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It’s time to scrap the dysfunctional, binary approach of “sales and marketing,” and look for a new system that harnesses the strengths of both groups to drive a company’s revenue. In order to do that, we must move past traditional sales cycles (and the supporting role marketing plays) and start attacking the entire revenue process with something called revenue performance management (RPM).

Death of a sales cycle

Most companies are very familiar with the concept of a sales cycle (the sales process and tunnel/funnel). Companies track prospective customers as leads through distinct stages and predict revenue based on potential sales as things currently stand. Up until recently, that was the best way for businesses to model revenue.

However, a sales cycle model on its own presents distinct problems and shortcomings when trying to drive sustained revenue growth in today’s increasingly social world for a couple of major reasons (and goes the heart of why corporations are literally leaving trillions of dollars on the revenue table).

  • It’s insufficient: The sales cycle model remains stuck on near-term revenue opportunities, based what’s happening with current accounts.
  • It’s inefficient: The sales cycle starts tracking revenue when a lead is accepted into sales, ignoring the time and expense spent on the lead by marketing before and during the sales cycle. As anyone who has planned an exotic vacation or purchased a new flat screen TV knows that in today’s market, the buyer explores dozens of online and social channels before they ever speak to a sales rep. That research, interest and outreach is not taken into consideration in a traditional sales cycle.

Birth of a revenue cycle

Contrary to the old sales cycle, the modern revenue cycle includes the parts of the business that feed and foster sales: marketing, branding, PR and social media. This bigger-picture process makes it possible to take this part of the business that has long been a cost center, and transform it into a true revenue driver.

Take marketing, for example. Incorporating marketing into a holistic revenue cycle means not just shooting in the dark and proving ROI later, but instead standardizing and tracking information with sales for the common goal of accelerated revenue generation. This new process, called revenue performance management (RPM), is a modern way of looking at marketing and sales together. The technologies that power RPM are rapidly gaining adoption among companies of all sizes and across every industry precisely because they deliver proven results.

In some respects, RPM is a no-brainer that’s time has finally come. In others, properly implementing RPM requires dedication and a degree of sophistication to get the best possible results. Still, it can’t be denied that there have been some major shifts between that make it both critically necessary and technically possible for companies of all shapes and sizes to take control of their revenue cycles by bringing marketing and sales together.

Today’s buyer demands RPM

Before the Internet, sales organizations actually had a chance to influence customers’ buying decisions. Now, buyers have a wealth of information at their fingertips and form their purchasing preferences well before they ever connect with a sales rep. We’ve gone from a limited number of powerful communication channels to a vast and fragmented Web-marketing world, bringing with it both opportunities and challenges.

Technological advances in cloud software — including marketing automation, business analytics, cloud-based CRM, sales intelligence and social media monitoring tools — have all been crucial to supporting the capture and flow of information from marketing to sales. They are equally as important to determining revenue impact.

For example, only recently has it been possible (or necessary) for a company to compare ROI across hundreds different marketing programs to base future marketing investment on the quality of resulting sales leads. Smart companies are now taking advantage of quickly proliferating marketing channels to reach, influence and track the interest of their prospective customers early in the revenue cycle. But with nearly infinite marketing options available, they must measure what works and what doesn’t to consistently accelerate their revenue engine. By optimizing interactions across every touch point, and aligning sales and marketing to operate at high velocity, RPM gives businesses the ideal roadmap to help leaders capitalize on the changes taking place in today’s social, mobile and web-driven marketplace to accelerate yearly growth by 40 percent.

Get going on your new revenue cycle

How can you take advantage of this shift in your organization today? Here are a few actions I suggest:

  • Establish an infrastructure where sales and marketing are fully integrated and equally responsible for revenue generation.
  • Hire a Chief Revenue Officer (CRO). Many organizations are already doing this to bring together sales and marketing in an efficient way. That means one person responsible for the entire revenue cycle (money invested in marketing, capitalized on by sales, and then reinvested into marketing). The performance and continual improvement of that business process should be the responsibility of the CRO.
  • Establish lead scoring thresholds to identify when leads should be passed on to sales and when they should be returned to marketing for further nurturing Identify. This removes defects and increases sales and marketing effectiveness and efficiency.
  • Identify contribution to revenue for marketing campaigns and scrap those that are underperforming. In the same vein, determine which channels and campaigns are the most effective investments and increase investment accordingly.

What to Expect with RPM

A good revenue performance management process should result in high revenue growth out the gate. In our case, Marketo grew revenue by 315 percent in 2010 and we’re well on our way to making 2011 another record-breaking year — growing revenue 140 percent last quarter alone.

The numbers speak for themselves. Now it’s your turn. Seize the day and incite a revenue revolution at your company!

Phil is a 30-year Silicon Valley veteran and has the scars (and a couple of successful IPOs) to prove it. Prior to Marketo, he was President and COO of Epiphany, a public enterprise software company known for its visionary marketing products. Before that, Phil was COO and SVP of Products and Services at Red Brick Systems, a pioneering data warehouse vendor. Earlier, Phil held leadership positions at Metaphor Computer Systems, Stanford University Medical Center, and Masstor Systems. Phil holds a BA from Stanford University.

[Top image via Kirill Kurashov/Shutterstock]

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