Revenue Performance Management (RPM): Strategy, Technology or the Real CRM 2.0?

Bob Thompson

My how our industry loves acronyms. Especially if they include an ‘M’ – usually meaning Management which, unsurprisingly, requires some new enabling technology. Or, append ‘2.0’ on the end to breathe new life into an aging idea. That has certainly helped with Sales 2.0 and CRM 2.0.

Now Revenue Performance Management (RPM) is on the rise. In my view, RPM is a technology-enabled strategy to increase total revenue productivity. Period. It's not any more complicated than that. For most companies, sales and marketing resources are a significant share of sales, general and administration (SG&A). If you get more revenue from the same SG&A, that's a good yhing in today's world where growth is tough to achieve.

Should you pay attention to yet another acronym, or just go about your day and wait for RPM 2.0 to emerge? Being a good consultant, the answer I have to give is, ‘it depends’. If you care about the overall revenue productivity of the company, then ‘yes’. If your boss insists you just maximise your own department's metrics – in marketing, inside sales or fields sales, then ‘no’.

However, if you decide to ignore the concepts behind RPM (the acronym itself is optional), you might want to dust off your résumé and look for a new job. That’s because RPM superstars are leaving their competitors in the dust.

RPM is a technology-enabled strategy to increase total revenue productivity. Like Enterasys, a fast-growing global provider of enterprise networking solutions. According to senior vice-president of Worldwide Marketing, Ram Appalaraju, RPM has enabled Enterasys to get better visibility of future business, optimise investments in marketing campaigns and ‘significantly’ improve staff productivity – all critical business issues if the company is to attain ambitious business goals.

But Appalaraju is not just concerned with process optimisation, which seems to be mainly what RPM proponents are pitching. If you think about revenue productivity holistically, you should consider the complete prospect/customer experience. That includes providing more relevant offers, where RPM can certainly help. But customer service/support is also a factor in loyal relationships which helps drive revenue from existing customers.

The Enterasys RPM journey started several years ago with a Marketo implementation to manage segmented marketing campaigns, while using other tools independently for search engine marketing, sales automation and so on. Now they think of Marketo as a platform to 1) integrate disparate tools across the buying cycle, and 2) provide a dashboard with analytics to aid decision-marketing.

Strategy, Technology or Buzzword?

I know what you're thinking:‘Vendors are pushing RPM, so here we go again. Another buzzword designed to sell software’. Frankly, that's exactly the sceptical stance I took when I started researching RPM.

Despite massive investments in CRM, marketing and sales automation technologies, most companies don't really manage the end-to-end process for revenue production. Marketing has one set of goals, metrics and tools, while sales has another. This misalignment is more prevalent in B2B organisations, where the dysfunction manifests as marketing getting rewarded for generating leads that the salesforce ignores. Simply put: silos are a bitch.

The result (for the CEO) is that some of the precious SG&A investment is wasted, which impacts the top line, bottom line, or both.

Still, this approach has worked for a long time. Why change now? First and foremost, the customer is going to break down your silos, whether you like it or not. Some experts estimate 50-70 per cent of the buying journey is being completed before a prospect engages with a sales representative. That's forcing companies to engage with marketing programs much earlier, which has spurred a huge interest in content marketing. Business performance expectations are also driving change, and in some cases new leaders. Shareholders don't care about your internal problems. The bottom line is growing revenue as effectively and efficiently as possible. It's management's job to figure out how.

Phil Fernandez, Marketo co-founder/CEO and author of a new book Revenue Disruption, insists RPM is not about software:

“Revenue Performance Management is a set of ideas about how companies can grow and accelerate revenue growth by taking advantage of these very broad changes in the way buying and selling takes place in our economy.”

This ‘disruption’ has been caused by buyers using the Social Web to research and find solutions. Fernandez maintains RPM is a strategy to become more competitive and grow faster by embracing this shift, not fighting it.

Taking a more analytical slant, co-founder and CTO at Eloqua, Steve Woods, says:

“Revenue performance management is a systematic approach to looking at revenue, identifying both the drivers and the impediments that make your revenue either come in or fail to come in, measuring them and then pulling the right levers to drive more growth and optimise that topline growth.” Woods, author of his own RPM book Revenue Engine, argues RPM should be about understanding digital buyer behaviour earlier in the buying funnel and connecting the dots to sales results. If you can do more of the things that engage buyers (such as content marketing) and drive qualified leads, you'll get more sales at the end. You don't have to read between the lines much to realise revenue analytics requires a technology backbone to manage a very complex set of activities from demand generation to closed deals.