Ljubica Radoicic, Marketing and Customer Success Director at Autodesk, gave this talk at the B2B Marketing Festival.
Hi there! I’m here to share with you my insights on optimizing the revenue marketing engine. Before we get down to business, a quick introduction: my name is Ljubica Radoicic, and I'm the Marketing and Customer Success Director for Autodesk in the APAC region.
During the course of my career, I’ve worked for a number of organizations where there was a demand for high growth, and marketing was expected to show revenue results despite being viewed as a cost center. In these organizations, everyone was talking about the customer, but at the end of the day, product was king.
In these environments, our marketing activities delivered mediocre results; we really struggled to move the dial on anything. My team and I started searching for a way to get out of this vicious cycle. It was then that I came across a practice that was taking the marketing world by storm: revenue marketing.
Revenue marketing comes in many different shapes and forms. Some of the practices were introduced by marketing automation platforms. Others came from the expansion of technology startups seeking accelerated growth. Others still were developed by marketing consultancies.
Regardless of the origin, revenue marketing revolutionized how my team approached our work. We saw a 30% improvement in win rates and a 50% improvement in pipeline generation. In my current organization, we’ve been able to achieve over 50% growth thanks to revenue marketing.
In this article, I’ll share with you some of my experiences in building and optimizing revenue marketing teams, as well as some tips, resources, and tools that you can take away and apply in your own organizations.
Revenue marketing defined
Before we talk about the framework and practice of revenue marketing, I always like to kick things off with a couple of definitions, mainly because there are so many definitions out there and so many different ways to look at revenue marketing.
In order to lay the foundation, let’s first reflect on a definition from Paul D’Arcy’s Science of Revenue blog. Paul defines revenue marketing as the development of repeatable prospecting programs with predictable ROI, where marketing objectives and plans are clearly linked to revenue goals and targets for the organization.
Another leading authority on revenue marketing, The Pedowitz Group, expands on this definition. They state that to achieve transformation from a cost center to a revenue marketing operation, there are three key areas that need to be addressed:
- Digital transformation – optimizing and transforming the marketing operation via technology to ensure that you can cater for the buyer's journey in the right place at the right time.
- Customer focus – embedding the voice of the customer and customer insights as part of an effective sales and marketing strategy.
- Revenue accountability – making sure that marketing speaks the language of business and revenue.
Why revenue marketing?
Now that we have a common understanding of what revenue marketing is, I think it's important to know why revenue marketing is so critical to aligning sales and marketing teams. There's some industry research that points to the core of this.
According to a study by MarketingProfs, aligned sales and marketing strategies deliver 38% higher conversion rates. This really speaks to the importance of breaking down barriers between sales and marketing teams and these teams working as one, which is a core element of revenue marketing.
84% of B2B buyers, according to Salesforce, want to be treated as a person. That shows us the importance of the personalized approach, which can only be built through embedding customer focus into our operations.
What’s more, 63% of buyers, according to Gartner, prefer not to involve sales reps as part of their search. This is something that revenue marketing facilitates by making marketing teams responsible for more of the funnel.
The revenue marketing maturity framework
Before we get into how to build and optimize the revenue and marketing engine, let’s see what we’re aiming for. We’re going to take a look at the revenue marketing maturity framework, which examines the progress a marketing organization makes as it moves from a traditional setup to a sophisticated revenue generation engine.
There are four distinct phases that marketing teams go through on their quest to becoming well-oiled revenue generation machines: crawl, walk, run, and leap. Let’s see what those phases look like in practice.
In the crawl stage, which is typical of more traditional organizations, marketing is seen as a service provider to the sales operation and the business overall. There are few established processes in place, and sales and marketing operate in silos. There's limited use of technology, and marketing efforts are purely focused on advertising and awareness-raising. Success is rather simplistically measured in terms of cost and the number of activities.
I have seen all too many marketing functions operating in this manner – in one of my previous roles, our KPIs were based on how many emails and press releases were sent. As you can imagine, in this sort of context, it's hard for marketing to prove its value, show its impact on the bottom line, or demonstrate that it makes any sort of contribution beyond just creating awareness.
As we progress along to the walk stage, marketing may not be aligned closely to revenue goals, but there are better marketing plans in place. There’s an awareness of customer demographics too; however customer information isn’t necessarily collected in a very sophisticated manner. There's a CRM in place, but it's not used as a mandate by the sales team. Also, there's an email marketing and marketing automation tool in place, but it's mostly used for single-drop email campaigns.
In this phase, marketing success is measured based on the number of leads provided to sales. It’s a pretty typical MQL type of scene.
During the run stage of maturity, things are looking up. There are annual marketing plans in place, and they’re aligned with the business’ goals. The marketing organization is well defined, and there's a close collaboration happening with the sales team. There’s also a more sophisticated marketing tech stack, and integrated multi-channel campaigns are being run.
There's also a CMO or VP of Marketing; however, at this stage, they may not have a seat at the organization’s leadership table. During this phase, performance is measured in terms of cost-per-lead and the percentage and the value of leads provided to the sales team.
And finally, during the leap stage of maturity, we'll see that there are annual plans in place, which are aligned with business plans. There are also quarterly campaign plans, which are clearly aligned to revenue goals and have clear ROI expectations. In this phase, the CMO has a seat at the business leadership table.
In this phase, a more sophisticated tech stack is utilized, and there are repeatable, predictable, and scalable programs in place. Data is extensively collected and predictive analytics are coming into play.
Performance-wise, we start to see the evolution of more leading and lagging indicators, and we’re taking a more holistic view of the customer lifetime value. CLV, retention rate, churn rate conversion rate, and cost to acquire are all used as measures of success, so marketing is responsible not just for the front end of revenue generation but for the overall customer lifecycle. There’s also a closer synergy between sales and marketing, who share goals and metrics.
Incentives look much better in the leap phase, with compensation for the marketing team based on performance and overall contribution to the business.
How does your organization stack up?
A couple of years ago, I was part of a market research study into the revenue marketing maturity of B2B companies in the APAC region. The research found that a staggering 56% of marketing teams in the Asia Pacific were somewhere between the walk and the run stages and maturity.
I’d like you to take a moment to look over this framework and think about how your organization is doing from a maturity perspective; hopefully, this is a valuable tool that you can take back to your teams. Are you at the leap stage yet? If not, don’t worry – I’ll help you get there.
Revenue generation value chain (RVC)
So now that we understand where we're at in the journey, how do we optimize our teams and get ahead? The revenue generation value chain is a great tool to help you get there. It showcases 10 steps for marketing teams to take on their journey to the leap phase. These steps can’t be viewed in isolation but need to be addressed across the whole sales and marketing organization. I'll quickly run through each element.
First of all, we have strategic orientation, which is the inclination of a firm to focus on a strategic direction to improve performance. A strategically-oriented organization focuses on its direction as a continuous process and makes this its long-term vision.
In the context of the marketing org, it's about being able to set a double-layered strategy that balances short-term departmental targets with the whole vision of the organization.
Identifying your target market, as we all know, is of the utmost importance for any organization. An identified target market is a clear roadmap to the organization's goal of greater revenue.
Overall, customer knowledge is not a new practice – we all use ICPs, segmentation, and personas – but it's important to make sure that we’re really paying attention to our customers’ needs and using the voice of the customer as a basis for developing plans and programs.
Planning, budgeting, and performance management
Then we go into the planning, budgeting, and performance side of things. Being in marketing, we know that a lot of organizations allocate a certain percentage of overall business revenue to marketing, or they may take a year-on-year view on the marketing budget and make incremental increases based on how the business is performing.
But a recent budgeting study has shown that the way budgets are set can have a significant impact on revenue. Taking more of a top-down bottom-up approach to budgeting and understanding where growth needs to come from can dictate your company’s success.
Some years ago, VantagePoint Performance and the Sales Management Association ran a study and found that 44% of executives thought that their organization was ineffective in managing its sales pipeline. That study also found that companies that recorded significant revenue growth all had credible formalized sales processes in place.
In other words, those sales teams that had clearly defined sales stages and milestones in their sales cycle were the most successful. This goes not just for sales but also for marketing: having clearly defined and aligned processes is critical in terms of driving performance and optimizing operations.
Structure and skills
On the people, skills, and structure side of things, we're looking at whether we have an organizational structure and a team that's optimally structured to deliver on the revenue objectives. Are the teams well structured? Are the job designs clear?
A very common scenario is that a great strategy is derailed by poor execution. However, there are many contributing factors to why projects or initiatives fail. We often talk about human error when someone makes a mistake. However, one aspect that's often neglected by management is the possibility that people were set up to fail from the get-go.
When your job isn't optimally structured to support the business overall, that leads to poor performance. The importance of revisiting the job design and making sure that the job designs are optimized to support the business cannot be understated.
The same goes for people and skills. We need to do regular skill reviews and make sure that the right skill sets are in place. By the same token, we have to ensure that long-term upskilling and development programs are in place if we want to get the best from our teams.
Culture and communication
Company cultures are powerful. They determine how organizations get things done, what sort of decisions are made, how those decisions are made, and what sort of behavior gets rewarded. Culture is the heartbeat of any successful organization.
The saying goes that culture eats strategy for breakfast. So as leaders, we need to make sure that we’re driving the right kind of culture, mindset, and behavior within our teams.
Analytics and reporting
This covers the KPIs associated with revenue generation. There’s no room for vanity metrics here. Teams need to have cross-functionally aligned KPIs that support the company’s vision.
And last but not least is communication technology. Research has shown that effective communication is another critical driver of revenue that can make or break any company. Communication is what keeps internal processes and interactions with customers, suppliers, and employees smooth and productive.
As well as making sure that clear lines of communication are there from a tools standpoint, it’s vital to have organized processes and clear playbooks in place for the different functional teams and team members. All of that comes into play and deeply impacts an organization's ability to generate revenue effectively.
Where to begin?
When we look at this whole revenue value chain and its many moving parts, it begs the question: where do we begin?
From an organization transformation perspective, it's crucial to look at the first three elements – strategic orientation, customer knowledge, and budgeting – because they make up the game plan, right? They’re the basis of any successful marketing strategy and a great way to align your sales and marketing teams around the customer.
The fourth element, the process, forms the backbone of activities like demand generation, lead generation, and pipeline management, which are the crux of revenue generation. All of this is supported by the structure, skills, communications, culture and technology aspects of the framework.
Overall, the revenue generation value chain can equip any sales marketer or business professional with a pretty comprehensive framework to start to align different functions and optimize the revenue marketing engine.
Now that we’ve seen some of the core principles of building and optimizing revenue marketing teams, I’d like to move on and highlight a case study from one of my previous organizations. I’m going to show you how I worked with the teams to take the marketing organization from the crawl stage to the leap stage of maturity.
Revenue marketing maturity year one
Let me set the scene. This case study looks at an enterprise-based organization in the SaaS technology space. This organization operates in a very mature industry and has a market-leading position. Before I started optimizing this marketing organization, growth had been stagnating for several years due to industry trends. New growth had to come from diversification and development into new markets.
The company was going through a significant internal transformation, moving away from selling software to selling solutions. There was a lot of change happening, and marketing needed to shift as well.
So from a marketing perspective, what were some of the challenges? You can see from the graph above that the team was quite immature across all the different elements of the value chain. Marketing was purely used to pump out tactical campaigns and product releases; it was always reactive, never proactive.
The team would set out a marketing plan at the start of the year, but then that plan would fall by the wayside because there were so many demands for support from other lines of business, including from the sales team.
On the surface, there was clear alignment with the sales team. However, deeper down, there were major challenges. For example, the marketing budget wasn't owned by the marketing team: it was owned by the organization’s general management. What’s more, marketing metrics were based on the number of activities and the budget spent, and the function was viewed as a cost center.
Implementing the revenue value chain
Fast forward a couple of years, we started implementing the revenue marketing value chain.
The starting point for this transformation was getting a foundational understanding of business priorities. Next, we started redefining the marketing role so it could better support business strategies around diversification around growth into new markets.
Another key component of the transformation was an audit across people, processes, and technology so we could see what was working, what wasn’t, and understand what needed to shift and the level of investment that was needed.
And then we began implementing less tangible elements, like agile practices and a growth mindset. This goes back to the conversation around culture being a game-changer. It was vital that we took a more agile approach to planning and operation in general.
Next, we came to measuring what matters. We moved away from those activity-based metrics and started going deeper into the funnel. We wanted to understand marketing’s contribution and impact on the business overall, whether that was through generating opportunities or building influence. We were building up the whole attribution model.
Revenue marketing maturity year three
This journey took a good two and a half years, almost three years. This wasn't an overnight transformation; it was about building a solid business case and driving that change, not just within marketing but also together with the other teams, most importantly the sales organization.
So where are things today? Well, marketing now owns the full funnel, right up until the qualified opportunity stage. Also, marketing is contributing 45% of the overall new business pipeline. Marketing BDRs and SDR teams work as one, with marketing looking after and managing the BDR function.
All of this resulted in the organization surpassing industry benchmarks from both a campaign performance perspective and an overall marketing performance and engagement perspective.
The transformation roadmap
I'll share with you some of the secret sauce behind this remarkable turnaround, in the form of the transformational processes that took place.
This process starts off with alignment – agreeing on business priorities and goals for marketing. As this was in the context of a regional marketing operation, it was important that everybody understand the growth targets associated with that growth and how marketing was going to support them.
Off the back of that, we defined our strategic marketing priorities: building and developing the revenue marketing engine, breaking down the silos between sales and marketing, and looking at how sales and marketing together were going to drive the diversification strategy.
The next phase is diagnosis. This is about understanding the entire revenue-generation process and auditing all 10 elements of the revenue value chain. As well as understanding what is and isn’t working, you can identify the low-hanging fruit in terms of things that can be easily fixed, plus those things that will take a bit more investment or time.
Once you have a clearer picture, it’s time to build a blueprint of the resources that will be needed to support your transformation.
In the design phase, we start to optimize processes and roles. It’s time to go back to the drawing board and illustrate the job designs so they're optimally structured to support the business needs. On the back of that, conversations with the teams in terms of upskilling, resourcing need to happen. It may also be time to build a new capability and bring fresh expertise into the team.
This is also the moment for setting new success metrics.
Once the blueprint is there, it's time to begin deployment. You can’t change everything perfectly all at once; this is about incremental innovation. Focus on small wins to build business confidence, get traction, and show that this new way of doing things can generate results.
Change management is a vital part of this phase. You should be prepared to encounter some resistance within the team, but also find those champions in different parts of the organization who are willing to be part of the experiment and the resulting success story.
The final piece is around sustaining your new model and bringing it into business as usual. You’re also looking at continuous improvement because no matter what stage you're at – whether you’re crawling or leaping – there’s always room for innovation.
In sales and marketing, change is a constant, so don't expect that once you optimize and build this revenue engine you can rest on your laurels. This is where the agile approach and growth mindset become critical.
I’m going to wrap up with some of key learnings that I’ve picked up along the journey as I’ve spearheaded revenue marketing transformations in various organizations and industries
Key learning #1: Marketing is everyone’s job
My first key learning is that marketing is part of everyone's role, from the C-level down. Why? Because everyone impacts customer experience and drives revenue. We need to ensure that this philosophy of marketing as a revenue contributor and a driver and custodian of the overall customer experience is entrenched in the organizational culture.
Key learning #2: Building the revenue engine requires major change management
This process is not for the faint-hearted. Not only is it a significant time commitment, it also inevitably draws some resistance. To smooth the path, make sure you build a solid business case for this transformation, and get executives on board as early as possible.
Key learning #3: Take a holistic view
The impacts of this transformation will be felt beyond just the marketing function, so you need to step back and look at the bigger picture. It's important to have a tightly-aligned cross-functional team in place and get sales and marketing working as one.
Key learning #4: Get the right team in place
Getting the right team in place is critical because people can make or break the success of this whole operation. It boils down to having the right talent and making sure that they’re properly supported. If they're not the right people, get them off the bus. Some tough decisions may need to be made along the way.
Key learning #5: Marketing needs to adopt a sales mentality
My last key learning is that marketing should be living and breathing the numbers like the sales team. Everyone must have a clear view of the metrics and marketing contribution and be held accountable for them.
Thank you so much for your time. It’s been great to share some of my experience and learnings and hopefully equip you with tools and frameworks that you can take away to build and optimize your revenue engine.