money on a particular programme then it’s very useful to know how much pipeline was generated by that spend.  

A figure above 10 is a good starting point because it means that if I had a pipe to close of 33% then my programme spend would have generated over £3 in bookings. The Pipe-to-Spend also tells me that prospects are being worked through the funnel and that sales are accepting marketing generated leads.

So if this figure is high then it’s probably indicates a well working funnel process, a low figure of course indicates that a deeper look at the finer detailed metrics mentioned above to see if there is a process or programme selection problem.
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comment By Mike S. @ 12 January 2013 14:46
Pipe-to-Spend is indeed a nice metric, but I feel in real life is probably quite difficult to measure. Digital campaigns can probably be tracked relatively accurately, but other campaigns using more traditional channels are more difficult to track - which is why companies invest less in these campaigns and focus more in digital campaigns.
But overall, pipe-to-spend is still very helpful, especially when used together with other metrics.
Good article!

Mike Speranza
Small business CRM blog
Small business CRM

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