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You should expect, what you inspect, and it seems that measurement of Marketing still has a great impact on effectiveness.

“You should expect, what you inspect” is one of many quotes attributed to W. Edwards Deming, the American Engineer who contributed so much to the regrowth of post-war Japan. Working with the industrial leaders of Japan he instilled many of the strong management principles that Japan is now famous for and lifted Japan from poverty in the 1950s to being the second largest global economy in the 1960s.

If you have listened to some of my recent blogs, you know that in 2005 we published the first of our landmark reports into alignment. What we learned then has shaped much of the debate on the topic of alignment ever since.

In 2014 we published the 2013 refresh of the landmark alignment research.

What we learned about training, process, automation, structure, tactics, demand generation, measurement and location is going to get the debate started all over again.

In this blog I am going to focus on just one chapter from that report. Chapter 7 looks at what you should measure, and what effect we can have on closure rates, revenue contributions, and customer churn if we get it right. I’ll also show you how to get the whole report, for free, at the end of this video.

In our 2004/2005 study, we found that the best-aligned businesses measured Marketing on the proposal closure ratio – one that you’d expect to be the sole province of Sales. Since then we’ve been advocating to businesses that they should measure Marketing on closure rates. And it’s stuck for some at least.

This year we looked at measurement a little more deeply so we could see what happened for those who took our advice and shifted measurement from leads to appointments, proposals, and eventually sales.

As you might expect, the probability of an MQL closing goes up nicely. Across the survey group, the probability of a lead from Marketing closing was 23% higher.

By the time Sales is willing to accept the lead, they were 12% more likely to close if Marketing is accountable to closure. Why the difference? Sales is usually responsible for many of the SQLs itself. Any improvement put in place by Marketing will impact those leads that Marketing creates and hands across, but not usually have much impact on the leads that Sales initiates without Marketing’s help.

The impact of Marketing getting more focused on closability though was to see the total contribution on revenue from Marketing lift by 16%

Necessarily, Marketing often makes its best contribution to new logos, although we would expect a strong contribution to existing customer revenue also. The net effect was a 10% lift in revenue from new logos.

And an 18% improved retention rate with existing customers. We found no effectiveness ratios that worsened as marketing stopped trying to create leads, and focused instead on creating leads that close.

Marketing’s job is to create conditions and demand for Sales to succeed. On the demand side, if you measure Marketing on closure rates, not lead flow, they will give you demand that becomes revenue.

In a moment or two I’ll show you how to get a full copy of the alignment report. First I’m going to do two things: I’m going to show you how to transition Marketing to closure measurement. I’m going to invite you to receive more blogs like this.

Let’s get to the conclusion first. How do we measure marketing on closure?

The answer is simple: just do it, and do it granularly.

The first part is easy: create visibility on the closure rates for all leads from all sources, and negotiate a KPI around an improvement in closure from those leads that Marketing generates.

Secondly, do it by campaign and by lead source. We’re not proposing hanging Marketing out to dry here. The measurement is not “Marketing did well’ or “Marketing did badly”, but “this campaign beat that campaign, so let’s stop that one and double down on this one”.

If you enjoyed this blog, make sure you are subscribed to get either our blog (Funnel Vision comes out twice a week), or our Funnel Vision monthly which is an editor’s grab of the best articles from the previous month

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OK, so here’s how to get a copy of the alignment report: align.me/sales-and-marketing-alignment/

We’ll show you there how you can access the 2014 report, or a webinar I did with the key conclusions, or both.

If you’d like to see if align.me’s go-to-market planning workshops known as ‘Funnel Camp’ and ‘Funnel Mastery Workshop’ would help you to lift the performance of your Sales and Marketing systems, why not speak to your Funnel Coach today? Contact details on the web site.

I’ll show you why demand is a more important than brand next week. But for now, may your funnel be full, and always flowing.