Revenue Performance Management (RPM) – The Next Great Enterprise Acronym?

by Lauren Carlson

CRM Market Analyst,

4/7/2011

In the enterprise software world, we just love acronyms. For most of 2010, #SCRM was the reason I got up in the morning. This year, I’m hearing more and more about Revenue Performance Management (RPM) – a strategy (and emerging application category) that elevates the marketing automation value prop to address a C-level priority: revenue. 

RPM looks and sounds a lot like marketing automation: align sales and marketing; understand known and unknown prospects; manage the entire funnel; and, measure the effectiveness of marketing investments. But Eloqua and Marketo, the marketing automation leaders evangelizing RPM, are aiming to make RPM a much bigger deal – way bigger than marketing automation. 

Why? I see three primary motivations behind RPM:

  • Present the increasingly differentiated analytical capabilities in Eloqua and Marketo, and get above the noise of a crowded marketing automation market;
  • Empower marketers – these software companies’ primary buyers and users – to earn a more strategic role in the enterprise; and,
  • Gain the attention of C-level executives (i.e. CEOs, COOs, CFOs) who can champion more strategic projects and write bigger checks.

This makes sense to me, but the strategy isn’t without its risk. A quick look at relative Google searches shows that there’s a long way to go before RPM wins the mindshare of CRM or marketing automation. These market leaders need to be careful not to shed their marketing automation mindshare and over invest in RPM evangelizing.

Popularity of Revenue Performance Management

 

What’s the Difference Between Marketing Automation and RPM?

The marketing automation space has been growing rapidly in recent years. Both Eloqua and Marketo are putting big growth numbers on the board. A solid pack of contenders are also still in the hunt. Meanwhile, new players enter the market regularly. Most leading products are approaching functional parity in the core campaign management and lead nurturing modules. 

With growing R&D budgets and large enterprise customers pushing them forward, Eloqua and Marketo are now building out more sophisticated functionality in the area of analytics and data integration. Three broader, more sophisticated RPM solutions provide insight into what’s working and what’s not. By pulling data from traditional CRM systems, RPM solutions allow users to gain a more holistic view of the revenue cycle from the earliest stages of marketing through to sales execution. The more traditional marketing components allow marketers to take action on that insight.

Helping Marketers Help Themselves

Of course, RPM is a strategy even more than it’s a set of functional capabilities. And regardless of what technology is available, execution is as important (or arguably more important) than strategy. Therefore, RPM project sponsors need the internal clout to implement a vision that spans marketing and sales. Traditional marketers, unfortunately, often lack the sway to execute such a cross-functional implementation. Eloqua and Maketo are investing to support brave marketers willing to take on the challenge. 

The traditional perception of marketers is that they are creative types, great at producing snazzy copy, compelling collateral, and big ideas. Right-brained, not left. RPM, meanwhile, requires a highly analytical competency. Both Eloqua and Marketo are investing a lot in helping marketers adopt more quantitative measures of their efforts. With this measurement comes accountability, and with this accountability comes greater respect from the C-level executives and a bigger budget.

The RPM Elevator Goes to the Executive Floor

Speaking of C-level executives, RPM hits three words those guys love: revenue, performance, and management. What executive wouldn’t want an extra serving of all three? “Extra revenue, please…”

Take the CFO. She’s not particularly interested in automating the tasks of the marketing team. Marketing can deal with that. What she is interested in is growing the top line. When the CFO sees a request for a new marketing automation system, she’s likely to say, “Sure. Just so long as it fits in your marketing budget.” RPM, however, sounds like a bigger deal. If the investment can really move the needle on revenue, the CFO wants in, and she’ll find extra budget when she buys into the vision.

Eloqua and Marketo both have grand ambitions. I don’t get the sense that they want to sell out to one of the CRM leaders. They want to go public and grow to be billion-dollar companies. RPM is a story with ten-figure potential. Marketing automation is not. 

That Being Said…

It will be interesting to see how RPM develops and influences the market. In a worst-case scenario, it could meet the same end as Advanced Planning & Scheduling (APS), which tried to one-up ERP with more sophisticated supply chain analytics. ERP vendors now own that market. In an optimistic scenario, RPM could grow into a large, healthy, independent category, like CRM. While ERP vendors own a big part of the CRM market, there is still a huge opportunity for best-of-breed leader Salesforce.com. 

I’ll be watching Google search trends and #RPM on Twitter, as well as if other marketing automation players adopt the term. We should get a good sense of RPM’s momentum this year. 

There’s bound to be a range of opinions on RPM. I’d love to see your comments below. 

 

14 Comments

Unfortunately Revenue Performance Management (RPM) focuses on inside looking out way to manage sales and marketing. It will have great internal appeal, to drive sales revenue, but doesn’t map to how customers buy and facilitating the buying lifecycle, or drive value / outcome for the buyer.

There is a revolution underway, driven by empowered buyers, that shifts the power dramatically from seller to buyer. RPM does nothing to help the vendor team understand this power shift, and help buyers buy vs. marketers and sellers continue with funnel management and antiquated sales techniques.

Spring Has Sprung and So Should New Sales and Marketing Best Practices
http://blog.alinean.com/2011/03/spring-has-sprung-and-so-should-new.html

Comment by Tom Pisello
04/07/2011
 

This is a great analysis of an emerging market, Lauren. Disclosure; I’m the Dir. of Product Marketing at Eloqua, so no surprise I’m a big fan of the topic! You make some great points about the Revenue Performance Management category, where it came from and why Eloqua is aggressively pushing the concept. At the end of the day, RPM really is about transformation; it’s a business strategy that requires an alignment of resources, processes and technology. It’s a big idea, but the payoff is bigger: in a recent analysis of customers that are pursuing a Revenue Performance Management strategy, we found that their average three year growth rate was 70% higher than our marketing automation clients, and 274% higher than the S&P 500! With those kind of returns, we fully expect that the concept will make its way into the C-suite, and carry the marketing organization along with it.

Comment by Jim Williams
04/07/2011
 

RPM is just a hollows term that was invented by two vendors in an attempt to make their value propositions seem more “strategic” in nature.

They probably used their CRM tool to see that they win many of the deals where they are engaged at the C level and lose a significant number where they are shunted down to the tactical side of a business. And since revenue (money) is something C level leaders are dealing with (taking in more or spending less of it) they are attempting a certain “linkage” to Csuite.

SuccesFactors pulled it off last year by coining the Business Executions space because they had products that were significantly differentiated from their core EPM products and they provided added and MEASURABLE value.

I don’t think Eloqua and Marketo will NOT be successful because this “new” designation provides neither new nor measurable business value.

Comment by Mike Leflar
04/07/2011
 

Accountability is a current issue among marketers surveyed by the Association of National Advertisers (more here: http://blog.optimizationgroup.com/?p=234), and anything that helps marketers tie their efforts to concrete results is likely to be well-received in the marketplace.

One huge caveat exists, though: success depends on the quality of the model underneath the bells and whistles. It’s not going to be a one size fits all solution – every company faces unique challenges, and those must be accounted for in the analytics.

it looks like the barrier will not necessarily be the capability of the software, but rather, they ability of the user to get the most out of it.

Comment by Tom Thompson
04/08/2011
 

An interesting discussion but RPM is a vision for marketing and not the activities that they must be focused on to get credibility by the head of sales or finance. We have measured that Revenue is important for sales but our benchmark research on marketing does not find this to be in marketing. Marketing must focus on developing marketing qualified leads that sales can act on and provide the right marketing tools for sales to be successful. Trying to re-equate marketing automation to RPM is a large stretch, and marketing should focus on the management and operations of their processes to support the brand and sales related activities they are expected. Just adding analytics and integration does not make Revenue Performance but provides Marketing Analytics which is really what marketing automation lacked to truly help marketing.

Comment by Mark Smith
04/08/2011
 

Thanks for the article, Lauren. The noise of creating another acronym which sound smart is clever, but expensive, rebranding. “Marketing automation” as a term has already had millions spent to educate the market on a shorthand.

I think results are the eight-ball people are focusing on in this economy. Sounding smart versus making money are two different agendas. Excellent marketing strategy and execution is much more important than marketing automation, RPM or whatever else is used to position a technology. The talent, strategy and leadership behind the tool are always more important.

I elaborate further here: http://blog.ascendworks.com/what-matters-marketing-or-marketing-automation/

Thanks for keeping everyone aware.

Comment by Don Dalrymple
04/08/2011
 

Anyone who reads my blog knows about the respect I give to marketing terminology. But to be honest, creating yet another acronym only adds to the confusion.

It is true that CRM practitioners often find it difficult to attribute sales to multiple touch points. I believe it is best to look at the integrated media approach avoiding the assignment of sales attribution to single channels.

Better to look at developing and testing models that look at the entire campaign cost to determine the cost per sale or cost per customer. Don’t get caught up into whether the Internet SEO program generated the sale or the TV spots that drove them there should get 80% of the sales attribution. You’ll end up awakening the silo protectors.

You’ll start hearing things like “my direct mail is what drives people to the web in the first place or some other tactical implementation issue.”

CRM focuses on the customer. Whereas RPM promises something that it probably cannot deliver in any case. Especially if it refers to a software program.

Just stick to terminology that has some history behind it and demonstrate how you would evaluate the effectiveness of the marketing expenditures more accurately and quickly than competitors in the same space.

C level people have trouble understand CRM, CPS and CPC to tackle yet another acronym.

Remember the direct marketers philosophy of KISS. Keep it simple stupid.

I do agree with your assessment managing revenue performance is what it’s all about. But approach your offer using terms C level executives are familiar with such as ROI, incremental profit and predictable income, risk reduction and so on.

Comment by Ted Grigg
04/08/2011
 

Ted – I agree with your take. Seeing ‘revenue performance management’ thrown around reminds me of the term ‘demand generation’ which was used by many of these same companies before ‘marketing automation’ became more widely adopted.

Instead of creating new acronyms like RPM we should focus on ROI. Those 3 letters that mean the most to upper management.

Comment by Jason Kort
04/12/2011
 

The real question is whether RPM is just another TLA. Whatsnexx is working hard to gain recognition for CSM (Customer State Marketing). Introducing any new idea, no matter how revolutionary, is always an uphill battle. RPM sounds good in theory; however some good points were made by the people who have commented before me.

For RPM to really take off it will need solid business cases that demonstrate clearly that it was the RPM approach that yielded the results. The difficulty in many of the business cases you come across is that, although at first glance it appears that the program was successful, there are many other factors that contribute to a program’s success. Chief amongst these factors is usually a very strong sponsor who has the clout to get the organization aligned behind the initiative. Withdraw that champion and you have just another so-so project. Get a big win with lots of publicity and you have a new disciplice (e.g. ERP, CRM, MA (hijacked by B2C to mean Lead Gen…). Don’t get me wrong, I am all for advances that improve the state of the art and I am in favor of open discussions, it just that it will be an uphill battle to establish RPM as a discipline in its own right.

Comment by Jacques Spilka
04/12/2011
 

RPM is yet another example of hype versus reality. It’s a slippery slope when Marketing starts positioning itself as driving revenue for the company. Because at that point you’re assigned something called a quota and if you don’t make your quota, then you lose your job. That’s the practical reality of sales.

We provide demand generation and outsourced sales services, and as such, we work with every e-marketing solution out there. What we commonly find is that our customers have invested in Marketo or Eloqua and it is on the shelf collecting dust. Why is that? Because they don’t know how to properly use the tool and/or they have unrealistic expectations about turning it on and sitting back while their pipeline and revenues magically grow.

Don’t get me wrong, these e-mktg. tools are great. But they are just a tool. And like all tools, they are only as good as the person using them. The gas that feeds these tools is quality content. And the fact is that most companies are simply not good at creating compelling content that engages their target customers. Absent a steady stream of quality and engaging content, the tools will not live up to the embellished expectations of the customer.

As a long time VP of Sales, any time someone talks to me about their ideas for impacting revenue, I immediately offer to give them a sales territory with the associated quota and revenue accountability. Oddly enough, only a handful have ever taken me up on the offer over the years.

Comment by Steve Crepeau
04/21/2011
 

Steve,

I think you bring up some very excellent points. Marketing automation, like many other enterprise software products, has a lot of potential, but you need more than just the software to realize that potential. Vendors can and should provide this support, but companies also have the opportunity to reach out to companies, like yours (http://www.truesalesresults.com), to get the full value from the system. I will disagree with your first statement about revenue being the sole responsibility of sales. Sales people have a quota, but they cannot meet that without the support of a marketing team that is delivering those leads. Traditionally, there has been a disconnect between marketing and sales. RPM and marketing automation gives marketers the tools they need to help dissolve this disconnect. They can achieve greater insight into the pipeline. With advanced metrics and data integration they are able to see what is driving conversions and what is wasting time and money. With this additional insight, marketing can more effectively use their resources, providing sales with more quality leads. This translates to marketing playing a bigger role in terms of revenue generation.

Comment by Lauren Carlson
04/22/2011
 

Thanks for addressing the topic, Lauren.

I think a lot can be, and will be, said about RPM over the next couple of years. As you, we will be watching the interest in this term closely.

Working with Marketo’s own demand gen team, I can tell you that a lot of our current new business still comes via people searching for “marketing automation”. We would be foolish to abandon it.

But in reality, the technology we’re now dealing with goes beyond the automation of a marketing processes. A big part of it is pipeline/revenue analytics, a pipeline which ends with the closed deal and stretches up to the initial touch point with a lead. Because sales and marketing work from the same data, we are able to measure and even predict the impact of marketing investments and marketing decisions on revenue.

Comment by Andrew Spoeth
05/09/2011
 

Great blog and great give and take. As a marketer, I think the whole RPM thing is brilliant. It aggrandizes the marketing automation issue beyond the technology and incorporates issue appeal beyond sales and marketing to the C-Suite.

On the other hand, as more of a traditional marketer, I am still enamored of the “big idea” and doing something different than your competitors. I fear that marketing may be headed the way of accounting, a series of steps and processes: email/opens/click throughs/analytics/next touch, etc. that seem more like a rote process than a way to break through.

As marketers, we have to guard against marketing becoming like accounting. More or less every company does it the same way and as such, none gain any competitive advantage from it. We have to make sure that RPM does not become devoid of creativity or emotion.

Comment by Paul McKeon
05/11/2011
 

So long as any marketing automation focuses on closing a sale or introducing a solution, you will only close a fraction of those who need to buy. Unfortunately, all forms of marketing automation and sales currently being used are based on needs assessment and solution placement, and leave out the entire buying decision path that is based on change management and systems thinking.

And don’t fool yourself. There is no insight into the pipeline. Most of the pipeline appears off-line – when the Buying Decision Team is formed/forming, when the change management issues are discussed and managed, when buy-in is sought. Until or unless these issues are addressed, they cannot buy. And marketing automation does not manage these things at all.

It’s possible to help buyers manage their decision path with Buying Facilitation. But not with sales. And for some reason, the marketing automation folks merely replicated the sales model rather than learn how to enter the decision path around buy-in and change management – where 90% of the buying decision is made.

Comment by Sharon Drew Morgen
05/16/2011
 

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