Meaningful Metrics for the Chief Revenue Officer – 3 Places to Measure to Get the Right Result

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Posted: July 19, 2012 | Marketing Metrics

Since becoming Chief Revenue Officer at Marketo, I’ve uncovered a lot of like-minded companies and consultants who really get the concept of a single revenue team.  One person I’ve met recently is Rick McPartlin, a revenue generation consultant, coach and speaker, and CEO of The Revenue Game. I’ve invited Rick to share his insights on “Meaningful Metrics” for a revenue team.

 

Measuring things you see in the rearview mirror is not the way to manage a company into a future of continuously growing profitable revenue.

This 21st century demands more than looking in the rearview mirror and promising better.  The economy and the level of competition require executing a revenue strategy based in science with predictable outcomes at every stage.   Each of the following 3 sets of metrics is required to get better current results and to provide continuous revenue growth.

If the process is right and successfully executed, the result will be right.  So measuring and managing the immediate process assures the right result.

How exactly does this work?

First drop those practices from the 19th and 20th century that were driven by an aggressive sales person pushing a product to a naive buyer, requiring the sales function to do things like cold calling, networking and prospecting just to find someone to sell to.

History will show that over the last 70 years, businesses in North America and lately in the rest of the world have been riding one fulfillment bubble to the next.  What we called successful companies were really in the business of fulfilling the demand of the bubble.  These fulfillment companies were almost never good at “Revenue Generation,” because they didn’t see the need.  Their phone rang, the fax machine beeped and the website hummed with activity from those buyers chasing the bubble. 

Today everything moves faster, and the bubbles are fewer and shorter.  Without bubbles, winning companies actually have to know how to apply revenue science and CRO (Chief Revenue Officer) thinking to survive.  To be successful, they have to intentionally apply CRO thinking with the disciplined best practices science of “Revenue Generation.”

The following 3 metrics are part of that science and are the only way to make the growth of profitable revenue predictable over time.

Metric 1 For Marketing – The right number of the right type at the right time.

There are almost always infinitely more possible suspects to sell to than resources to do the selling.  So the mission is to find suspects who are as near ideal as possible and for sales to focus only on them.  Finding the right number of the right type (near ideal) of suspect at the right time is a marketing job.  It should be a highly leveraged repeatable process resulting in sales receiving only highly-qualified suspects to do an immediate qualification.  If qualified, they move to the sales process, and if not, they are sent back to the nurturing pool.

If you measure the investment in marketing by marketing’s ability to turn over to sales the right number of highly-qualified suspects at the right time, you get both a cost per highly-qualified suspect and predictable ways to measure those processes based on results.  Without measuring and controlling this part of the process, everything will be chaotic and very expensive.

Metric 2 For Sales – The length of the sales cycle, percent of wins, dollars per win and net margin in each revenue dollar.

There is a lot of history about how to measure sales people’s results, and very little of it helps.  If metric 1 is successfully measured and tweaked over time, the sales team gets a pipeline of highly-qualified suspects, to do a final qualification on and then to sell.  Because of Metric 1, the sales person’s job is selling not marketing.  With a high-quality pipeline of suspects presented in a manageable quantity at a pace consistent with the sales process, the sales person is ready for the true accountability of the length of the sales cycle, the percent of wins, deal size and net margin.

Metric 3 For Delivery – Deliver what was contracted on time, on budget, at the contracted net margin and be the primary source of new hot pipeline (from referrals).

The difference between a sales process and a revenue process is delivery.  Delivery is where the revenue is earned.  Revenue is a function of delivering to the buyer what the sales person contracted for.  If sales and delivery don’t function as an aligned team, there is money bleeding out to competitors.  This set of metrics measures the ability to execute and how perfect the sales contract was.  Lastly, the delivery team has insight into the buyer organization that no other part of the seller’s organization has and as a result, is chartered with the mission to seek additional opportunities with the buyer, the buyer’s organization, the buyer’s partners, etc.  This group is not expected to sell, but they are required to identify opportunity and to refer.

These 3 sets of metrics are the Revenue RoadMap.  If there is not discipline to measure these metrics, there is no hope to manage the process real time or for the future.  Remember if the process is right and successfully executed, the result will be right.  So measuring and managing the immediate process assures the right result at the right cost.

Meaningful Metrics for the Chief Revenue Officer – 3 Places to Measure to Get the Right Result

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