How Do You Know Your Demand Marketing Is Providing Real Lift to Sales?
What do CFOs and CROs have in common? Both ask the same, fundamental question when analyzing demand marketing budgets: What real sales ‘lift’ am I getting from this spend?
What do we mean by lift? Incrementality. A Nielsen blog post notes:
Marketers in every industry have one common goal: Prove that marketing efforts help drive more revenue…
One way you can do this is by measuring incrementality. People use the word “incrementality” to mean different things. Strictly defined, it’s the lift that marketing and advertising provide above native demand—the increase in leads, sales and other key performance indicators (KPIs) gained that would not have occurred without marketing efforts.
There is no question that marketing plays an important role in the areas of product and brand, which often have ‘soft’ vanity metrics used to assess program impact. Not sure what these look like? We define vanity metrics here.
But when it comes to demand marketing – the goal should not be a ‘soft’ metric. Demand Marketing should be held to a clear, high standard of incremental – i.e., ‘net’ – contribution to sales. Demand marketing should be held to the standard of being able to provide lift.
The problem – and the source of skepticism from CFOs and CROs – is that most demand marketing fails to contribute significantly to sales. (Ah, the dirty little secret!)
ANNUITAS has found that more than three-quarters of B2B organizations have taken a tactical approach to demand generation – engaging in non-sustainable and non-outcome-oriented random acts of marketing – versus building a sustainable and optimizable strategic demand engine. These organizations are activity-driven, not outcome-oriented.
Activity-driven demand marketing is just that – focused on the activity, not the outcome – and when it fails to yield real lift to sales, leaders of these organizations turn to the concept of marketing attribution.
On its face, it would seem that marketing attribution is a critical KPI for assessing the impact of demand marketing programs. But the reality is quite the opposite.
For most companies, marketing attribution is a continual process of chasing credit for leads and proving the worth of marketing altogether. What’s worse, attribution leads to a demand marketing environment where budgets are defended from the top-down, and demand marketing is not viewed from an ROI perspective, i.e. bottom-up.
The reality is that, too often, marketing attribution seeks to mask a failure to deliver sales lift.
Assessing the Impact of Demand Marketing
Demand marketing must be accountable. And this accountability must be related to demand marketing’s ability to 1.) orchestrate customer engagement and 2.) provide lift to pipelines. Accountability, however, seems to not be the right word.
Demand marketing must have a clear, verifiable impact on the top and bottom line of a business.
How do you assess this impact? There are four elements to consider:
Causality vs. correlation
One of the problems with the attribution mindset described above is that it leads to an environment where demand marketers attempt to show ‘correlation’ between marketing activities and positive outcomes. But this is the wrong approach. The question is whether these activities were ‘causal.’ I.e., did demand marketing activities lead to a positive sales outcome, versus occurring in tandem with (or after) the positive sales outcome. If there is net sales lift, then demand marketing is causal.
Driving initial, forward buyer progression
A critical role of effective demand marketing is engaging with customers earlier in the buying process – well before they’re ‘hand-raising.’ But effective demand marketing should do more than merely engage at this stage; rather, it should Engage and Nurture forward to a Conversion point – driving initial, forward buyer progression, which a lead developer or seller can then pick up on and carry forward.
Building out an early-stage picture of customer journey and intent
Leveraging web CMS and marketing automation technology, demand marketing has a unique opportunity to capture early-stage customer journey and to better discern buying intent – especially by seeing the nature of content engagement and translating that into where customers are in their buying process. A key element of demand marketing should thus be compositing these inputs and teeing up this early picture (and context) via interfaces in CRM such as Marketo Sales Insight and/or via data visualization platforms such as Tableau. If you’re not able to use your marketing automation platform at this level today, you aren’t leveraging the tool to its full potential. We talk about orchestrating marketing technology in this article.
Amid all of the factors to consider, the most basic is this: Does demand marketing play a value-added role in a company’s lead-to-revenue process? Is there a part of the end-to-end customer journey where demand marketing provides clear stewardship? Would the lack of demand marketing otherwise provide a gap? And does this stewardship thus yield more positive sales outcomes than would occur without it?
Effective Demand Marketing Should Be an Annuity
A frequent question is where the company name ANNUITAS comes from. Quite simply, it’s our view of demand marketing – i.e., that it should be a predictable, repeatable and optimizable ‘annuity.’
When demand marketing is perpetually orchestrating customer engagement and providing lift to pipelines it serves just such a role.
So how do you know your demand marketing is providing real lift to sales?
When it’s a strategic, integral component of go-to-market; when it’s role and value-add is clear; when it is an annuity.
At ANNUITAS, we refer to this annuity state as taking a Strategic Demand Marketing approach – a state where the role of demand marketing in successful customer outcomes is not questionable.
So then the next question would be, how do you transform your demand marketing? This is really a topic for another post; meanwhile, here are two additional – more in depth – resources to check out: