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What percentage of your revenue did that series of webinars contribute last quarter? Does the top-line figure justify the CMO’s decision to fund that million-dollar marketing campaign?

A CMO practicing Revenue Performance Management has deep insights on ROI of marketing programs and could give an outright response to these important questions. Unfortunately for many companies, marketing executives do not set revenue goals and overlook the importance of tying marketing efforts to returns. Traditional marketing practices focus only on marketing activities and rarely pay attention to revenue generation.

Revenue Performance Management is a systematic approach that enables business leaders to analyze and quantify the results of marketing activities with the end goal of optimizing revenue growth.[1] It entails evaluating marketing and sales performance to identify drivers as well as impediments to this growth.

While Marketing is considered to be one of the largest cost-centers in any business, it often leaves gray areas as to how much of its spending actually returns to the business in the form of closed deals. Revenue Performance Management clears out this field of uncertainty by emphasizing marketing's role in revenue generation and introducing a revenue process based on deep analytics.

 How does Revenue Performance Management work? It employs methodologies that allow companies to make "intelligent, evidence-based decisions about where to allocate resources to stimulate predictable, measurable, and sustained revenue growth."[2] Revenue Performance Management makes this happen by addressing the challenges posed by:

  • the lack of visibility in the buying cycle;
  • having limited to no information on customer behavior;
  • the misalignment of marketing and sales efforts; 
  • complex analytics that does not provide relevant insights on conversion;
  • not setting revenue targets for marketers; and
  • the absence of processes that are optimized for top line growth.

The following is a preview of the benefits of practicing Revenue Performance Management.

Visibility into Buyer Interaction
Having well-defined revenue performance strategies means processes are more buyer-centric. Practices that work for marketing and sales teams but don't really put customers first will no longer have a place in the system. Revenue Performance Management provides a way for companies to gain visibility into the customers’ buying behavior by studying specific metrics. Steps in the customer journey are mapped out and the interaction in each stage is assessed.

Marketing and Sales Collaboration
It is a fundamental function of Marketing to produce leads for Sales to close. And the sales people are supposed to look upon marketers for support in achieving their revenue targets. The challenge arises when lead generation is seen as a separate and distinct goal from revenue generation.
When marketing plans don't align with sales strategies, the business misses the opportunity to leverage its designated revenue generators. Revenue Performance Management ensures that Marketing is aligned with Sales in attaining revenue goals.

Actionable Intelligence
"Sophisticated analytics technology is now capable of aggregating and transforming large, disparate data sets into actionable intelligence for making accurate demand forecasts and strategic pricing decision."[3]
Today's technology provides businesses with the power to accurately measure performance and capitalize on analytics for optimizing revenue strategies. By gaining insight into such metrics as reach, value, conversion, velocity, and return, "metrics such as influenced revenue, marketing contribution to revenue, pipeline uplift, and funnel conversion,"[4] management knows exactly how much of generated leads (from email campaigns, events, or social media) actually converted to sales. Revenue Performance Management leverages deep analytics to identify opportunities for better revenue performance.

Long-Term Forecasting
With all the right metrics, analytics, and information on customer interaction, companies gain the power to make long-term forecasting of future revenue as well as revenue opportunities not yet realized. This includes not only profitability expectations but also specific strategies that make them achievable.
Revenue growth is the goal of every business and of the highest priority for most CEOs. However, this is not always achieved. In 2012, 87% of marketers reported that they did not hit performance targets.[5] But with actionable intelligence on marketing and sales activities, a 10% additional gain in total annual sales is estimated to be attainable.[6] And this is but one direct impact of Revenue Performance Management on revenue results. Now, the bigger picture is Total Revenue Performance Management.

Total Revenue Performance Management is "the ability to instantly and systematically decide what business to accept across multiple revenue streams, based on which decisions deliver the greatest value to the [business]."[7] It considers all revenue streams and optimizes for overall profitability. Total Revenue Performance Management uses "advanced analytics to aggregate and synthesize all revenue streams."[8]  Instead of just one specific area in the business, the focus becomes achieving overall business objectives. This entails greater collaboration between specific business groups than ever before, even beyond Sales and Marketing. Leaders assume the big-picture mindset and implement synergistic strategies with one ultimate goal: revenue growth. In the long run, companies that practice Total Revenue Performance Management will have established processes optimized for profitability that is sustainable and almost guaranteed.

Your Turn...
Is your organization adopting any Revenue Performance Management methodology to allow leaders in your organization make evidence-based decisions around how to run the business? Have you experienced any of the benefits of Total Revenue Performance Management and what are the challenges you are facing which prevent you from committing to it? What can you do today to remove these barriers? Leave a comment and let us know.

Eve Chen is the Founder and Chief Engine Operator of The Growth Engine, a Revenue Generation Professional Services firm, and can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it.
Follow The Growth Engine LinkedIn company page or subscribe to our blog Think Tank to stay abreast of the latest insights on how to power your revenue performance.

References:

[1] “The Future of Revenue,” YouTube video, posted by “EloquaChannel,” October 4, 2010, https://www.youtube.com/watch?v=_8sBuBcCGs8.
[2] Ibid.
[3] Sanjay Nagalia, “Five Tips to Think Differently About Your Revenue Strategy: Practicing Total Revenue Performance,” Hospitality Net, March 4, 2015, http://www.hospitalitynet.org/news/4069324.html.
[4] “What is Revenue Performance Management?” YouTube video, posted by “EloquaChannel,” March 28, 2012, https://www.youtube.com/watch?v=DhIio6aJO2c&noredirect=1v.Ibid.“Whatever Happened to Revenue Performance Management?” Annuitas, accessed August 11, 2015, http://annuitas.com/2013/07/23/whatever-happened-to-revenue-performance-management/
[5] “What is Revenue Performance Management?” YouTube video, posted by “EloquaChannel,” March 28, 2012, https://www.youtube.com/watch?v=DhIio6aJO2c&noredirect=1v. Ibid.
[6] Ibid.
[7] Nagalia, “Five Tips to Think Differently About Your Revenue Strategy: Practicing Total Revenue Performance.”
[8] Ibid.