Marketing Analytics for B2B Companies
Many people have wanted real time abilities in Google Analytics. Now they have it.
Last week Google Analytics announced it would add real time capture and analytics information to its application.
Jason Cutroni, Stephanie Chang at distilled, and Dorcas Alexander at LunaMetrics immediately wrote informative articles with their initial impressions.
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You know the bounce rate on your website. And average time on site. And on and on for many other metrics.
Are your numbers low or high? What can you compare them to? How can you know what a ‘good’ number is?
You could compare your metrics to those of your competitors to answer this question. Or to other industries that are similar to yours.
You could look at historical patterns – this time last year, last month, last week.
You could look to the future and measure against your plan, your forecast, your budget.
You could try all these. But they would be a waste of time.
Every business wants to know what is happening on their website.
But you can’t just stroll onto your website like a restaurant owner who leaves the kitchen to visit the dining room.
Or a shopkeeper who visits the store floor.
It’s invisible, this activity on your website. You need a way to record the activity and assemble it in a form that you can use.
That’s exactly what Analytics packages do. And the most popular package is Google Analytics.
Every business wants to grow, and to do that you need to find and win more customers. You have to make it easy for buyers to find you and then nurture them through their buying cycle.
But how much website traffic and how many sales leads do you need to generate so that you can achieve your revenue goal? I’m going to show you a calculator that will make it easy to answer this question.
In her work teaching her buying facilitation method, Sharon Drew Morgen (author of “Dirty Little Secrets”, reviewed here) states that she has worked with groups who have doubled their sales close rate. This doubling is possible because sales people are facilitating the change management that must occur in the buyer’s organization. And because the average close rate for companies with a direct sales force is low, around 7%.
What would it mean if a company doubled it’s close rate simply by increasing the productivity of its Sales people?
Let’s first look at a fictitious company with Revenues of $20M and an Operating Profit of $2M.
Here is the simplified income statement before the increase in productivity:
What happens when Sales productivity doubles? At first you might think, well, if the company has an operating profit of $2M and a margin of 10%, then if the revenue doubled, the operating margin would double to $4M. Typically this is true. A company grows, but it’s financial model and productivity stay the same. A doubling in revenue requires twice as many sales people and most operating expenses (except R&D) would also double.
This is not what Morgen is talking about. She’s describing a situation where the same marketing group delivers the same number of leads. The only thing that changes is that Sales people are twice as productive. This increase produces twice the sales and twice the revenue.
What would the impact be on the Operating Profits? Let’s take a look at the new income statement for our fictitious company. Revenue doubles and so does the corresponding Cost of Revenue and Gross Profit.
But the overhead cost has not changed, it is still $8M. Overhead is now only 20% of revenue. This increase in Sales productivity causes the Operating Profit to jump from $2M to $12M, an astonishing 600% increase in operating profits!
Here is the simplified income statement after the increase in productivity:
This exercise shows the power of increasing Sales productivity. You get a multiplier effect because you are increasing revenue but keeping operating costs stable.
