As a former sales leader and direct sales contributor, I have been on the receiving end of leads for many years. Throughout I have seen firsthand the challenge marketing teams have in articulating their value to a CFO. By value, I mean revenue production. If your marketing budget was $4 million, what revenue impact did your company receive through this investment? These are the types of questions that typically come up:
1) How many deals did we land through the 40 tradeshows we attended?
2) How much revenue was driven from our user’s conference?
3) How many leads came in and were closed via our website?
4) What is the revenue figure associated with these marketing assets?
I can go on and on with these types of questions in which accurate answers can be very difficult to obtain. This usually leads to a reduction in budget, which forces the marketing department to do twice the work with half the resources. Sound familiar?
True story: Larry, Vice President of Marketing, and Victor, Vice President of Sales are in an annual review in preparation for budgets with the CEO and CFO. Larry, in his annual review presentation proudly stated that lead volume across all touch points (Website, tradeshow, and direct marketing) was up approximately 20%. He stated that his literature distribution volume was up as well. He was kicking butt and wanted the boss to know. Victor piped in and stated that Larry should stop sending him leads. He didn’t have the bandwidth to work that activity and most weren’t even followed up on. Argument proceeded and the meeting was over. Afterword, they put us both in the same office and ended up cutting Larry’s marketing budget by 20%.
What did we do? We ended up collaborating on the definition of a “Sales Ready” lead. We also agreed upon two additional metrics, average sales price and average close rate across three product types. Marketing agreed to only hand over leads that were categorized “Sales Ready” and Sales agreed to meet or exceed the agreed upon average sales price and close rate metrics. We also adjusted our compensation plan to encourage Sales to update the status of their opportunities within our CRM system. Essentially, if their territory activity/pipeline was not depicted in CRM and closed orders updated, they did not receive commission.
Through these efforts, Marketing was able to more accurately depict their projected, pipeline and actual revenue production from a campaign to campaign perspective. Sales was getting what they wanted as well, qualified leads.
Based upon this experience and many others, I cannot stress enough how important it is that both sales and marketing are in sync with regards to their efforts. The benefits of effective collaboration are tremendous; increased revenue, reduced lead management costs, improved CPOD (cost per order dollar) improved deployment of CRM and ancillary marketing tools and corporate sanity!
In our next annual budget meeting, our conversation revolved around adjustments in our “Sale Ready” definition, strategies to improve close rates and adjustments in campaign investments based upon the aforementioned results. We found some campaigns were driving in 50% fewer leads but 15% more “Sales Ready” leads. The cost benefit of adjusting was tremendous!
Let us know if you have any other stories regarding budget challenges and wins.