Most B2B measurement systems were built around metrics that no longer exist: form fills and hand-raisers, tracked clicks, email engagement and funnel-stage progression.
The executive team and finance want demonstrated return and clear ROI. But B2B marketers don’t have a modern measurement system with the tools to deliver those answers.
My colleague Andy Hasselwander wrote about the problem with pipeline and how a de-duplicated marketing income statement is a better communication tool.
But how should enterprises redefine their B2B measurement system for the future?
Below is our simple B2B measurement ethos as well as a watchout and organizing framework to help evolve your organization’s thinking and approach.
Marketbridge’s measurement ethos
We established our measurement ethos from over 30 years’ experience evaluating marketing effectiveness and channel dynamics, and our expertise as the Go-to-Market partner for enterprises.
Principle #1: Measurement is counterfactual
What it means: Counterfactual means marketing is measured as the difference with what would’ve happened without the marketing investment (both marketing as a whole, and each individual channel).
Why it matters: For most enterprises, marketing can only impact 15-30% of revenue, while the rest is organic or unattributed. But, because the impact measured in quarter was generated from prior quarter’s (or year’s) investment, many B2B enterprises struggle to quantify and communicate marketing’s true impact.
Principle #2: Measurement is non-duplicative
What it means: No double-counting leads, conversions or credit across channels or between sales and marketing.
Why it matters: Many ad platforms have their own attribution methodology with a lookback window (often 7 days), which means using platform attribution results in double-counting across marketing channels. Without a methodology for de-duplicating attribution, enterprises can’t make decisions on true channel performance and instead will drive investment to the most easily measurable channels (typically demand-capturing lower funnel channels).
Principle #3: ROI as the measurement goal
What it means: Reported metrics should be tied to either realized revenue in period, or time-discounted expected revenue (aligned to longer B2B sales cycles).
Why it matters: Enterprises need to weigh marketing investment against other product, operational and growth investments. Yet marketing leaders often report on marketing metrics that make comparisons across departments difficult. Marketing ROI (mROI) is difficult to calculate due to long B2B sales cycles, lack of buying signals, non-linear pipeline progression and myriad other reasons. But not calculating mROI handicaps marketing in these enterprise trade-off discussions and can strain the relationship with the CFO.
Principle #4: Forward- and backward-looking
What it means: Identify what drove today’s revenue (historical, backward-looking) and quantify what today’s spend will drive in future revenue (forward-looking).
Why it matters: As I’ve alluded to already, the long sales cycles of B2B make measurement more challenging than B2C. The revenue realized this quarter was partially generated by marketing investment from the last 12-18 months (perhaps longer). A forward-looking view of what this quarter’s investment will drive in the future helps identify gaps to revenue targets earlier and with enough time to adjust. This measurement principle also gives marketing leaders the proper tools to negotiate what revenue target marketing can commit to and what additional investment is required to meet higher growth targets.
Watch-out: Over- and under-measurement
The measurement trap in B2B is typically one of two poles:
Under-measure: B2B is impossible to measure, why bother. The result: loss of credibility, low growth, pet projects.
Over-measure: Every marketing activity must be measured. The result: Pocket vetoes, investment in purely down-funnel tactics.
Instead, balanced measurement seeks to measure what’s possible, and uses clear assumptions and documented methods when measurement is inferred. Channels like online video, display, out of home, etc., are measured using probabilistic interactions and combined with known interactions to paint a fuller picture of an account’s experience with the enterprise. This results in more balanced spending up- and down-funnel, and appropriate share of voice relative to market share.
Organizing framework for measurement
Too often enterprises have an abundance of dashboards. Existing dashboards don’t exactly fit a stakeholder’s needs, so additional dashboards are spun up or ad hoc reports are created.
Instead of proliferating dashboards of limited utility, measurement should be organized around the main stakeholder groups and the decisions those groups need to make.
Executives & finance
Decide: Levels of investment, portfolio trade-offs, performance vs. efficiency decisions, and strategic shift considerations.
Key measurement needs: ROI, long-term consequences of short-term decisions (e.g., make this quarter’s goal at the expense of how much revenue in next quarter) and comparative performance across the organization.
GTM leaders
Decide: Budget allocation and optimization, prioritization across campaigns and channels, day-to-day execution and optimization, and trade-offs between near-term and long-term performance.
Key measurement needs: GTM system dynamics, full-funnel attribution as well as full-funnel diagnostic KPIs, and context on what’s working and why or why not.
BU / LOB leaders
Decide: Growth bets, prioritization across multiple fronts (product and solution as well as market, segment and verticals), and how to align GTM partners around LOB priorities.
Key measurement needs: Contribution to pipeline and revenue, performance across geography, segment and customer types, and demand coverage and conversion velocity through the funnel.
Check out our recent webinar on B2B measurement to hear more about our measurement principles and approach.
If you need help evaluating your current measurement system and evolving to a scalable, ROI-focused measurement framework, get in touch.
