Does Measuring Marketing Sourcing Still Matter?
- The number of B2B marketing organizations consistently reporting on marketing-sourced pipeline and revenue is declining
- A handful of key trends are driving this shift — but is it wise to move away from reporting on marketing sourcing?
- With a more precise context setting, marketing-sourced revenue remains a valuable performance measure for B2B marketing organizations
As recently as three years ago, nearly 70% of B2B marketing organizations claimed to consistently report on marketing-sourced pipeline — the portion of the overall sales pipeline that marketing had uniquely initiated. Use of a marketing-sourced pipeline metric had been so steadily on the rise, that I even wrote a blog post about it. At the time, I suggested that looking exclusively at marketing-sourced pipeline wasn’t a complete enough way to describe performance, and I urged marketers to expand their gaze.
But what I didn’t fully anticipate was what would happen next.
The number of B2B marketing organizations reporting on marketing sourcing as a performance indicator has fallen. Currently, only 48% of B2B organizations consistently report on marketing-sourced revenue. This corresponds with what I hear from my conversations with B2B marketers in which they routinely mention a decline in the use of marketing-sourced metrics — which had once been the single most commonly used performance indicator.
Why is this happening? And if marketing sourcing was such an important metric to so many, why are fewer organizations using it today? What has changed? After consulting with several B2B marketing leaders in recent months, I can now offer some insights:
- The B2B buying cycle is increasing in complexity. SiriusDecisions research reveals that more players are involved in B2B buying. Results from our 2019 B2B Buying Study show that an average buying cycle involved a minimum of six buying group members and 30 discrete marketing interactions across those people. When you consider all of the interactions that marketing is investing time and money in to create, it’s clear why marketing leaders don’t want to exclusively focus their value story on that one interaction that initiated the buying cycle.
- Marketing-sourced percentages are declining. SiriusDecisions data shows that companies with a higher percentage of revenue from an install base report that marketing is sourcing less pipeline and revenue. As companies build up their install customer bases, marketing-sourced percentages begin to lag. The reason is that when account management teams consistently interact with clients, the opportunity for marketing to identify new opportunities in that account is far lower than if an account manager was not engaged. And with more companies going to subscription/SaaS/recurring revenue models, we’ve seen increasing focus on account management. So, for better or for worse, marketers are reluctant to point to a metric in decline — especially where that decline more accurately reflects an improvement in the health of the business.
- More companies are turning to account-based marketing (ABM) strategies. As ABM strategies have taken center stage in recent years, marketing plans are emphasizing ways to better connect with multiple members of buying groups. Deeper engagement can increase the likelihood of winning business and growing account revenues. However, success is unlikely to show up in higher marketing-sourced pipeline or revenue numbers. Companies that have moved to ABM strategies devote greater portions of marketing’s investment toward actions not intended to source pipeline.
- The move from leads to demand units. The Demand Unit Waterfall™ was introduced in 2017 and gave businesses a new way to think about demand flow. This mindset shift away from individual leads increased marketers’ concern with activating second, third and fourth buying group members — even for companies that have not fully adopted the Demand Unit Waterfall. At some organizations, this has led to rebalancing marketing’s efforts to source a new instance of demand against a more comprehensive focus on activating and influencing additional buying group members.
- De-escalating the battle for credit. Highly aligned sales and marketing functions deliver better business performance. However, at some companies, the measurement of sourcing has turned into a battleground that has pitted sales against marketing in a fight over credit. To de-escalate that conflict, some organizations have stepped away from reporting on marketing-sourced pipeline and revenue altogether. But is that really the best answer?
Better yet, does marketing sourcing matter at all anymore?
Sourcing does still matter, but we must adjust how we think about it. In the past, marketing-sourced revenue may have been seen as the primary expression of how marketing created value. It now serves as a useful measure among a larger collection of performance indicators — and one that still needs to be tracked. Here’s why:
- Sourcing is expensive. Sourcing or activating demand, by finding new individuals and inspiring them to raise their hands, remains a relatively cost-intensive thing to do. Whether it’s through the use of marketing tactics, cold calling or “feet on the street” selling, B2B organizations must invest in activating demand. As with any task that absorbs a disproportionate share of resources, marketers must show how effective they’ve been in producing the desired outcome from those resources.
- Sourcing is about optimization. B2B organizations rely on a combination of sales, marketing and tele functions to cover sourcing responsibilities. For most companies, expecting only one function to exclusively handle sourcing responsibilities isn’t realistic; it’s multiple approaches that allow providers to cover market segments in the most efficient ways. For example, a company might find that using seller or lead development representatives’ time to call into an SMB segment would be a poor use of resources as it lacks the scale to capture the attention of enough organizations that would need to be targeted. Similarly, it’s wasteful to have marketing attempt to source new buying centers at strategic accounts when a strategic account manager would be far more successful by asking for an introduction from an existing client within the business. To optimize efficiency, successful organizations must establish the right balance of sourcing across functions and segments.
- Sourcing metrics describe progress against a commitment. Once targets are distributed and resources made available to accomplish those objectives, companies must track progress against those commitments. The conversation surrounding marketing’s achievement against a sourced pipeline number transforms into a status check against a plan. While not a comprehensive picture of marketing’s contribution, it serves as an assessment of progress. Results that are too high or too low would need to be analyzed and remediated. The tracking is what makes adjustment possible.
So, don’t throw out your marketing-sourced metrics just yet! If you’re going to manage marketing performance, you still need to understand sourcing. But we must put sourcing in a more limited context. To accomplish that, weave in other metrics that work together to describe marketing’s contribution, and that contribution must extend beyond sourcing leads.