No reasonable discussion of B2B marketing and its mission can even debate marketing’s need to be an accountable contributor to the business and its revenue objectives. Yet despite the requirement that marketing prove its impact, the way that most B2B organizations have grown accustomed to demonstrating contribution is failing marketers, and it’s undermining marketing’s credibility.
The centerpiece of marketing’s contribution story revolves around performance indicators, which describe how much demand (leads, pipeline, revenue) marketers can claim they found first, originated, or “sourced.” According to Forrester’s 2020 B2B Metrics Study, marketing-sourced pipeline and marketing-sourced revenue metrics are featured on 47% of B2B marketing leadership dashboards, making them B2B marketing’s most commonly used performance indicators. While marketers have embraced sourcing metrics for many years, our research tells us that it’s doing more harm than good.
Sourcing Isn’t Working
Quantitative and interview-based research we’ve conducted with marketing leaders makes it clear that leaders struggle to use sourcing metrics to credibly describe marketing’s contribution to the revenue engine. Forrester’s 2021 CMO Survey underscored this point, showing that marketing leaders view the need to improve the ROI/effectiveness of marketing as their top priority — it has climbed four spots since our 2019 study. But why isn’t the current, sourcing-focused approach working?
- Buying has changed, but measurement hasn’t. Buyers are engaging in more buying interactions than ever before, and buying groups, while always a core part of B2B buying, have been expanding. Forrester’s 2021 B2B Buying Survey showed that B2B buyers engage in an average of 27 interactions over the course of a buying journey (up 93% since 2015), and 60% of B2B purchases now involve groups of four or more people. Nearly one-third of buying cycles span four or more months (compared with less than one-fifth in 2015). Yet sourcing metrics steer the conversation of impact toward which function can clearly claim responsibility for that first interaction with a buyer. A sourcing focus, while not ideal when buying was simpler, isn’t holding up in the face of more complex buying dynamics.
- Sourcing isn’t a driver of business success. Winning a higher percentage of deals and winning bigger deals are prime examples of business impacts. While finding opportunities may be a prerequisite to winning, we’ve seen no evidence that organizations with high rates of marketing sourcing experience higher win rates, bigger deal sizes, or greater cost efficiency across the revenue engine. Simply put, higher rates of sourcing don’t equate to more revenue.
- Businesses need marketing to deliver more than sourcing. To consistently win business, B2B organizations must support their buyers across the entirety of their buying journeys. The days where buyers were willing to accept salespeople controlling the flow of information are long gone. Buyers make purchasing decisions at their own pace and drive their own information requirements at different points in their decision-making process. Buyers are demanding a fluid buying experience that intertwines self-service, seller-driven, and marketing-assisted information flow. Businesses can’t afford to have marketing step aside once demand has been identified.
- A sourcing focus undermines true alignment. To grow, a business does some combination of winning more deals, closing a higher portion of deals, winning bigger deals, and cost-effectively growing revenues. To make that happen, sales, marketing, product, and customer engagement functions must be fully aligned on the strategies that will drive growth and the approaches for making that happen. But a sourcing focus often encourages marketing behaviors that are misaligned with those growth strategies as marketers and their resources are directed at a sourcing goal. Consider an example where a business believes that the best way to deliver growth is by focusing on winning business in a sharply defined account universe, where marketing will rarely identify new opportunities before dedicated account managers become aware of them. In such a scenario, the business likely needs marketing support to expand engagement within an established buying group to increase probability of winning — yet a sourcing objective is entirely misaligned with the business’s requirement.
Sourcing Metrics Will Spiral Toward Irrelevance
Given their shortcomings, sourcing metrics have been falling out of favor with B2B marketing organizations. As recently as 2015, we noted the use of marketing-sourced pipeline within 70% of B2B marketing organizations. In 2020, sourced pipeline or sourced revenue appeared on 47% of CMO dashboards. Personally, I’m cheering on sourcing’s continued descent into irrelevance, and I’ve predicted that we’ll see the decline of sourcing metrics accelerate.
Revenue Lift Must Replace Sourcing
Sourcing metrics can’t be fully cast aside until marketing leaders latch on to a new set of performance indicators. Those indicators must more completely demonstrate marketing’s contribution to the revenue engine while working to drive alignment and accountability.
We’ve recently introduced a new system of B2B marketing performance indicators designed around the concept of revenue lift. Revenue lift is calculated by looking to the combination of increases in win rates and deal sizes that are achieved when marketing interaction with a buying group reaches a set threshold. The minimum level of marketing interaction is established through looking at past performance to understand the volume of interactions at which better outcomes are achieved.
By surrounding this lift metric with indicators that demonstrate that the overall pipeline is full enough, that marketing is sufficiently engaged with a meaningful portion of the overall pipeline, and that marketing’s engagement is producing lift in an economical way, the B2B marketing organization can finally ditch sourcing and deliver enhanced impact for the business.
For a different angle on the metrics conversation, see my colleague Brett Kahnke’s post on why B2B CMOs should shift the conversation away from marketing sourcing metrics.