With the new economic reality, marketers across every vertical are expected to increase efficiency and look further down the funnel when it comes to their investments.
That means that more and more marketers are embracing a revenue marketing methodology, in which the main focus is driving revenue while remaining efficient.
In this approach, marketing decisions are made based on revenue outcomes, and the focus is on connecting marketing activities to revenue outcomes as much as possible.
As brands grow and scale and functional groups become more complex, revenue is the one common agenda around which all functions of an expanding organization can align and streamline.
Revenue is a language everyone understands. And everyone understands marketing’s role in driving revenue when revenue marketing is at the center of your strategy.
In this article, I’ll walk you through the key pillars that support and scale revenue marketing. First, let’s recap why revenue marketing has become the preferred model for scaling B2B companies in the first place.
Why is Revenue Marketing the Best Choice for Scaling B2B Companies?
1. It Drives Alignment Across All Functions
Keeping all the growing business functions on the same page gets more complex as the company grows.
Budgets become more competitive, and gaining a seat at the table means being able to prove the value being created. While each function will have their own agenda and success metrics, revenue is one metric around which everyone in the C-suite, sales, marketing, service, and others can align.
That’s why marketing should build around a revenue marketing approach from the start. It proves the marketing’s value and helps the whole business rather than just the marketing department.
2. It Helps Invest in the Right Marketing Channels
B2B buying groups and customer journeys are becoming more complex.
That gives marketers more touchpoints than ever to deliver on goals such as MQLs, SQLs, or even opportunities and closed-wons.
But just as all MQLs are not created equal, nor are all closed-wons.
As the business grows, there is a need to optimize for the activities that deliver not just revenues but the best revenues. By best, I mean not just the lowest cost of acquisition but also the fastest or most consistent revenue–depending on the business context.
By using a revenue marketing framework, you can figure out what channels and activities will deliver the most customers and revenue for your business.
3. It Helps Create An Aligned Funnel
While every company needs a strong inflow of MQLs to meet their revenue goals, they are not an end in themselves. Yet, partly thanks to the long sales cycle and partly due to functional silos, marketing often finds itself stuck on the ‘MQL hamster wheel.’
This involves running faster and faster to deliver more MQLs that may not convert or convert sub-optimally. They end up measuring ROI against MQLs generated instead of ‘revenue delivered.’
In contrast, a revenue marketing framework retains MQLs as a key success metric (as I will show you later in this blog) but goes beyond that to connect metrics at each stage of the funnel, leading all the way to the close.
This level of visibility with a connected funnel enables optimization for the right channel at the right time.
The 4 Pillars of a Successful Revenue Marketing Strategy in 2022
If you have chosen to commit to a revenue marketing strategy, here are the pillars on which to build for success and scale:
Revenue Marketing Strategy #1: A Measurement Mindset
For revenue marketing to be successful, marketing leadership needs to understand and measure all activity–despite how hard it may seem–to progress towards revenue.
In practice, though not everything can be directly or easily measured, it is crucial to have clarity and a plan to manage measurement. This means:
- Measure what can be measured
- Find indicators and correlations to help measure and minimize activities that are harder to measure
- Better understand what is considered ‘unmeasurable’ and aim to show–as far as possible–the value they bring to the strategy or their impact on more measurable channels.
A solid attribution platform and supporting tools can deal with everything that can be measured. It can also help measure sources that are not currently being tracked—or that are not tracked correctly—but, with some effort, could be fully or partly measured. For example, activities such as organic social media interactions could be integrated with your CRM using tools such as Oktopost.
But there are still some buyer activities, interactions, and decisions in what is called the ‘dark funnel’–channels and platforms our attribution and measurement systems cannot reach. These are much harder to fully track. Even for those, there is a way to create some traction.
For example, at first glance, it appears that sources such as word-of-mouth or in-person conversations, podcast mentions, video calls, link sharing, discussions in closed communities and forums, or other unknown traffic sources are destined to remain entirely invisible to us.
A good place to start is to bundle all the direct and brand search traffic such sources generate under a channel called the ‘dark funnel’. Then, using a tool such as InfiniGrow, you can manually add the costs of running podcasts, organic social, etc., to this channel.
Now, all that incoming traffic has a name (the dark funnel), and at least you know the various sources that constitute it to a large extent. It’s true you won’t be able to isolate individual channels in it, but at least you’ll have a very good idea of whether these activities are working for you and their ROI.
A measurement mindset first addresses what can be controlled and challenges you to have clarity on what you can’t. Sometimes, as marketers, we just know something works–even if it cannot be immediately measured.
By staying committed to understanding the connections between marketing efforts and revenue goals, we can get buy-in for the less measurable actions or actions that can only be evaluated in the longer term. This mindset helps focus on marketing that’s rooted in attribution and measurement while still leaving scope for experimenting with measurable and unmeasurable channels.
Either way, giving up on the idea of attribution altogether because it’s just too hard is not the answer.
Instead, elevate your revenue marketing performance to a significant degree with the right mindset and a strong revenue management platform that can help continuously tweak and improve measurement on an ongoing basis.
Revenue Marketing Strategy #2: A Revenue Model Based on Real Revenue Targets
Aligning marketing goals with revenue is key for revenue marketers, but what is the best way to do this? A good start is creating a revenue model–a set of measurable metrics aligned with the sales funnel and the overall revenue targets.
A good revenue model works backward from the target revenue to calculate and set realistic marketing revenue and funnel goals using historical data, revenue KPIs, and proxy metrics.
Your revenue model should be able to define how many won customers and funnel goals (opportunities, SQLs, MQLs, leads) are needed over the year, to achieve marketing’s contribution to the company’s top-level revenue goals.
This process usually consists of 5 steps:
- Setting annual revenue targets
- Calculating the number of new customers as well as funnel targets
- Setting marketing targets (proxy metrics)
- Adding up the yearly costs and the needed budget
- Transforming the annual budget into monthly targets for marketing
Revenue marketers can’t rely on disconnected data and hunches when it comes to marketing analysis, planning, and budgeting. So building and monitoring a revenue model based on the annual and monthly revenue targets becomes key to clarity and smarter decision-making.
To make it more efficient and accurate, consider working with a template like my revenue model template, which not only helps calculate revenue targets but also transforms the budgets into targets to track performance through the funnel.
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Revenue Marketing Strategy #3: Revenue Marketing Metrics That Matter
Revenue marketers seek to track ‘revenue generated’ as an important measure of marketing performance. Not only does this help them understand their contribution to the overall revenue and the success of the campaigns they have been running in terms of their impact on revenue.
Some of the revenue marketing metrics that should be measured to gauge marketing contribution to the total revenue include marketing sourced pipeline and revenue (the portion of the overall sales pipeline/revenue that marketing has initiated) and marketing attributed pipeline and revenue (any pipeline or revenue that is attributed to marketing through an attribution model) and, of course, cost-efficiency metrics such as ROI and cost of acquisition of MQLs, SQLs, and opportunities.
While customer acquisition cost (CAC) and ROI are important, there’s another set of metrics that act as the revenue marketer’s secret weapon: velocity metrics. Since all marketing goals are ultimately time-bound, in addition to deal sizes and win rates, we need to consider the time factor–how quickly deals progress through the funnel and how many more deals can be closed simultaneously with a shorter sales cycle.
For example, you may find that shrinking the deal cycle enables you to double the number of customers within the same period, albeit at a slightly higher CAC.
Ultimately, revenue marketers will measure and decide the trade-off between velocity metrics, efficiency metrics (such as CAC), and volume metrics (like attributed revenue), based on what is more valuable in their unique context. Some useful velocity metrics include:
- Funnel stage velocity: how fast is the progression from MQL to SQL, for example, and which marketing activities are speeding that up?
- Time to impact: the time it takes for a marketing campaign to drive a business or revenue outcome
- Time to ROI: how long before a marketing activity becomes ROI positive
Revenue Marketing Strategy #4: An Ongoing, Full-Funnel Optimization Cycle
The long sales cycle in B2B means that marketers are often forced to optimize for upper-funnel metrics since the time gap between the marketing activity and the outcome is too large.
Waiting for several months for the sales cycle to conclude and get visibility on revenue outcomes of marketing activity or even experiments is not feasible.
What revenue marketers need instead, is a full-funnel optimization cycle that helps them understand with much higher frequency if they are on the right track to meet revenue goals.
This effort has two key aspects:
1. Define and set proxy metrics for ongoing optimization instead of waiting till the end of the sales cycle to optimize what works.
SQLs, and in some cases, MQLs work well as proxy metrics, which are metrics not directly related to revenue outcomes but which are good indicators of success. (I view proxy metrics as the opposite of vanity metrics, which do not correlate to revenue).
The best way to think of a proxy metric is as a milestone on the way to your true KPI or a lower-level metric that will bring you closer to your main goal, which should be revenue.
For example, not only are SQLs closer to the bottom of the funnel and the revenue outcomes, they also allow for a shorter iteration timeframe that can be optimized at a higher frequency – say quarterly or monthly.
Similarly, if we think of MQLs as proxies with a strong correlation to revenue (which is not always the case, so use it with caution), we can begin to re-establish the link between MQLs and revenue and build a more frequent weekly optimization cycle.
When you leverage proxy metrics through the full funnel, you are using data points that can be optimized for within a reasonable feedback loop. This brings us to the second aspect of building a full-funnel optimization cycle.
2. Build your unique optimization schedule where each activity across the funnel connects to the next and ultimately leads to revenue outcomes.
The right optimization cycle is unique to each organization and its goals and context, so there is no formula for it.
However, using a framework like a waterfall optimization schedule described here helps accommodate multiple optimization cycles based on your needs and sets up an ongoing iterative process of testing, measuring and optimizing.
An optimization schedule helps you create a structure starting with the least frequent optimization cycle (e.g., six monthly or quarterly) and continue to more frequent optimization cycles with proxy metrics higher up the connected funnel.
For example, you may set up cascading monthly cycles based on SQLs or even weekly cycles based on MQLs as your proxy metrics.
Build Stronger Revenue Marketing Outcomes On These 4 Pillars
For companies that have relied more on acquisition and sales even at a high CAC, the transition to more revenue-focused growth at scale can be challenging. A revenue marketing strategy built upon these four pillars can set you up for success with a measurable, predictable, and revenue-led methodology.
Not only will it enable a more cohesive full-funnel strategy that reduces the CAC and optimizes revenue outcomes, but it also keeps the focus on scaling channels that are easier to measure and more closely tied to better revenue outcomes.