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

Bob Thompson gives readers the lowdown on CRM’s evolution and why RPM might be the answer to those lingering customer insight bugbears

So, yes, RPM is a strategy – a plan to increase revenue productivity. But plans are something you can write down and talk about. In practice you'll need technology to make RPM work, along with a few other changes I'll discuss later. For now let me just say it's not enough to declare something a strategy, then go about installing software and hope for the best. That approach didn't work for CRM, and it won't work for RPM, either.

Not everyone is enthralled with the term RPM. David Raab, one of the smartest guys around in marketing technology, says he rarely hears the term used except by vendors and a few consultants. But he agrees the “underlying concept is certainly important”. Whether RPM becomes a full-fledged technology category is hard to say at this point. Raab contends CRM vendors could move in "rather than letting the MA/RPM vendors take over such a critical reporting function". My take: Maybe later. Because right now CRM vendors are too busy re-positioning as Customer Experience Management (CEM) solutions.

Senior B2B marketing strategist at MarketStar, Manuel Rietzsch, says currently RPM is a buzzword, but like Raab, believes the ideas behind the term make sense. Properly implemented, RPM-the-strategy could help improve marketing/sales teamwork, improve lead nurturing and in general waste less resources. At Forrester Research, analyst Jeff Ernst sees RPM as an evolution of thinking about Lead to Revenue Management, which is about managing the end-to-end process and engaging empowered buyers more effectively. He says RPM should be a "discipline to create an revenue engine", not a another technology category.

Does RPM Work?

Good case studies are appearing to illustrate RPM can indeed move the needle on revenue productivity. Concur marketing operations manager, Greg Forrest, says RPM (enabled with Eloqua's technology) has helped reduce their sales cycle and improve lead acceptance rates. While they can't yet tie directly to revenue increases, without the productivity benefits of RPM they would need perhaps three times as many employees to scale the business as planned. In addition, Forrest credits RPM metrics as a "huge win" in Concur’s budgeting and planning process, which enable better revenue forecasts. That's somewhat important for a public company.

More generally, vendor benchmark data suggests companies that practice effective RPM perform better. Marketo's co-founder and vice-president of marketing, Jon Miller, says its benchmark research found significant differences between companies that achieved RPM – a ‘fourth level’ of revenue management maturity – and other, less mature companies. Only nine per cent of companies achieved RPM maturity, which includes:

  • Multi-channel marketing campaigns that coordinate actions to each buyer in their journey, including after sales takes over
  • A single revenue team that passes leads and even resources back and forth (such as money/budget)
  • Using metrics to manage a disciplined ROI processes, upfront planning, multi-touch attribution, and forecasting.

Marketo's research found RPM firms enjoyed much higher win-rates: 40 per cent of sales-qualified leads closed versus 25 per cent for average companies. And it was three times more likely for a ‘name’ (raw lead from a web form) to result in a win in an RPM company. Over all, as you can see in the chart below, RPM practitioners hit 102 per cent of their target revenue plans, while others missed their targets by a wide margin.

The ROI evidence looks solid, but I urge caution in concluding RPM excellence is the only reason for these performance improvements. Although correlations may look impressive, they don't necessarily explain all the reasons for top performance. In my research, I find that top-performing companies are usually doing a number of things well at the same time. These organisational ‘habits’ are the key to sustainable performance, not the implementation of a single method or tool.

Is RPM the Real CRM 2.0?

If you've been around this industry for a while some of these ideas sound suspiciously like CRM. Yet marketing vendors seem bent to avoid that term. I can't blame them. CRM is such a huge industry, filled with vendors and consultants marketing hundreds of solutions. Saying a strategy or solution is CRM doesn't differentiate it much at all.

And marketing has never really warmed up to CRM, which has been more closely associated with sales and SFA. Instead, marketing vendors have been pumping out an array of solutions under terms like MRM, EMM and more.

Meanwhile, there has been some attempts to upgrade the inside-out, technology focus of CRM to a more strategic, collaborative strategy which some call CRM 2.0 and others Social CRM. But that's not going particularly well, either. Social CRM has become a grab bag of ideas and social applications without a concise industry definition. Some vendors are moving on to CEM.

All that said, to me RPM is the real CRM 2.0. Why? Because RPM is an integrated and collaborative approach to improving sales and marketing—what is what most CRM projects are about. Customer service/support, which ideally should be part of CRM, has a more natural place in CEM. Service experiences play a critical role in customer loyalty, which indirectly drives revenue over the longer term. RPM as it is being defined in the early goings isn't about the customer experience in any meaningful way. But who knows, there's always RPM 2.0.

Keys to success

I'll close with some brief advice on how to get value out of the RPM idea.

  1. Make sure that the executive in charge of revenue not only sponsors RPM but gets personally involved to ensure marketing and sales move towards ‘one revenue team’. In some cases, appointing a chief revenue officer might help signal the organisation that sales/marketing alignment is (finally) a top priority.
  2. Invest in the RPM backbone technology (yes, that comes from marketing automation vendors) but when you do, make sure that it plays nicely with other solutions you'll need in the RPM ecosystem. That includes salesforce automation at a bare minimum, but could also involve sales enablement systems, social marketing, content management, sales analytics, web analytics and more.
  3. RPM should be a transformative strategy. To make it into the top 10-20 per cent of your market, you'll need to set aggressive long-term goals and use metrics to track improvement at each stage of the buying process. This continuous improvement loop is what sets top-performing companies apart. If you're at low-maturity level, set interim goals while keeping your eye on the prize which may make take a few years to reach.
  4. Finally, and most important, RPM success is not just about numbers and processes. It's really about people working together. Create and nurture a collaborative culture where marketing, inside sales, field sales and other support organisations feel they are all working to accomplish the revenue mission. Implement reward systems that keep everyone focused on the big goal, not just optimising performance in each ‘silo’.

Now is the time for the industry to rally around RPM as a unifying concept for marketing and sales to work together to maximum revenue.

Bob Thompson is CEO of CustomerThink, an independent research and publishing firm focused on customer-centric business management, and founder/editor-in-chief of CustomerThink.com, the world's largest community dedicated to customer-centric business. Thompson is a popular keynote speaker, blogger and author of numerous reports, articles and papers including CrowdService: Harnessing the Wisdom of Crowds in Customer Service and Support.

Republished with permission from CustomerThink.com. Copyright CustomerThink Corp..

Follow CMO World on Twitter: @CMOAustralia.

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