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What Is the Role of Marketing in Revenue Generation?
With the growth of digital, it is now possible to connect the dots between marketing and revenue. If you aren't sure if your marketing dollars are really impacting your bottom line, it's time to find out.
A Changed Landscape
For decades, business owners have regarded their marketing departments as cost centers, which engage in activities that generate awareness, but are usually never tracked to sales. While they understand that marketing helps to generate leads that often become sales, most companies fail to reliably track marketing dollars that go out, in relation to sales dollars coming in.
When businesses spent the majority of their marketing dollars on television, newspaper and radio advertising, it wasn’t easy to accurately determine ROI, due to the ‘one-way’ nature of these communication mediums.
These days, PPC, Social, Email and SEO have become the primary ways many businesses reach consumers. These tactics result in engagement by prospective customers that can be tracked and analyzed through the use of website analytics tools such as Google Analytics.
When used properly, these powerful tools can even make it possible to accurately analyze traditional advertising that points prospective customers to a website.
Focusing on the Right Metrics
There are those who still believe that marketing is more like an art than a science. By effectively analyzing data, however, modern marketers can scientifically determine which channels and campaigns drive revenue, and allocate investment dollars accordingly. To do this, however, they need the tools to gather key metrics and the ability to determine the meaning behind certain metrics.
When it comes to tracking the performance of a marketing campaign, there is a lot of data to unravel. While some metrics give valuable insight into ROI, others don't paint a very clear picture. Take, for instance, so-called vanity metrics, such as page views, which reveal nothing about how visitors respond to content. While a lot of page views might make a campaign look successful, they mean little if visitors are exiting the page after only a second or two.
On the other hand, you can draw a more definitive link between marketing and revenue by focusing on metrics that track the customer through the entire sales funnel. If the customer spends several minutes on the page, that's a good sign. If the customer follows a call to action and makes a purchase, that's even better. Whatever the case, it's important to differentiate between vanity metrics and growth metrics when assessing how much revenue a marketing campaign is producing.
Metrics Mean Accountability
Whether it's organic or purchased, increased traffic represents enhanced visibility, a greater likelihood of lead generation, and an increased probability of conversions. That said, it doesn't always. One hundred thousand eyes can mean less than 100, if those hundred thousand aren't in the market for your product, engaged by your content, or ready to buy.
Modern marketers can use bounce rates, time spent on a page, pages per session, and a host of other analytics to assess the way visitors are responding to content. At the same time, they can assess how content impacts specific groups of people, based on their locations, ages, income and other demographics. They can also use metrics to assess the conversion rate of traffic coming from specific sources, while also determining whether visitors are more or less likely to convert while using tablets, smartphones, or desktops.
With so much data available, modern marketers shouldn't only be assessed by how many leads they generate. Instead of simply "tossing the ball over the fence" to the sales team, a company's marketing team should be able to drive revenue and use analytics to prove it. Marketing and sales teams should learn to "shake hands" in the middle when leads are created to be sure these leads are converted into measurable revenue. A company's marketing department must also be able to educate managers on the meaning and value of certain metrics, so everyone will understand what they are trying to do and how they are trying to do it.