4 Revenue Sources Most ROI Calculators Miss (Part 1 of 2)

Posted by Dan McDade

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on Mar 1, 2016 4:44:58 PM

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This is Part One of a two-part blog about how organizations with a complex sales process can improve accuracy in lead/revenue projections.

Most ROI calculators I see published are flawed. Many of the tools are designed to determine how much revenue an organization needs and where that revenue came from. However, that is overly simplistic and lacks critically important metrics. Revenue projected from the “write content and they will come” mentality is overestimated. The real potential of lead nurturing is ignored. Furthermore, necessary outbound investments are underestimated.

Nonetheless, senior marketing and sales leaders stumble forward only to wake up and find themselves behind before they get to the end of the month or quarter.

It doesn’t have to be that way.

By including oft-overlooked metrics, and evolving your ROI Calculator into a comprehensive Lead/Revenue Calculator, you can get more accurate predictions of potential leads and expected revenue.

Simple ROI Calculators miss the mark in the following ways:

  1. Not taking into account critical metrics, including revenue from the previous year. Total revenue goals for the current year should include an estimate of the percent of revenue that will be retained from the previous year (this is important because many companies don’t set retention goals.) Test your estimates for 2016 by going back to the end of 2015 and compare actual retained revenue with your estimates. If you didn’t make an estimate, start doing so now.
  1. Over-confidence in the impact of inbound-only strategies on revenue, including percent of new revenue that will come from inbound sources. Companies frequently overestimate the percentage of revenue that will come from inbound sources. Without measuring it year over year it’s tough to accurately project what to expect. Additionally, inbound revenue estimates will allow you to course correct if the actual number is coming in below your projections—or is exceeding them.

Moreover, waiting for the market to come to you can end up hurting your results. If you wait for buyers to come to you it is likely that you are going to end up as column fodder in an evaluation already won by a more agile competitor. In January, 2016 Julie Schwartz of ITSMA stated:

“It’s widely believed that 60-70% of the buying process is over before prospects want to engage with a salesperson. The premise is that there is so much information available online that salespeople are thought to be unnecessary in the early stages. ITSMA’s data says that for high consideration technology solutions, this is a myth. In fact, we believe just the opposite: 70% of B2B technology solution buyers want to engage with sales reps before they identify their short list. In fact, buyers perceive value in interacting with sales at every stage of the buying process—even the early stages. In the epiphany stage they want education and unique perspectives; in the awareness stage they want product information and subject matter experts (SMEs); and in the interest stage they want benchmarks and best practices.”

  1. Inadequate consideration of the value of outbound nurturing of inbound and outbound leads, including the residual value of marketing/sales activity from previous year. Effective follow-up on pipeline, nurture and no-response prospects can triple the revenue from marketing campaigns. Failure to augment programs with outbound leaves significant money on the table and can keep you from meeting revenue goals. Read this white paper to learn more.
  1. Lastly, is the extent to which most B2B considered sales situations depend on proactive efforts to hit their number. Per The Aberdeen Group:

“Tele-prospecting is a valued complement to content marketing and inbound marketing and should be a component of any MQI-to-MQL Nurturing program. In fact, Aberdeen research shows that 60% of leads, on average, still come in through outbound marketing efforts – vs 40% from inbound.” (From CMO Essentials)

In Part Two of this blog, we will provide a Comprehensive Lead/Revenue Calculator and some benchmarks for what to expect from the four categories of revenue discussed in this blog.

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Topics: Marketing & Sales Alignment, Marketing Strategy, Lead Management

Revenue - Inbound - Nurturing = The GAP. We guarantee you'll be surprised by your actual metrics. Try our Lead Revenue Calculator
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