The Revenue Feedback Loop: putting revenue at the heart of B2B marketing
This is a back-to-basics guide for putting revenue at the heart of your marketing process.
Pipeline trumps impressions, revenue trumps clicks.
Obvious right?
So why are so many B2B marketers still stuck with reporting on clicks, visitors and conversions?
Well, it isn’t because they are ignorant of the benefits of revenue reporting… quite the opposite!
The B2B marketer knows that the status quo not only complicates the task of optimising efforts but also forces them to bring clicks to the boardroom, like knives to a gunfight.
Instead, the reason is simply that making the link between marketing and revenue isn’t easy. The B2B customer journey is long and complex, and the resulting data trail sends shivers down the spine of even the most veteran of data scientists.
Well we say, enough!
Enough of having no option but to optimise towards vanity metrics, enough of the boardroom perceptions where marketing is the cost centre and sales the revenue generator.
Great.
But how do you transition to a revenue-focused marketing setup where marketing is able to measure and report on the impact efforts are having on the bottom line?
The answer: a Revenue Feedback Loop that transcends data, analysis and reporting.
And here’s a practical guide for implementing the Revenue Loop.
The limits of the ‘traditional’ B2B marketing paradigm
In the ‘traditional’ marketing paradigm, clicks and conversions form the basis of performance tracking and reporting.
And while clicks, visitors, conversions, etc. can serve as useful leading indicators (more on this below), they are much less useful when assessing and reporting on success.
The result of this can be summarised into the following three limitations:
1. Lead-focused metrics tell only half the story
When it comes to reporting it is leads, qualified to some degree, against which marketing efforts are measured.
Even when lead gen is dressed up as demand gen, it’s still leads that are clocked up and measured.
Now, this isn’t a problem in and of itself, after all, a marketer’s primary task is attracting potential customers to the brand. Not to mention that revenue takes long to measure given the length of B2B customer journeys, meaning clicks and conversions can be great leading indicators.
What is a problem, however, is leaving it at that. That is, not seeing whether these leads go on to purchase.
Without this fundamental link to revenue, it’s very difficult to assess whether marketing efforts are making an impact in terms of actual business value.
2. Pump-and-dump of leads can result in marketing-sales misalignment
Equally, not tying your marketing activities to revenue adds friction to the marketing-sales org dynamic.
Despite B2B go-to-market being spilt between marketing and sales, the customer journey is still a singular one.
When marketing operates on a lead-gen machine basis - where leads are dumped on Sale’s desk and ‘hasta la vista baby’ - it’s difficult to identify the quality of said leads. Do they go on to purchase the product/service?
It’s only when the link between action and revenue is made that these
3. CMOs are underequipped when reporting to the board
When it comes to presenting results to the board, not having revenue metrics puts CMOs at a considerable disadvantage.
Sales has always been able to easily report revenue metrics. Number of deals closed, close rate, average customer value, etc. etc.
I mean Sales’ whole pay structure is centred on the number and value of deals closed.
Marketing on the other hand has, at best, (qualified) conversion rates, but otherwise, clicks and cost metrics.
The result is an underequipped CMO bringing clicks to the Board, like knives in a gunfight… little wonder marketing budgets are constantly in the crosshairs.
So why do so many B2B marketing orgs continue operating within this traditional marketing paradigm?
You might also be interested in this post on Revenue Marketing —>
Connecting marketing to revenue: a question of data
The answer is obvious: data, data, data.
Data is a pretty considerable - read huge - stumbling block for the revenue-seeking B2B marketer.
As we’ve mentioned time and again, B2B customer journeys are long and complex. They extend over months, involve a multitude of touches across a multitude of channels, and are driven by a host of stakeholders.
And the data holding all these touches is siloed across the tools on the martech stack.
Without a solution bringing this all together, there’s little alternative but to resort to the ‘traditional’ approach.
Which is why any attempt to operate the Revenue Feedback Loop, starts with bringing your data together.
Revenue Feedback Loop
The Revenue Feedback Loop is a conceptual process model for putting revenue at the core of your marketing.
The Loop is rooted in four key stages: analysis, planning, action, and revenue, all of which are linked together in a cycle that constantly feeds back into itself - fostering a cycle of accountable improvement and growth.
Analysis stage
First up, analysis.
Here’s where you’re going to be examining the results of your marketing efforts in detail. What channels, campaigns and content have worked, and what hasn’t?
Analytics
And crucial to this process is analytics.
That is, having the right data processing in place to measure every one of your marketing efforts against revenue - from paid campaigns to content to emails, you name it.
For this, you need to overcome the data challenge set out above.
That is, you need to collect, process and model the account-based B2B customer journey data, from anonymous first touch to closed-won.
A process that takes time and resources to implement, unless you opt for purchasing one of the plug-and-play tools, like Dreamdata, available off-the-shelf.
More about building or buying a solution here.
Understand what has driven your revenue
Once you’ve got the data in place, you need to examine performance against your KPIs.
At a top level, apart from a standard revenue target, you might want to be looking at the ROI of your whole marketing operation, as well as your CAC to LTV ratio which helps understand the return you’re getting for each dollar spent on acquiring new customers by comparing it with the net profit expected from that customer over their lifetime.
At the channel level, you’ll want to be tracking ROI, to see whether the channel as a whole has proven a worthwhile investment. The same for the campaign or content level analysis, where you can also dig into CPA vs value and URL influence.
In essence, you’re going to be looking at the impact of every effort across the channel, campaign and content level on the sales pipeline and revenue.
Planning stage
With a clear picture of what marketing efforts are behind your revenue, you can go about outlining the key objectives and strategy for the forthcoming period.
That is, how you’re going to translate business goals and revenue targets into marketing activities.
And yes, this is where we can safely re-introduce leads - highly qualified leads, backed by data - and non-revenue leading indicators back into the equation.
This can be broken down into three main elements:
Align your business goals (revenue) with marketing objectives
Set a strategy: know how you’re going to hit your goals
Track leading indicators to measure performance
Translate your business goals (revenue target) into marketing deliverables
You need to do reverse engineering to translate your business goals (revenue target) into a marketing plan.
Here’s a quick guide:
Jot down the revenue target for the period - say, $500,000 for the quarter.
Take the revenue generated over the last period, using the same time period, e.g. the last quarter if you’re planning for the upcoming quarter - $400,000
The number of leads generated in the last period - 400
The average lead value (revenue divided by number of leads) - $10,000
The number of leads you’ll need to generate to hit the revenue target using the average lead value from the previous step - $500,000/ $10,000 = 500.
Once you’ve got the number of leads you’ll need to hit the revenue target, in our example, 500, you can look at what activities are the ones that you’re going to invest in to bring you that number.
Here’s a much more detailed guide for this method - including a helpful template!
Set a strategy: know how you’re going to hit your goals
You then need to put this target into a tangible strategy. What activities will you have to run to hit (and surpass) this target - efficiently?
Here you’re going to loop back to your previous analysis, where you’ll identify what channels, campaigns, and content pulled in the greatest number of leads.
You’ll also have to keep an eye on the time to value metric. How long did those activities take to generate the leads? Will it fit within the cycle of the present period?
Note, if you’re running longer buying cycles, you might have to adjust the strategy to plan two quarters in advance.
Also note that you can’t only rely on previously successful activities. As we all know, the market moves fast, and the competition faster. In your planning, you have to accommodate for experimentation, whether that’s trialling new channels, running new campaigns, or hosting a physical event.
Check out this guide for running successful B2B event marketing.
Track leading indicators to measure performance
A final consideration for the planning stage is measuring performance during the period in question.
Here we need to move away from our revenue focus - shocker, I know.
While revenue tells us the end result of our marketing activities, they don't give insight into the immediate health and potential future outcomes of our campaigns.
Enter leading indicators. These predictive metrics offer a forward-looking perspective, enabling you to make proactive adjustments before results are set in stone.
For instance, metrics like website traffic growth, engagement rates on content pieces, or the volume of qualified leads entering the funnel can act as reliable harbingers of future sales performance. By monitoring these leading indicators, marketers can identify potential issues, optimise their strategies in real-time, and stay ahead of the curve.
Action Stage
Following the planning phase, the process proceeds to the action stage. During this phase, the planned strategies are implemented.
This could include the launch of an advertising campaign, the start of a social media engagement strategy, the initiation of a promotional event, or any other marketing activities outlined during the planning phase.
The aim here is to execute the plan meticulously to ensure that the business reaches the planned objectives as efficiently as possible.
Revenue Stage
Once the actions have been set in motion, the model moves to the revenue impact stage.
At this stage, it’s less about intervention and action, and more about letting the data transformation and magic do its thing.
The revenue impact stage provides the ultimate, tangible measure of the effectiveness of the marketing strategies that have been implemented. Which then goes on to inform the rest of the process.
The Benefits of the Revenue Feedback Loop
The Revenue Feedback Loop overcomes the limits of the traditional marketing paradigm by putting revenue as the focal input.
This, in turn, equips the B2B marketing team with the ability to:
Align marketing’s objectives directly with the wider business goals,
Allocate resources according to their impact on the bottom line,
Optimise campaigns, channels and efforts based on pipeline and revenue generation, and
Foster accountability towards revenue and sales
Conclusion
The beauty of the Revenue Feedback Loop is its cyclical nature.
The tracked revenue impact illuminates the insights and learnings at the analysis stage, which in turn are used to inform the planning and actions of the next marketing cycle, creates a constant feedback mechanism that allows for iterative improvements, ensuring the marketing strategy stays agile, responsive, and effective in driving revenue growth.
What’s more, in being tied to the bottom line, the process can better adapt to new information and changing market conditions, which can be a key advantage in today's dynamic business landscape.
