If you’re like most marketing leaders, you’ve found yourself in the uncomfortable situation where you’ve just presented the latest update to the rest of the senior leadership team, only to receive a reaction of confusion and blank stares.

“It’s great to hear about all the engagement on social… and the team sure has sent out a lot of emails, but how do we know if that’s good or not? How do we know it’s working?”

If you’re in this situation, you’ve failed to properly communicate marketing’s contribution towards business results.  Even worse – you might not know what marketing’s contribution actually is.

Marketing leaders who have fallen victim to this scenario can learn from their counterparts in sales. When joining a monthly or quarterly review, sales leaders will typically report out on pipeline metrics that show progress towards pre-determined revenue goals and quotas. They speak the language everyone seems to understand and care about: the language of money.

So how can you turn things around and start communicating marketing’s true value?  The first step is to establish the right funnel targets.  To do this, you need to gather a few inputs.

  1. New Business Revenue Required – It’s important to remember that not all revenue will come from new business.  Typically your total annual bookings will come from a mix of existing accounts and new.  Start by determining the percentage that needs to come from new, as this is where marketing will need to play a larger role.
  2. Marketing Contribution Percentage – Unless you offer a SaaS solution, it’s rare that marketing will be 100% responsible for sourcing new business. Typically, the sales team is responsible for sourcing their own leads in addition to working leads that marketing generates. If you don’t know this number, start by reviewing your CRM data from the previous year.  What percentage of leads were passed along from marketing to sales?
  3. Sales Pipeline-to-Quota Ratio – Sometimes referred to as “pipeline coverage”, this metric indicates the desired amount of business in your opportunity pipeline relative to your quota for the period. According to SellingPower.com, most organizations prefer a ratio of 3X.  The basic thinking behind this is that not all deals in your pipeline are going to close, so you want to have a certain percentage more than that (2x, 3x, 4x, etc.) in order to meet quota.  If unsure, run with the 3x number.
  4. Average Deal Size – Perhaps the most important of the four key inputs you need to capture is your average deal size. In other words, how many deals will you need to win in order to hit your revenue target? If unsure, once again you’ll want to turn to your CRM to get to this number.  Simply run a report on the past 12 months of won opportunities, and determine the average value.

With these inputs and a few calculations, you can now determine the number of deals, pipeline value and total revenue target that marketing should be responsible for in a given period.  Consider these your primary marketing KPI’s.  To make this as easy as possible we’ve created a marketing contribution calculator that will do this math for you.

Calculate Marketing Funnel TargetsOnce you’ve gathered these inputs and determined your KPI’s, you can take it a step further to break down the marketing funnel in greater detail.  

To do this you’ll need to input your conversion rates for progression from each stage of the funnel to the next.  This should include:

  • # of unique inquiries per individual
  • Inquiry-to-Marketing Qualified Lead (MQL) Conversion Rate
  • MQL-to-Sales Accepted Lead (SAL) Conversion Rate
  • SAL-to-Sales Qualified Lead (SQL) Conversion Rate
  • SQL-to-Closed-Won Conversion Rate

By reverse-engineering your funnel backwards from the number of deals required, you’ll be able to determine a target for each stage.  Our Marketing Contribution Calculator Tool makes this easy to do, and provides a shareable PDF copy so you can discuss with your team.

The tool also will provide you with an estimated revenue per inquiry, revenue per mql and revenue per won deal so that you can accurately say what each lead might be worth to the organization.

With your inbound marketing targets in hand, you can now begin tracking progress against these goals on a daily, weekly, and monthly basis.  By doing so with consistency you’ll have a much easier time communicating why marketing has been doing what they’ve been doing, and how those activities are contributing towards business goals.

Calculate Marketing's Contribution