Revenue Cycle Analytics — Part One

The most persuasive argument that a marketing department can muster for a larger budget is to demonstrate the aggregate impact of marketing upon revenue. Marketers can no longer disown responsibility for revenue. In fact, some estimates for the impact of marketing upon sales run as high as 70 percent. Sales and marketing must work together to increase revenues, and this partnership requires new metrics and analytics. We refer to the measurement process as revenue cycle analytics.

To begin, we must define the different stages of the revenue cycle. This includes making potential buyers aware of your offering, performing marketing and sales functions, and closing deals. There is also continued maintenance of the buyer-seller relationship. Each step must be defined with rigor, and business rules must attach to each. These rules define how a customer moves through each stage of the marketing funnel.

Typically, to optimize the sales cycle, a sales department specifies standard benchmarks and best practices, and these methodologies underlie sales analytics. The sales cycle can be broken into stages that answer important questions such as the length of the sales cycle and the lead pipeline needed to support sales for the quarter. Marketers using revenue cycle analytics must be equally rigorous.

While the marketing revenue cycle varies among different companies, we can present an illustrative example to serve as a case study. Here are the marketing funnel’s seven stages used by a highly efficient marketing department:

1)    Names – the listing of all potential future customers. These names have not been qualified in any serious way – they are merely a starting point.

2)    Engaged – applies to names that show some level of engagement with the company. Engagement can include attending a webinar, leaving a comment at a website or forum, downloading content and opening email messages. Unengaged individuals are winnowed from a names list.

3)    Prospect – engaged individuals who are might become customers in the future, but are not yet ready to interact with the sales department. Qualified prospects are people and companies that score well on a “goodness of fit” metric – the first metric reported to management.

4)    Lead – prospects who are engaged enough to warrant contact from the sales department.

5)    Sales Lead – these are leads that have been designated as sales-ready by the sales department.

6)    Opportunity – sales leads that have been added to the deal pipeline. A deal is actively being pursued.

7)    Customer – the deal has been closed and a new customer has been won. These customers are then recycled for upsales and retention.

== Eric Bank