Have We Really Improved Marketing Productivity?

The recent pace of change in B2B marketing has been nothing short of breathtaking. Over the past 10-15 years, new marketing technologies, channels, and techniques have appeared in rapid succession, and many of these innovations are now in widespread use. B2B marketing automation, content marketing, inbound marketing, and social media marketing are just of few of the technologies and techniques that have changed B2B marketing over the past decade or so.

By all indications, the pace of change is not slowing. During the past couple of years, many B2B companies have adopted account-based marketing, and many have begun using predictive marketing analytics technologies to support ABM and other marketing efforts. And just within the past few months, we've started to hear that machine learning and artificial intelligence will have a major impact on B2B marketing in the near future.

All of these innovations have promised to improve marketing effectiveness and efficiency, and numerous research studies purport to show that they are delivering a wide range of benefits. But have these innovations really improved the bottom-line productivity of B2B marketing? Can we show - in a credible and convincing way - that B2B marketing is more financially productive today than it was 10 or 15 years ago?

Obviously, these questions must be answered on a company-by-company basis. Some B2B marketers may be able to show that their marketing efforts have become significantly more productive over the past several years. But there is evidence suggesting that some aspects of B2B marketing performance haven't improved as much as we might have anticipated.

One indicator of B2B marketing and sales productivity is the efficiency of the demand generation process. Efficiency is usually measured by the percentage of potential buyers or leads who are "converting" from one lead stage to the next.

Many B2B companies use the Demand Waterfall model developed by SiriusDecisions to describe the stages of the lead-to-revenue process, and from time to time, SiriusDecisions publishes "average" and "best-in-class" conversion rates that link to the Demand Waterfall. The following table shows the conversion rates reported by SiriusDecisions for 2008 and 2014:

What is most striking about this data is that it indicates there was essentially no improvement in conversion rates - particularly the overall lead-to-revenue conversion rate - between 2008 and 2014.

The 2008 conversion rates largely reflect marketing productivity before many of the marketing innovations mentioned above had become widely adopted. But research has shown that by 2014, a significant number of companies were using these technologies and techniques.

• 60% of large companies (more than $500 million in annual revenue) had acquired a marketing automation solution. (Raab Associates)
• 93% of B2B marketers were using content marketing in some form. (Content Marketing Institute/MarketingProfs)
• 86% of companies were running inbound marketing programs. (Hubspot)

Of course, lead conversion rates aren't the only relevant measure of marketing productivity, and there may be a reasonable explanation for the lack of improvement shown in the SiriusDecisions data. For example, the 2014 conversion rates would not have captured the impact of the shift to account-based marketing that's occurred over the past couple of years. Nevertheless, this data should be a wake-up call for B2B marketers.

Senior company leaders are increasingly expecting marketers to demonstrate that their activities and programs are creating economic value for the enterprise and improving enterprise financial performance. Many senior leaders are no longer satisfied with the tactical performance indicators (campaign response rates, content downloads, etc.) that marketers have traditionally used to describe marketing performance. What senior business leaders really want to see is proof that marketing is delivering financial results and that the dollars they are investing in marketing are being spent as efficiently as possible.

The important point here is that the value of any marketing technology or method must ultimately be judged by whether its use improves marketing productivity. So that's what marketers must be prepared to demonstrate.

Top image courtesy of Kelly Teague via Flickr CC.