Revenue Performance Management

I noticed a conversation on Linked-In about RPM and realized that once again my buzzword dictionary is out of date.  A little research introduced me to the concept of Revenue Performance Management,  which (I understand) offers the benefit of being able to examine mid quarter revenue results, compare them to end quarter projections and then have the ability to tweak necessary actions to bring results back on track.

There is some controversy around this hot new tool in that some commenters note that the true concept of revenue performance management is a company wide initiative with many groups outside of marketing and sales having an impact on revenue- while the software itself – which looks to be an evolution of current marketing automation offerings is, in fact, marketing and sales centric.

To say that the scope goes beyond marketing because pricing and product development are part of the picture only betrays an ignorance of the true scope of marketing.  From what I understand RPM is measuring more actions and also tying the actions back to revenue instead of something like leads or sales calls.  But,  with all due respect to the creators and a nod to the scope and breadth of tactics that can be managed it looks very familiar.

Remember the old saying “sales is a numbers game?”  I’ve been sticking to that old song for a long time now and taking the slings and arrows of the social marketing set who’ve been insisting that only dinosaurs think the way I do. But all marketing automation and now revenue performance management software is doing is making it easier to automate actions that need to be either ramped up or scaled back depending on whether or not you’re running on target.

In old school sales we began the equation with calls.  To make $10,000 you need 10 sales with an average value of 1,000.  You’ll close one sale for every 10 meetings and it takes 5 conversations to get one meeting and 20 dials to get one conversation.   So, if on a semi-annual  basis you’re 50% behind your $100K quota based on your tracking at 3 months, how many more times do you need to pick up the phone today?

The equation has more wrinkles now. It has more players, it incorporates different time-lines and there are more tactics available than just picking up the phone, but the basic equation has not changed.

I’m looking forward to the version of the software that includes how many tweets you need to make a sale and if the social guys don’t think this is on the horizon, there’s a big surprise coming.

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