Revenue Quotient

The RPM Quotient

Revenue Performance Management Impact

Marketo conducted an online Customer Impact Survey in May 2011. The survey assessed various aspects between Marketo and its customers, including marketing and sales processes customers were employing with the help of the Marketo Revenue Performance Management solution, and return on investment achieved. Over 250 customers or 25% of Marketo’s customer base participated in the survey.

Marketo customers reported the following results:

• Marketing campaign effectiveness (is your marketing program increasingly driving more opportunities?): 46% increase
• Sales win rate (are you increasingly winning a higher percentage of those opportunities?): 17% increase
• Revenue scale (how much is your average contract value increasing and length of sales cycle decreasing): 12% increase in contract value and 7% reduction in sales cycle
• Overall RPM efficiency (how much are you reducing customer acquisition costs?): 15% increase

The customer results across these categories result in up to a 40% increase in revenue. Here’s an example of one customer’s results:

Revenue Impact for a Mid-Size Software Company

Increased Bookings by $12.1M. Increased Cash Flow by $3.7M.

Baseline Assumptions:
Expected 2011 Total Revenues	$37,045,000
Gross Margin	50%
Industry	Software
Average Deal Size	$20,000
% of Revenue Marketing Generates	30%
Number of Sales Represetatives	36

Extrapolation

Marketo then examined the cumulative revenue of its customers through 2015 and multiplied this by the RPM impact of each customer. Marketo projected a 25% increase in revenue in the first year and a lower increase in subsequent years. The net result is that in aggregate, Marketo customers have the potential to realize $2.5 trillion in revenue by 2015.

Employee Base as Growth Indicator

Marketo also secured publicly available employee growth data for its customers and their peers over the preceding 12 months. Comparing the two yielded dramatic results. Marketo customers grew their own employee bases by 39%; their peers only grew by 16% over the same period. While not directly correlated, employee growth is often linked to revenue growth. This supports the claim of the revenue performance of Marketo’s customers.

Employee Growth in
Last 12 Months

Publicly available LinkedIn data
on employee growth.

 

Conclusion

Every business is in business to create and grow revenue. In today’s open, transparent and increasingly fast-moving business world, companies have newfound opportunities to achieve results that have never existed in the history of business. Marketo’s study clearly illustrates the impact of RPM in driving revenue. Marketo predicts that in the next five years, RPM will become a standard for every company and overtime will exceed ERP, CRM and all other categories of business software in terms of direct revenue impact. For more information about this quotient, please contact research@marketo.com.