What Is the Role of Marketing in Revenue Generation?
By Stacy Willis
Here at IMPACT, we practice what we preach. "We eat our own dog food," you might say.
For instance, we spend an awful lot of time talking about buyer personas and how incredibly important they are to marketing. They are so important that we start off every retainer engagement with clients by running persona interviews and speaking directly to their ideal customers.
Well, here's a fun fact: We do it for ourselves too.
Recently, I had the distinct pleasure of interviewing the head of commercial for a biotech startup, which specializes in scientific wellness (behavior coaching based on your very own DNA), about some new (and long-standing) trends in the marketing leadership world.
But since her insights on revenue generation and increasing sales were so compelling, I knew I had to share them with all of you. Here's what she had to say.
Title Trends and the CRO
We are living in a new world. A world in which marketing and sales are required to work together, and titles are starting to reflect that trend.
The emergence of the "chief revenue officer" title is evidence of this combined sales and marketing department where one executive position is responsible for revenue generation at all stages of the funnel.
It has also been "driven mostly by the needs of start-ups to attract top talent," she says. Startups cannot pay their sales leaders as much as larger, industry-tested companies, so they compensate them with executive-level titles as a trade-off for the risk involved.
This is most commonly seen in the A-round of funding once venture capitalist are involved, because those VCs like to see a level of consistency when it comes to benefit and option packages across title levels. Essentially, if a startup wants to attract talent with stock options that are equivalent to the stock options of other executive-level members of the organization, it better come with an executive-level title.
The CRO title is essentially a shiny new version of what has always been called "head of commercial." The head of commercial title shares all of the same duties and responsibilities as a CRO and has been a mainstay of regulated industries like health care and finance for years.
Clearly, they've always known what's up with sales and marketing alignment.
You'll typically see CRO appear more in start-ups within the consumer space and head of commercial in more heavily regulated or B2B organizations. But, they are basically two sides of the same coin.
Sales and Marketing Under a One Roof
Along with the trends surrounding titles, we are currently seeing a massive shift in how organizations view sales and marketing. In the past they've been considered separate departments who, on occasion, work together. Well, now we are seeing an entirely new department emerge: the "revenue department."
The revenue department is essentially the combination of sales and marketing into one cohesive unit. They are still two distinct entities, but function more as two halves of a whole rather than two completely independent parties.
But why are we seeing this change?
"We are definitely seeing a shift where marketing can influence the value chain of the sale into later stages," she says. The sales cycle is typically broken up into the six stages: identifying prospects, targeting those prospects, interacting with prospects, validating or qualifying prospects, proposing the sale, and finally closing the deal.
Before social media, the sales side would cover the last four out of the six stages - but it doesn't work that way anymore.
"What we've seen in the last five years is a real shift away from that and toward the marketing function being able to drive the sale through more of those phases," she shared. More automation is happening when it comes to consumer touch, and as a result it has shifted the way in which we market, sell and fulfill products or services.
This has been more dramatic and noticeable on the B2C side of things, as those sales tend to be more heavily transaction-based, rather than relationship-based. Product categories that rely more heavily upon nurtured relationships need more interaction from sales to drive leads through the cycle.
However, B2B is catching up fast, and marketing automation is influencing more stages of the pipeline.
The Role of Marketing in Revenue Generation
So, now the big question: What did she see as marketing's role in the revenue generating engine?
First and foremost, it is about awareness: brand awareness, demand generation and outreach. It's the classic case of, "If a tree falls in the forest but nobody is around to hear it, does it actually make a sound?"
The purpose of marketing is about making noise and allowing the market to actually find out about the trees we are knocking down. Bottom line, there is no way to generate demand for your product or service without marketing!
In addition, marketing plays a very strategic role in educating the marketplace. This is especially common in the startup world and key to the success of new companies. This organization is fascinating and is creating an entirely new industry that has never existed before so educating the world on what they do is key in selling their services.
For example, "people don't open their laptops and Google 'scientific wellness,'" she explains. They don't even know that it's an option, so it is the job of the company's marketing team to educate the world on what they do, and why it is important.
Over time, she has found that educating the public is an even more important function of marketing than she'd initially expected due to resistance from existing business models. Potential customers are faced with all of the information from the traditional "take a pill and fix it" approach of the health care system.
Confusion and uncertainty are the norm, making education that much more important.
Building a Revenue Generation Team
So how do you build a revenue generation team that is comprised of both sales and marketing? How does a CRO or head of commercial know where to focus their efforts or how to balance their time?
The answer is: It all depends.
She says that her focus is on whichever part of her team needs more of that focus. It is never a 50/50 split of effort between sales and marketing. One side of the equation will always need more of her attention than the other, and it is a fluid, constantly changing balancing act.
She works to split her time based on where she is needed. She evaluates the maturity levels of each area, determines where there are gaps and selects the appropriate distribution of her time and effort.
As part of this process, and this is especially important in the start-up world, comes the decision on when, where and how to outsource.
Her incredibly simple no-nonsense answer on how to make outsourcing decisions, drives right to the point: "Core competencies must be under our own roof; if it is not core to business then outsource." Core aspects of your business are where your expertise truly lies, anything that fits into the core of your mission as a business should stay squarely under your own roof.
For everything else, rely on businesses or people who are experts.
One of the key takeaways from our interview that I was left thinking about are the serious parallels that exist between wellness and marketing. (I know, I use wellness analogies in all my blog posts, but this time it wasn't my fault!)
She explains that the CDC says a person's health has three key components: their lifestyle choices, their genetics and their interaction with the health care system. They attribute weights of importance to each at 60 percent to lifestyle, 10 percent genetics and 30 percent to their interaction with the health care system.
The way things work right now, we are pouring all of our money into the factor weighted at only 30 percent instead of focusing on where we can make the biggest difference with the 60 percent of weight from lifestyle choices. If the world started to treat human beings as a system rather than individual parts, we could be personalized and proactive in the way they are treated and have a more optimized approach.
Her company's personalization drives engagement with the program to much higher levels than any other wellness program in history.
I take inspiration from her story because I see the marketing world works in much the same way. The biggest chunk of success with marketing can be found within the lifestyle habits that must be consistently executed on a regular basis.
Most people want to come in, take a pill and suddenly be cured instead of putting in the effort day in and day out to build a solid foundation. And true personalization of a marketing strategy, not just following a cookie-cutter recipe, is the path to success.
Wondering where to begin?