• April 27, 2009
  • By Lisa Cramer, president, LeadLife Solutions

Prove it or Lose It

It's no surprise that these days, we have lots of conversations with people about ROI. Marketers, CFOs, and CEOs alike are struggling to figure out the best approach to tracking and computing a return on their marketing and sales investments. But what is interesting is that while there are so many variations of ROI discussions, so many of them have nothing to do with one of the most expensive components in the sales and marketing process-the cost of sales resources.

We often discuss how implementing marketing automation solutions help marketers get more value out of lead generation dollars, by gaining visibility into both working and failing campaigns, increasing the quality of leads provided to sales, tracking ROI related to marketing programs, and much more. But rarely do companies understand the second largest value proposition that marketing automation provides-actually reducing the cost of sales resources.

The idea behind marketing automation systems and processes is that leads today are not what leads were years ago. Today's leads are mostly just researchers-companies that are still very early in their buying cycle. These leads are not yet ready to be engaged in conversations with salespeople; or if they are, it's more about educating the lead than the sale of a product or service. Marketing automation systems try to deliver value even before the expensive sales resource gets involved, by identifying "sales ready" leads. And for those leads that are not yet sales ready, these systems nurture those leads-by communicating and educating them on the value of a company's product or service. These leads are moved along the lifecycle until they are deemed sales ready and can then be passed over to sales.

Obviously, such systems have great impact on marketing departments, since marketing activities have traditionally been the source of large budget items. So, they are always on the line to show ROI for their large expenditures. Marketers must have systems and processes in place to track every lead to every campaign, nurture the leads until they are worth sending to an expensive sales resource, and then follow the lead through the sales cycle (usually they lose all visibility here). To gain a true picture of their effectiveness, they must evaluate ROI on many levels-not just cost per lead or revenue per campaign, but also the impact of their campaigns on the value of the leads-how many quality leads were passed to sales?

From a corporate perspective, ROI takes into account much more than the cost of the marketing program and the revenue attributed to it. It must also incorporate the cost of sales resources throughout the sales process. If marketing is implementing effective marketing automation systems and processes, then the cost of sales resources per revenue should decrease, since the sales force is being handed those leads that are in the buy cycle. If salespeople, who often spend up to 1.5 hours per day generating their own leads, turn that time alone into actually selling to the quality leads passed to them by marketing, shouldn't the amount of revenue generated per sales resource also increase? In other words, if marketing takes on more responsibility to nurture leads until they are sales ready, shouldn't sales be spending less time qualifying and nurturing the leads themselves and more time actually selling? Shouldn't this not only increase revenue but also reduce the cost spent by sales through the sales cycle?

Marketing automation systems not only help marketers in so many ways related to the effectiveness of their lead generation dollars, they also help companies to dramatically increase revenue while decreasing the expensive cost of sales resources. Lots of companies simply calculate marketing ROI by the ratio of lead generation dollars spent to the revenue generated from that campaign. Few take into consideration the cost of sales resources applied to the leads generated from that campaign. If indeed you calculate ROI with both these components, you will see how marketing automation systems affect both, increasing ROI, reducing sales resource cost and increasing over all revenue generation.

Obviously, in today's economic environment, sales and marketing expenses and returns will continue to come under scrutiny. But instead of just shutting things off, companies should learn to optimize and track the dollars and resources they have and are currently using. This alone can provide the best opportunity for success.

About the Author

Lisa Cramer is president of LeadLife Solutions, a provider of on-demand marketing automation software that generates, scores, and nurtures leads for B2B marketers. For more information, go to www.leadlife.com, or call 1 (800) 680-6292.

Please note that the Viewpoints listed in CRM magazine and appearing on destinationCRM.com represent the perspective of the authors, and not necessarily those of the magazine or its editors. If you would like to submit a Viewpoint for consideration on a topic related to customer relationship management, please email viewpoints@destinationCRM.com.

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