Revenue Performance Management (RPM) Benchmark Report

ContentPart 1: Topic OverviewPart 2: Reasons to ImplementPart 3: Value DriversPart 4: ChallengesPart 5: Performance MetricsPart 6: Success StoryPart 7: Vendor Landscape

SidebarsSurvey StatsBenchmark KPIsCore TechnologiesGleanster NumbersVendor Quick Reference Guide

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Q1 2013

Gleansight

Business marketing has never been easy, but at least it used to be simple: the job was to find good leads and hand them over to sales. Today, marketers stay involved with potential buyers throughout the purchase process and beyond. The main reason for the change is that buyers themselves now control the flow of information, using the Internet to research potential vendors on company sites, search engines, and social networks. Marketers, not sales people, are primarily responsible for managing these channels and using them to build successful relationships with prospects and customers.

This broader scope of involvement has been accompanied by higher investment in marketing technology, greater demands for proof of the value created by marketing investments, and closer integration between marketing and sales activities. Revenue Performance Management systems are designed to meet the needs of this new, more demanding environment.

Specifically, RPM systems provide a unified view of the entire revenue cycle, from initial lead generation through customer growth and retention. This distinguishes them from earlier marketing automation products, which were primarily limited to lead acquisition and nurture. The unified view lets marketers measure the net impact of each marketing program on final results. They can use this information to calculate the value of marketing investments and ultimately to optimize spending across both marketing and sales departments.

Although RPM is a logical next step in marketing systems, its success is not guaranteed. Marketers need to build complex new customer tracking models, work more closely with sales, and correctly interpret ambiguous results. This requires new skills, management support, and disciplined execution. But the rewards – more effective marketing and a clear picture of marketing’s contribution to the enterprise – are worth the effort.

Revenue Performance Management

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Gleansight: Revenue Performance Management 2



• Deep integration with CRM data. A typical marketing automation system captures profile data about leads and contacts, such as name and email address. RPM also captures interaction history, such as campaign membership and messages sent. This is used to build a complete picture of marketing and sales treatments.

• Tracking customer stages through the entire relationship with the company. Compared with a traditional sales funnel, the RPM stages begin earlier (with the first marketing interactions) and extend further (past the initial sale to additional purchases and service). The RPM model may also include stages for people who fall off the purchase path, such as prospects with no immediate purchase intent and lapsed customers.

• A history database that stores snapshots of each relationship over time. This is different from standard marketing automation and sales databases, which keep only current data about each customer. The history database allows analysis

of when an individual moved from one RPM stage to another. These movements will be correlated with marketing and sales treatments to assess the impact of those treatments.

• Enhanced reporting and analytics to measure the impact of marketing and sales treatments. Specific enhancements may include more sophisticated testing, better measurement of incremental impact of treatment changes, advanced attribution that shares credit among multiple treatments, and value calculations to calculate

the full contribution of marketing investments. RPM systems also provide dashboards and forecasting to project the size and timing of revenues expected from the current set of prospects and customers. This improved forecasting is sometimes considered almost as

important as optimizing the marketing and sales programs.

The broader scope of the RPM database, compared with traditional marketing automation databases, is the key to enabling marketers to use the system to optimize treatments across the entire customer relationship. RPM

Survey StatsThe research findings featured in this Gleansight benchmark report are derived from the Q4 2012 Gleanster survey on Revenue Performance Management.

• Total survey responses: 219

• Qualified survey responses: 178

• Company size: <$1M (5%); $1 - 10M (22%); $10-100M (36%); $100M - $1B (28%); >$1B (11%)

• Geography: North America (90%); Europe (8%); Other (2%)

• Industries: Software and Technology (33%); Business Services (15%); Financial Services (9%); Education (5%); Entertainment (4%); Other (34%)

• Job levels: C-level (10%); SVP/ VP (31%); Director (22%); Manager & Staff (37%)

Sample survey respondents:

Director, Logitech

Manager, EMC

Director, Comcast

VP of Marketing, Cardinal Health

Manager, Intertek

VP of Marketing, Sony

Manager, Success Factors

CMO, Sesame Software

Director, Aptara

SVP, Ez Systems

Part 1: Topic OverviewRevenue Performance Management (RPM) can be defined as the process of tracking and optimizing all marketing and sales contacts through the customer life cycle. The term was originally introduced by leading marketing automation vendors Eloqua and Marketo, and has since been used by some other marketing automation providers.

The system features specifically associated with RPM include:

RPM systems provide a unified view of the entire revenue cycle, from initial lead generation through customer growth and retention.”

“





Benchmark KPIs Gleanster uses 2-3 key performance indicators (KPIs) to distinguish “Top Performers” from all other companies (“Everyone Else”) within a given data set, thereby establishing a basis for benchmarking best practices. By definition, Top Performers are comprised of the top quartile of qualified survey respondents (QSRs).

The KPIs used for distinguishing Top Performers focus on performance metrics that speak to year-over-year improvement in relevant, measurable areas. Not all KPIs are weighted equally.

The KPIs used for this Gleansight are:

• Year-over-year increase in revenue

• Increase in customer acquisition rate

• Volume of marketing qualified leads

To learn more about Gleanster’s research methodology, please click here or email [email protected].

systems may also provide additional execution capabilities, such as social media messaging and sales access to marketing automation features and data. These are valuable features but not specifically required for RPM itself.

Sales access to the RPM database is probably the most important execution feature for RPM, since optimized treatments often require closer coordination of sales and marketing activities.

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But RPM does more than simply measure the value of marketing efforts. RPM systems break the buying process into stages and track customers’ movement through those stages. This allows marketers to identify bottlenecks in the process, determine which stages are affected by specific marketing programs, and calculate the cost of moving customers from one stage to the next. Marketers can then start to optimize their efforts by focusing on poorly-performing stages and by moving funds to the most effective programs within each stage. Depending on business goals, this optimization can either create more revenue with the same marketing budget or allow a smaller budget to generate the same revenue. The same methods can also

achieve more refined goals, such as improving lead quality or increasing penetration of targeted customer segments.

The process model also allows RPM systems to estimate future revenue more precisely, by projecting movement of current customers and prospects through remaining process stages. These projections rely on historical data that shows how many people move from each stage to the next and how long these movements take. They also take into account delays when some people move into holding stages such as nurture programs. The resulting projections show anticipated results by time period, giving marketers a clear picture of expected over- or

Part 2: Reasons to ImplementRevenue Performance Management solves one of marketers oldest challenges: proving the value of their efforts. The challenge has existed because, until recently, it was often impossible to know which customers had received which marketing treatments. Online marketing methods largely solve that problem because they track interactions with each individual. For outbound treatments, such as email, the system keeps a record of each recipient and how she responded. For inbound treatments, such as banner ads or social media posts, the system can’t identify everyone who saw the message but does capture the messages seen by responders. This information can be combined with data from the CRM system about sales treatments and purchases, also tied to individuals. The resulting database provides a foundation for testing and analysis to estimate the ultimate revenue impact of each marketing effort.

* According to Top Performers, based on 178 Qualified Survey Responses to the Q4 2012 survey on RPM.**According to Everyone Else shown only when a notable disparity occurs relative to Top Performers* According to Top Performers, based on 135 Qualified Survey Responses to the Q3 2011 Gleanster survey

77%65%58%MostCompellingReasons toImplement*

More insight into marketing and sales activities

Measuring marketing ROI Increase revenue

38%**

** According to Everyone Else, shown only when a notable disparity occurs relative to Top Performers




Core Technologies

The basic components and core capabilities required for a marketing automation system include:

Outbound email. Users must be able to create templates to generate personalized emails from the system database. They must also be able to import email lists from trade shows, print advertising, CRM and other sources. Emails must contain trackable links to system-generated landing pages.

Social media. Users can post content to social media, track social media-generated traffic, help recipients share content to their own social media accounts, and monitor social media conversations. More sophisticated features include forms and personalized ads within social platforms, using social sign-on to capture more data, and building more detailed profiles based on activities, consumption, connections and influence.

Landing pages and Web forms. Users must be able to create Web forms and landing pages that can capture leads from system-generated emails and other sources. Forms are designed to collect prospect information and marry this with cross -channel behavioral response patterns allowing the organization to identify which prospects are ready to talk to sales. These pages are hosted by the marketing automation system and post data directly to the marketing automation database.

under-production and allowing other departments to plan for future volumes. Reports that compare actual to expected performance also give a clear picture of trends in results, showing whether marketing programs are becoming more or less effective. Some RPM systems go even further to show the expected results from scenarios such as adding or removing marketing programs or changes in program effectiveness.

Increase Revenue. RPM systems enable marketers to increase revenue without adding more budget. For each marketing program, the system captures both immediate impact, such as response rates, and long-term impact on revenue. The long-term view is critical because short term results can be misleading: some promotions may increase response but only add non-buyers; in extreme cases, a high-responding promotion may actually reduce future revenue by annoying prospects or attracting the wrong types of people.

In practice, it can be difficult to directly measure the revenue impact of specific marketing programs because many other factors affect the final result. RPM systems address this difficulty by letting marketers measure the impact of the programs on movements from one stage to another within the larger process. These movements are more easily tied to specific marketing programs because they occur soon after the program touches an individual

prospect. Although marketers still need to check for long-term impacts as well, stage movements provide an alternative measure for identifying the most productive marketing expenditures.

Measure marketing ROI. RPM systems provide a repository for marketing program costs as well as results. These can be combined in Return on Investment calculations to show the relative performance of each marketing expense. Accurate ROI calculations require measuring the incremental impact of each program. This is difficult, since some responses would often have been received through another program or channel if the original program had not existed.

The best way to measure incremental impact is formal split testing, which divides a set of customers into two similar groups, includes only one group in the program being tested, and compares the two groups’ results. Any difference in performance is attributed to the test program. RPM systems include features to support this sort of testing, although it can still be difficult to execute and track. At most companies, the amount of testing is limited by the number of prospects available: test groups must be large enough to produce statistically significant results. Tests are also limited by the amount of staff effort available to create and analyze them

More insight into marketing and sales activities. The history databases that RPM systems use to track customer

* According to Top Performers, based on 135 Qualified Survey Responses to the Q3 2011 Gleanster survey

46%42%42% Compelling

Reasons to Implement*

Unified view of marketing

and sales pipelineOptimize marketing spend

across channelsBetter alignment

with sales

63%**

** According to Everyone Else, shown only when a notable disparity occurs relative to Top Performers* According to Top Performers, based on 178 Qualified Survey Responses to the Q4 2012 survey on RPM.**According to Everyone Else shown only when a notable disparity occurs relative to Top Performers

Revenue Performance Management (RPM) Benchmark Report

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