Revenue Performance Management: Viva La Drucker!

If you believed that RPM was short for revolutions per minute, you are most likely an engineer (like I used to be), but if you knew that a more contemporary acronym stood for Revenue Performance Management, then you are probably a marketer (like I am today). But seriously folks, RPM is attempting to engineer a rather revolutionary paradigm shift in marketing that would make all marketers feel good about their profession all over again! In fact, I tweeted recently in anticipation,

“Revenue Performance Management (RPM) is transforming the SMB demand chain and reviving the concept of a marketing-driven organization.”

So what is RPM? Marketo, a leading market automation company, defines RPM as follows:

RPM is a strategy to optimize interactions with buyers across the revenue cycle to accelerate predictable revenue growth.

Competitor, Eloqua, defines RPM very similarly as follows:

RPM is a strategy for managing a company’s interactions with buyers through the entire purchase process to enable dramatically more predictable, rapid and profitable revenue growth.

Quite simply, RPM is empowering Marketing to transform its perception from that of a cost center to that of a partner revenue generator, alongside traditional Sales.

In its whitepaper, “Revenue Performance Management: Re-Engineering the Revenue Cycle,” Eloqua summarizes the requirements for a successful RPM strategy as follows:

As a business strategy, RPM requires the right mix of people, process and technology in order to drive real revenue growth. Marketing automation is certainly one enabling technology, but not the only. After all, businesses use all kinds of tools and services to drive revenue – from social media tracking tools to website analytics to sales force automation. But even more important than investing in technology is the development of business practices that are universally accepted and adhered to.

The pattern that emerges among best in class adopters of RPM shows the following four business practices are key to a successful RPM strategy:

  1. Modeling the integrated sales and marketing funnel
  2. Continuous improvement through industry benchmarking
  3. Making data actionable with deep analytics
  4. Long-term forecasting to identify future revenue opportunities.

Jon Miller, VP of Marketing at Marketo, offers an equally succinct take on RPM in a whiteboard session on video, “What is Revenue Performance Management?The Marketing Id would encourage readers to view his entire five-and-half minute video pitch. I was intrigued by Jon’s reference to RPM as the equivalent of a six sigma process on the “demand chain side” corresponding to the more well-known six sigma process on the cost or supply chain side. He also mentioned a comparable need for achieving a mentality for continuous measurement and process improvements on the demand chain side.

More importantly Jon, like his Eloqua counterparts, stressed on the imperative for transforming people, process and technologies to ensure the success of RPM. The concept of a Chief Revenue Officer that oversees both, CSO and CMO functions, across the new integrated sales and marketing funnel, is definitely a way to go. The need to review and revise how sales and marketing people are measured and compensated seems inherently fair. And, critically, to evaluate and incorporate the right technologies and tools, over and above a company’s CRM system, that would support the entire revenue cycle.

Having reviewed what both these thought leaders in the marketing automation space had to say about RPM, The Marketing Id saw it fit to encapsulate their combined RPM vision in one diagram that is reproduced below. Per the old adage “a picture is worth a thousand words,” the diagram captures all the essential elements of an RPM system.

REVENUE CYCLE ACROSS INTEGRATED SALES & MARKETING FUNNEL

Finally, my review of RPM brought to mind that old Peter Drucker quote about the raison d’être for a business:

“Because the purpose of business is to create a customer, the business enterprise has two-and only two-basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs. Marketing is the distinguishing, unique function of the business.”

The management guru was way ahead of his times–Peter Drucker never considered marketing as a cost to the enterprise! His vision is being born again as today’s RPM gives new meaning to the concept of a marketing-driven organization. Viva La Drucker!

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About Jack Nargundkar

High-tech marketing is always a constant compromise between logical left-brain analytics and creative right-brain activities. Jack has been living this struggle his entire working career, which he began as a software geek after graduating with a BSEE degree from Bombay University. To hone his marketing skills, Jack went on to pursue an MBA degree from Columbia Business School in New York City. Jack has since gained wide-ranging marketing experience from working at start-ups to Fortune 500 companies in the global IT, Defense & Space, and Telecommunications industries. In the past few years, Jack has focused on developing integrated marketing strategies and plans that incorporate a judicious mix of inbound and outbound marketing techniques. In addition to being a self-published author, Jack has been recognized for outstanding analytical and communications skills, authoring technical articles (self and ghosted) in numerous trade publications and editorial opinions in Business Week, The Wall Street Journal, The Washington Post, and The New York Times.
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