Sales

3 Metrics Every B2B Marketer Should Know

Razzled-but-not-dazzled“When you can measure what you are speaking about, and express it in numbers, you know something about it; but when you cannot measure it, when you cannot express it in numbers, your knowledge is of a meager and unsatisfactory kind: it may be the beginning of knowledge, but you have scarcely, in your thoughts, advanced to the stage of science.”
– Sr. William Thomas, Lord Kelvin

The number one thing that has set me apart from other marketers throughout my career is my ability, and willingness, to do math.  It is not enough to make things look pretty or budget for events.  You must be able to express very clear and useful metrics that drive a business forward.  Here are 3 that I believe every marketer should know off the top of their head if ever asked.

ROI: Return on Investment

ROI

This is the basic of the basic.  You should be able to rattle off exactly what your ROI is for major initiatives and for your year overall.  Although we all know this is very basic, most marketers don’t actually bother to calculate it or share it.

If you have a negative ROI it could lead to negative consequences.  However, if you can get ahead of the question, report your negative ROI, and outline causes for this you will, most likely, be viewed as a professional in the eyes of your management.  Entry level marketers hide bad metrics.  Professionals address them head on.

Equity Value Creation

This equation literally tells the business how much more valuable you’ve made it.  Not how much money you’ve made it, but how much you’ve increased the company’s value.

This is a tough concept for many marketers.  We focus on the bottom line and how much deals are worth.  But how much is the company worth?  If you CEO decided to put the company on the market, how much more valuable have you made it?

This is a critical metric for marketers for two reasons:

  1. You’re communicating how your influenced deals affect the attractiveness of the company directly
  2. You’re communicating how your more fluffy work, like brand awareness and sales enablement, are contributing to the overall value of the company – if not the quarterly sales directly.

Equity Value Creation Formula

Let’s break this down:

  • Monthly Revenue – look at how much your influenced deals bill on a monthly basis.  If you’re measuring something like “brand awareness” look at your monthly revenue a year ago and compare it to now.  Calculate the difference.
  • Expense Ratio – What percentage of your revenue goes to cover expenses?  If you don’t know, a good estimate is 50-60%.  Expenses cover keeping the lights on, employees’ salaries, paying contractors, etc.
  • Multiplier – A multiplier tells a potential buyer of your company how much more than your annual profits they need to purchase you.  This one is tricky.  If your company is not publicaly traded, you likely don’t know what your multiplier is.

    Here are a few good rules of thumb I got from BusinessTown:

    • An extremely well-established and steady business with a rock-solid market position, whose continued earnings will not be dependent upon a strong management team:
      a multiple of 8 to 10.
    • An established business with a good market position, with some competitive pressures and some swings in earnings, requiring continual management attention:
      a multiple of 5 to 7.
    • An established business with no significant competitive advantages, stiff competition, few hard assets, and heavy dependency upon management’s skills for success:
      a multiple of 2 to 4.
    • A small, personal service business where the new owner will be the only, or one of the only, professional service providers:
a multiple of 1.

Essentially this equation takes your Annual Profits x your company’s multiplier and generates the value of the company if someone wanted to buy it.  You can use this to communicate how much more valuable your company is now that marketing is doing x, y or z.

NPV: Net Present Value

“A bird in hand is worth two in the bush.”

A dollar today is worth more than a dollar you make a year from now.  Marketers often report metrics based on the total value of a deal, which makes sense.  But to take your marketing game to the next level, start reporting on NPV instead.  Net Present Value is how much the deal is worth today.  For B2B marketers we often deal with more expensive, longer term solutions.   It could be years before our company realizes the actual full revenue from a sale.  By calculating your ROIs with NPV instead of total deal you’re indicating to your leadership that you understand the deal loses value the longer it lasts.  It shows you’re a professional.

Here is the actual equation:

Image result for npv formula

But only college students do it that way.  If your CRM doesn’t already calculate NPV for you, here’s a website that will do it for you.  There is an equation to calculate your discount rate, but here’s a cheat I found online for all our sanity:

  • 10% for public companies
  • 15% for private companies that are scaling predictably (say above $10m in ARR, and growing greater than 40% year on year)
  • 20% for private companies that have not yet reached scale and predictable growth

That being said, most CRMs can do it for you.  Just customize your opportunity page to include the field.

All marketers do is spend money… and other stupid crap people say.

Image result for eye roll memeI have no idea why marketing gets such a bad rap.  I’m sick and tired of it personally.  I can only guess that people are jealous because marketers have an awesome job where we get to throw parties and design cool stuff and don’t have to talk to customers every day.  I would probably hate me too.

But here’s the thing: No one’s job is a walk in the park.  Here are a few of my favorite stupid things I hear from non-marketers about marketing.

All Marketers Do Is Spend Money

I’ll admit, marketing can be expensive.  Especially at organizations that struggle to pay their employees regularly.  But here’s the thing.  Good marketers pays for themselves.  Marketers actually hate spending money, because we know we have to prove an ROI for every dollar we cost the company.  I have never met a B2B marketer who’s like “I have this massive budget.  I can’t wait to burn it on display ads and liquor!”  It just doesn’t happen.

Image result for marketing dilbert

If you have a marketer on your team that you feel “only spends money”, most likely they have fallen victim to a few shortfalls:

  • They didn’t state the projected return before spending the money.  Doing this results in two outcomes – (1) Stated goals keep them honest and (2) Helps them get everyone on board with the expense beforehand – which avoids uncomfortable discussions later.
  • You are making them buy crap for no reason.  (Yes, this is a real thing)  Don’t get mad at marketing for low ROI when you insist on buying thousands of pens to put at your $60,000 tradeshow booth that costs $20,000 just to ship.  No wonder your event marketing isn’t working.  You are setting it up for failure.
  • They’re not tracking or reporting their return in KPIs that mean anything to you.  Marketers speak marketing.  “KPI” stands for “Key Performance Indicators” and if you didn’t know that chances are you don’t speak marketing.  If marketing insists their campaigns are working and you’re not seeing evidence of that, most likely you have a failure to communicate.  Explain to marketing exactly how you define success and ask them to explain to you how they define success.  Without an agreed upon set of KPIs, you’re likely going to have a tough time understanding their value.

Those who can’t do, teach.  Those who can’t sell, market.

Image result for marketing liquor and guessing

I understand how this misconception would come to be.  I tried direct sales.  I did not enjoy it one bit.  I’m not talking about the cooshy stuff most B2B account reps do.  I mean I literally walked around Home Depot for 10 hours a day, 6 days a week trying to get people to sign up for in-home kitchen cabinet refacing consultations.  I was paid $25 a lead.  They called it “direct marketing” – I called it bullsh*t.

But that doesn’t mean I can’t sell.  I have been told by many sales directors over the years that I have the personality and ear for it (whatever that means).

However, I don’t like being called 400 times a day to see if I’ve moved the pipeline $2 further than yesterday.  I also don’t like to be in constant competition with the people on my same team. The stress of doing sales day in and day out is miserable.  But somehow the puzzle of click-through-rates is exhilarating.  It’s not that I can’t do your job – I just don’t want to.

Marketers are the drunk frat boys of the business world

Image result for marketing dilbert

Screw you.  We all know that’s sales.

Marketing isn’t a real business discipline

 - Dilbert by Scott Adams

Marketers have a bad rap for being stupid.  People claim we don’t know anything about how business is done and, I’ll admit, I’ve perpetuated that stereotype from time to time to get out of boring meetings.

But the fact is that statement doesn’t make any sense.

I graduated from one of the most prestigious marketing programs in the world, Penn State.  (WE ARE!)  At the time our marketing program was ranked 16th in the world – THE WORLD!  But they wouldn’t let me graduate with a business degree without also studying managerial accounting, finance, statistics, calculus and a host of other classes every business student studies.  I just took a few more marketing classes than you and a few less [insert discipline] classes.  That doesn’t mean I don’t understand business and you sound like a moron by saying that.

In conclusion, haters gonna hate.  Marketers are going to continue to be professionally awesome.  Also, I love Dilbert and you should buy all of their products.  (No they did not pay me to say that.)

 - Dilbert by Scott Adams

 

3 ways to turn Sales into Marketing’s best friend

marketing-vs-sales-11We can all agree how strange it is that sales and marketing always seem to be at odds.  We’re all on the same team.  We all want the same things.  But, alas, most of us can easily see that there is a clear divide between the two groups, and in some organizations, that divide is more like a canyon.

But here’s the honest truth.  Sales success = marketing’s success, but marketing’s success doesn’t necessarily = sales success.  Sales is graded on simple metrics and they come in funny shapes – $ € £ ¥ – very simple.  The more of them the better.

Unfortunately marketing operates much further up the funnel.  Although we want funny shaped characters too, we also want crazy things like brand awareness and process management and CTRs… very strange desires indeed.

How can two organizations who seem to be speaking different languages work together for a common goal?

Treat sales like a customer, not a colleague

As marketers, we often think about our customers as the company’s customers – which is correct.  You shouldn’t stop doing that.

However, that’s also true for IT and HR and AP.  But IT’s customers are also everyone in the building using a laptop.  And if those laptops all turn off, the customers complain.  Accounts Payable’s customers are everyone trying to pay vendors.  If the outsourced graphic designer stops working because AP can’t write a check, any marketing manager would (understandably) lose their mind.

Marketing is no different.  Sales is marketing’s customer.

So how do you treat sales like a customer?

  1. Deliver the product they want – ie. Qualified leads

Image result for leadsA laptop is fantastic, but if IT gives you one without an operating system, there’s not much you can do with it.  Leads make everyone happy, except when they’re crap and they waste sales’ time.

Anatomy of a qualified lead:

  • Complete contact information: name, title, email, company
  • Qualifying information: “This person requested a _____”
  • Agreement on what constitutes a qualified lead

I stopped gating my online content because sales and I agreed that downloading a sales sheet does not make you a qualified lead.  In your organization, that may not be the case.  Sit down and talk about it.

This goes double for lead scoring.  Sales leadership should be involved in determining what scoring methodology you’re using.  Then when you hit the magic number, sales is bought in and everyone’s happy.

  1. Consistently remind them of the service you deliver to them

Good B2B sales reps do something called a QBR or “Quarterly Business Review”.

PRO TIP: If you’ve never attended a QBR before, call your local sales reps and ask if you can be a fly on the wall for their next one – in the name of learning.

In a QBR, sales outlines what they delivered to the customer the previous quarter, how they dealt with issues, and what value they helped drive.  It’s a way to remind the customer – who has a million much more important things to think about – what you mean to their business.

Marketing can do the same thing.Image result for presentation meme

Once a quarter I call a 1-hour meeting with sales leadership and walk through my quarterly marketing plan.  I keep my audience in mind and focus on the details sales will care most about.  I start off with lead-to-opportunity conversions from the previous quarter and then outline what I’ve got planned for them in the current quarter.  Some things are brand awareness or customer satisfaction related – which don’t directly drive the pipeline.  But sales isn’t stupid.  Explain to them exactly how this ultimately makes their life easier and they will smile.

  1. Shut up and listen

Image result for shut up and listen funnyThe QBR may start with a presentation, but it ends with a discussion.  Once a good rep has explained what they’ve done for the customer, they stop talking.

As marketers, especially amazingly extroverted dynamos like myself, this part can be difficult.  Once a quarter, sit down with sales leadership and let them tell you want they want/need.  The entire purpose of the call will be to listen and take notes.  Over time they will become comfortable enough to simply call you up if they actually need something.

“But Hannah, they are constantly asking me for crap they could just do themselves.” 

Good point.  You are not a PowerPoint monkey and you don’t need to book conference rooms for them.

However if leadership says they really need a new overview PowerPoint for XYZ reason, do that.  If you don’t have one and you keep getting asinine “I need a PowerPoint” calls, that’s an indication that you need to make one.

“But Hannah, I have a sales team full of idiots that wouldn’t know a good lead if it bit them in the…” 

I get it.  I’ve been there.

You’re the expert.  Act like it.  This is exactly how sales feels about their customers too.

“But Hannah, I don’t have the budget to do what they’re asking for.” 

Ask them to pitch in.  If they really want it, the budget will show up.

Image result for did we just become best friends gif

I promise you if you do these three things with a customer service attitude, sales will love you and you’ll find it a lot easier to get things done.  If not, email me at hlhoward71@hotmail.com and tell me what you’re running into.  I’m all ears.