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With so many new tools and new ways of tracking marketing campaigns nowadays, it’s just not good enough for digital marketers to just give an account of their campaign performance. Beyond just how many clicks they’ve received or how many emails have been opened, marketers need to show how well their marketing is really doing – and how much it’s boosting revenue.

To show this, the metric of choice in 2014 is going to be marketing contribution to revenue, writes Vince Koehler for SalesBenchmarkIndex.com. He says there are two steps to figuring out what marketing contribution means.

1. Setting up a marketing contribution agreement 

Before anything else, sales and marketing executives need to decide what their goals are, Koehler writes. Is the goal to net new customers? Or is it something else?

While sales and marketing often go hand in hand, the key is to  know what each department is doing. Marketing is often concerned with upselling and cross-selling to existing customers, so that can make it easy for a company’s CEO to believe marketers aren’t performing at their best.

Conversely, sales teams can’t focus on every single account. That’s where marketers come in – building early stage awareness of a company’s products and services, which in turn can support sales and increase their chances of selling through funnel opportunities.

Koehler recommends setting a 90-day goal in a pilot phase, ensuring the goal is something both salespeople and marketers can agree on.  That goal should also be well-documented. Leaders of the sales department and marketing department should then run through some potential common scenarios that may arise, deciding which role each department plays and figuring out how they should behave if those situations occur. By paying attention to what each department does best, sales and marketing can partner together and work on an even footing.

2. Determine the percentage of marketing contribution.

Revenue essentially comes from three sources – it stems from new customers, existing customers through upselling and cross-selling, and through recurring revenue. Koehler defines that as maintenance fees, service agreements, license upgrades, and other kinds of sales that have been carried over from other deals.

Once marketing and sales leaders figure out how much revenue comes from each source, then they need to agree upon a solid goal for the marketing department.

Typically, marketers claim credit for 15 to 30 per cent of new customers, depending on how good they are at lead generation. A really good, “world-class” marketing team can score as high as 30 per cent, Koehler writes.

Then there are existing customers, where marketers can claim 10 to 20 per cent of marketing contribution. That’s a lower percentage, but in terms of amount of revenue, this is often higher than from new customers.

 

 

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