The Marketing Value Chain and Revenue: Closing the Loop

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When you’re in a quarterly meeting with your CEO, it’s not the open rate on your latest email or the number of Twitter followers you’ve accrued that’s going to prove your value to the business. Instead, what really matters is your impact on revenue. Proving that your marketing operations have had a clear, positive impact on your company’s bottom line is essential to your success and that of your company.

Unfortunately, marketers often get left out of discussions of revenue. Instead of being seen as a major driver of the bottom line, marketers are pigeonholed as a creative department that doesn’t contribute in a measurable fashion to sales or revenue generation. Of course, this isn’t at all true. But in order to prove it, we need to embrace the new marketing value chain and focus on new ways of proving our worth. Here’s how:

Redefine the Marketing Cycle

Unlike many other departments, marketing’s impact on revenue can be difficult to measure. Determining the source of new leads, tracking them through to conversion, and attributing them to a specific source with an attached monetary value is complex. In order to truly measure marketing’s impact on revenue, we must concentrate on defining what matters most in the marketing cycle and show how marketing builds long-term value instead of short-term gains.

Measure the Impact of Marketing Activity on Revenue

The new marketing value chain is predicated on making tasks measurable and accountable to data. In order to ensure that your marketing activity is generating revenue, it’s necessary to invest in the tools and processes required for sophisticated marketing measurement. This may include things like a top-of-the-line CRM system or a marketing automation tool.

Essential to measuring the impact of marketing is coordinating with the sales department in order to track marketing-generated leads through the sales process all the way to conversion. Your goal should be the ability to track which of your marketing campaigns and activities are generating quality leads, how many those leads are being nurtured through marketing automation and the sales team, and how much revenue they’re bringing into the pipeline. Only then can you optimize your marketing investment and impact.

Forecast Revenue Contribution

To truly illustrate your impact on ROI, you should also work to forecast the continued effects of marketing on future revenue. While this is traditionally the domain of sales, the power to make correct, data-based revenue forecasts gives marketers a powerful tool for demonstrating their credibility.

Use data and analytics taken from ongoing and past marketing campaigns to forecast the effect of marketing on future revenue. By working through revenue contributions as discussed above, marketers can begin to understand the degree to which different strategies and tactics contribute to overall revenue. By tracking past and current marketing efforts and using the related insights to predict future revenue contribution, marketers can demonstrate their understanding of not just their present, but also their future role in the company’s bottom line.

Let us know: how are you tracking the impact of your marketing efforts on your company’s revenue?

Photo Credit: Sebastiaan ter Burg via Flickr Creative Commons

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