Stop Guessing & Start Optimizing Your Revenue Growth Strategies
Guide to episode
- Industrial companies are hesitant to invest in marketing because they don't have clear KPIs on the ROI
- Revenue attribution ties specific revenue dollars back to specific marketing and sales investments
- Various methods of revenue attribution range from simple to complex - depend on the requirements
- A revenue attribution report becomes a management tool to focus investment in initiatives with empirical evidence of success
Hi, I’m Ed Marsh. Welcome to this episode of Signals from the OP. My biweekly videos are intended to be thought-provoking for industrial manufacturing company execs. If you know of one who you think might find some value, please share it with them.
Stop Wasting, Stop Guess, Start Measuring, Start Managing
Today we’re going to chat about revenue attribution.
I’m sure you’ve heard the aphorism, “I know half my marketing spend is wasted, I just don’t know which half.”
Back when you’d run Yellow Page and Thomas Register green book ads, that sort of made sense. You could always hope your folks would remember to ask and document the lead source, and that your reporting would capture it.
You could use different toll-free numbers and try to associate lead sources. But it was hard, almost impossible, to really know! And of course, any brand spend is inherently uncertain too.
For the sake of this conversation, let’s focus on lead generation. Specifically, lead generation and predictable revenue for industrial manufacturing companies and capital equipment machinery vendors.
A Cautious Mindset Toward Marketing Investment
Midsize industrial manufacturers are conservative in their spending on marketing.
Many have tried journal advertising, SEO, and content marketing – and had disappointing results. While my experience tells me that those disappointing results were almost certainly reflective of poor execution rather than faulty strategy, nevertheless, they’re understandably cautious.
Experience tells me that caution isn’t resistance – it’s hesitance.
Most people that run industrial manufacturing firms try to be objective and make empirical decisions. We’re all human, but they’re generally a logical lot. When they say they’re hesitant to spend much more on marketing than the 1% of the revenue they put into trade shows, what they’re really saying is they don’t want to indiscriminately waste money.
Realistically, if they knew, for example, that every dollar spent on Google AdWords returned seven dollars in gross profit, they’d be setting AdWords on fire.
It’s hard to argue with their position – it’s pretty sensible.
Lack of Clear ROI - Does Marketing Investment Cause Revenue Growth?
Here we get to the meat of the discussion. What we’re really getting to is the question of how we can connect specific revenue dollars to specific marketing and sales activities and investments – after all capital equipment sales teams don’t have generous marketing budgets. So connecting dollars invested, to their correlated return, is a critical capability in the world of inbound sales and marketing.
After all, not everything works. And what works with one group doesn’t work for another. Further, lots of traffic or leads that drive no revenue could be indicative of various things - from fruitless spending to inept sales. Only data will help to guide investment toward activities that work via revenue attribution.
What is Revenue Attribution?
Revenue attribution is the process by which sales dollars (even profit dollars specifically) are tied to specific marketing and sales activities.
This helps management do more of what works, less of what doesn’t, and to invest in productive programs to proactively drive revenue growth.
It does something much more important as well!
It gives management a set of revenue growth controls; in other words levers and buttons, and data to guide decisions on which to push and pull, at what magnitude, to achieve specific revenue outcomes.
Manufacturing marketing and industrial sales aren’t some black box – you should be able to invest tactically in efforts that drive results.
Every company should have clarity into what inputs affect what outputs and to what degree in their revenue growth, just as they do in manufacturing production.
That should be at the core of revenue growth strategies and execution planning, and it undergirds predictable revenue efforts.
Uncertainty in Revenue Attribution Modeling
Now let’s be honest. Revenue attribution is an imperfect science, particularly at the transaction level. However, in the aggregate, it’s very informative.
Why is there some uncertainty?
Let’s say you have a target account to which marketing has been showing some LinkedIn ads and sales has been running some target account outbound sales playbooks. Someone from the company attends a sponsored webinar you run with an industry trade journal, and a pair of engineers visit your booth at a trade show. Six months later, after team selling efforts and lots of sales enablement, you close a deal. Which investment won the deal? The ads? Outbound sales? Webinar? Trade show? Sales enablement? The reality is probably all contributed, and we’ll never know exactly.
So how do we attribute the revenue for ROI purposes and a clean revenue attribution report?
There are a few approaches.
One is the first touch – say the LinkedIn paid ads in the example above.
Some say the last touch – the sales enablement.
Those may simplify reporting, but they’re simplistic for complex capital equipment sales.
More realistic is a model that takes all of it into account through some formula.
Why is this important?
Let’s take your investment in trade shows. What if a show fails repeatedly to yield enough leads and attributable profit dollars to justify participation, but you find through attribution modeling that engaging with pending projects at that show is an incredible predictor of closed/won deals? And, in fact, generates enough profit to pay for participation on average?
That’s valuable info to guide your budget and forecast process!
Whether your spending on:
- paid ads
- contracted demand generation services
- content creation
- sponsored content
- trade shows
- journal ads
- an inbound sales team
- public relations
- or any other revenue growth investment
you should be able to know what net dollars are generated and what the ROI is for that investment.
A dynamically updated attribution report should be on every revenue growth management dashboard and a topic of conversation in every marketing and sales meeting.
Revenue attribution must inform revenue growth strategy and manufacturing marketing investment decisions, and your tech stack must support this through marketing automation, inbound call tracking, and thoughtful integration of digital tools into print and physical events (for example 2D bar codes or vanity URLs that forward to tracking URLs.)
Process Engineering for Revenue Growth (ORE™)
Revenue attribution is an example of the kind of process engineering which is common in companies' operations and production, and which we need to bring to their marketing and sales.
Revenue attribution tracking and reporting should inform all activities – from revenue growth strategies down to daily tasks.
Not only does it enable sound financial decisions, but it provides the toolkit to make informed decisions on what activities to emphasize to achieve certain revenue objectives. Revenue attribution is fundamental to developing predictable revenue programs.
I’m Ed Marsh. Thank you for joining me for this episode of Signals from the OP. If you enjoyed it, please share it and subscribe – either to my YouTube channel EdMarshSpeaks.TV or at the related blog SignalsFromTheOP.com.