Last week, CMS issued its annual final rule, which finalized the proposed 8% cut to outpatient Medicare payments for physical therapy and occupational therapy services. It’s officially official: not only will clinics have to contend with the therapy assistant reimbursement reductions in 2022, but they’ll also have to absorb an 8% across-the-board hit to their Medicare revenue starting in January 2021. It’s a pretty heavy blow to the industry, and I feel like I can see everyone reeling a little bit and hear a few f-bombs from the news. So, what comes next?
First, I want to make clear that I do not believe this cut is our death knell—at least, not yet. The good news is that rehab therapy is still alive and kicking, and I know that rehab therapists are in a good position to step into a prominent role in the healthcare sphere. The not-so-good news? We have a lot of work to do—and we can’t keep doing the same things that we’ve done in the past.
CMS has a long history of reducing rehab therapy expenditures.
In a way, these cuts almost feel like old hat. It’s not the first time CMS has decided to balance its budget by siphoning funds out of rehab therapy or implementing burdensome programs—and I wager that it won’t be the last. Just take a look at the regulatory requirements that have made their way down the pipeline over the last decade or so. Most of the recent legislation affecting rehab therapists has been onerous—not to mention financially taxing—for everyone in our profession.
Timeline of Regulatory Burden in Rehab
1997: The Therapy Cap
The therapy cap is the seasoned alumnus of these regulatory programs (the modern version of the cap was enacted in 1997), but it stole the spotlight again in 2018 when the Senate voted to repeal the hard cap in favor of a soft threshold. Therapists celebrated the demise of the hard cap on services—but it opened the door for other cuts so CMS could balance an influx of therapy expenses.
In 2006, CMS introduced PQRS, a now-defunct program that was originally meant to improve quality of care. For a long time, I strongly believed that therapists should use this program to demonstrate the value of rehabilitative therapy to CMS—but after some time and a little bit of reflection, I realized that PQRS was not functionally capable of doing this, because a large majority of its reportable rehab therapy measures did not speak to the skill of our profession. Basically, it was a whole lotta work for minimal payoff.
In 2011, CMS rolled out some steep payment cuts under the multiple procedure payment reduction (MPPR) program, which is still in effect today. Under MPPR, rehab therapists who bill more than one “always therapy service” during the same visit are subject to an estimated reimbursement reduction of 6% to 7%.
In 2013, CMS began requiring rehab therapists to participate in another now-defunct quality-based reporting program known as functional limitation reporting (FLR). It required all sorts of burdensome code and modifier reporting, and noncompliant therapists had their claims denied outright.
2020: 8% Reimbursement Cut
This is the biggest and most detrimental cut to rehab therapy that we’ve seen in a long, long time—and it came to pass partly because another organization lobbied CMS for improved reimbursement rates on troublesome E/M codes. The problem, as I said before, is that every budgetary increase comes at a price—and in this case, it’s one that rehab therapists had to pay.
However, although this reduction may seem random, there is actually a lot of data in play when CMS makes these kinds of decisions—and we have to take responsibility for our own actions. When the OIG reviewed 300 randomly selected Medicare claims for outpatient physical therapy services, 61% of those claims did not meet Medicare’s standards for medical necessity, coding, or documentation—resulting in $367 million in overpayments. That’s a lot of money that the government is trying to recoup.
2022: PTA and OTA Reimbursement Reductions
CMS floated the idea of these reimbursement reductions at the same time it repealed the therapy cap, but the cuts didn’t receive much attention until after the release of the 2020 proposed rule. I’ve spoken openly about how clinic workflow changes can help offset these payment reductions (and it’s worth noting that the APTA’s and PT-PAC’s lobbying efforts successfully helped define and minimize the payment differential), but they are still, nevertheless, another therapy-specific reduction in a long line of cuts at the hands of CMS.
Reimbursement reductions and burdensome, ineffective programs endanger our patients and our profession.
I’m all about resiliency and learning to roll with the punches (you have to expect some setbacks when you’re dealing with the federal government), but CMS’s trend toward reducing rehab therapy payments is extremely concerning. A plethora of emerging medical guidance encourages providers to route patients to safer, less invasive treatment paths. This best practice has received even more attention in the wake of the ongoing opioid crisis. And yet, CMS continues to introduce payment structures and regulatory programs that penalize the very providers who deliver that type of conservative treatment. How are we supposed to make rehab therapy more accessible to these patients when it’s becoming harder and harder to even stay in business?
APTA President Sharon Dunn, PT, PhD, put it best: “The 8% cuts to PTs in the face of mounting evidence for our roles in healthy aging, fall prevention, and stark reduction in opioid exposure and overall costs is inexplicable and irresponsible. Our US citizens & publicly supported health system deserves better.”
If CMS truly believes in the unique value rehab therapists provide, why would it pay them less? I just can’t wrap my head around that logic. I would even argue that CMS is essentially incentivizing the delivery of non-conservative care—because apparently, that’s what it’s willing to pay for. So, is it really that surprising that 90% of the patients who could benefit from seeing a rehab therapist never do?
These will likely not be the last cuts to Medicare payments for physical therapy and occupational therapy.
As much as I hate to say it, I highly doubt that these will be the last cuts we see. CMS functions a little bit like a business: it has to stay budget-neutral and ensure that its expenditures don’t exceed its allotted budget. What that ultimately means is that almost every win for the therapy industry—whether it’s an improved reimbursement rate or improved access to care—will come at a cost. Literally.
Many rehab therapy thought leaders and advocates (myself included) have high hopes for the profession. We want to be at the forefront of the movement toward preventive, conservative care—and we want to be paid fairly for the skills, expertise, and value we provide. The unfortunate reality is that we’re not there yet. Right now, CMS still classifies rehab therapy as a “service” and does not categorize rehab therapists as “providers.” (Fun, but sad, fact: That’s why we can’t opt out of Medicare the way other providers can.) Because we don’t have the same clout as physicians or other medical providers, we have to stay vigilant and be loud when CMS tries to sabotage our hard-earned wins with seemingly arbitrary reductions.
But it’s not enough for therapists to lobby CMS; we did that to the tune of more than 10,000 comments that protested the 8% cuts—to no avail. Moving forward, we have to take matters into our own hands and go straight to the consumer, our patients, in order to hold the agency accountable for its actions (more on that below).
We must do better—we can’t afford to let this happen again.
I still believe we got ferociously sidetracked by the PTA and OTA reductions—though we did see some favorable outcomes from those advocacy efforts. Reimbursement cuts are never ideal, but that particular reduction should be relatively manageable, and it puts us in line with the assistant standards in other healthcare disciplines. (For example, PAs and NPs also have an 85% reimbursement rate in their respective disciplines.) Fighting that assistant reduction was nowhere near as crucial as fighting this industry-wide cut—yet here we are. Hopefully, this sweeping 8% cut has finally captured everyone’s attention.
Luckily, there is still a sliver of hope; CMS has stated that this plan is “subject to change.” Furthermore, we don’t yet know which CPT codes will be impacted by the cut. Still, this is an issue that spans our entire profession—from small practices to enterprise organizations—and it affects more than just Medicare patients. It sets a precedent for the future and sends the wrong message to the rest of the healthcare community. Every therapist has some skin in the game, because these regulatory changes limit access to care and heighten the barrier of entry for musculoskeletal pain patients. Ultimately, these cuts incentivize the wrong clinical pathways and encourage referral patterns that include pain medicine—and even opioids.
The time for advocacy is now.
It’s time for us to set some serious boundaries with CMS. To do that, we must unite and come to a consensus on our advocacy strategy for this year. I would even argue that we should be planning for the next decade. We must pinpoint the issues that truly deserve our attention and action—like sweeping payment cuts, access to telehealth, and MIPS participation—that will affect the future of our profession..
This is yet another wake-up call to set our priorities, take a stand, and make a ruckus. No more snooze button! These cuts—however they end up being applied—are unacceptable. They completely undermine the value of rehab therapy, and we should be fighting mad about it.
How to Take Action
I know the thought of becoming an industry advocate can be daunting—especially if you don’t know where to start. Well, I’m a little bit of an advocacy aficionado, so I can give you a few ideas on where to start.
One of the easiest ways to get involved is to support an established advocacy organization by donating funds or volunteering your time. The APTA does some great work—like with the PPS Key Contact program, where PTs are paired with local congressional representatives to provide insight on how upcoming healthcare legislation will affect the PT industry. You can also come to the Federal Advocacy Forum in Washington, DC from March 29–31, 2020. It’s a great place to learn about the latest issues that plague our industry as well as how to advocate as a rehab therapy professional.
It’s also important to understand that none of the intensive hand-to-hand, day-to-day legislative combat could be done without the PT-PAC—an organization that lobbies congressional representatives for the benefit of PTs. So, I encourage all of you to contribute what you can to this group. And, if you aren’t already, you should become an APTA member. I believe this is an obligation for every PT, because there truly is strength in numbers.
You, as an individual, can also advocate for our profession by collecting outcomes data and sharing it with other payers and providers—or by becoming a healthcare thought leader and speaking at healthcare conferences or contributing articles to physician-, patient-, or consumer-focused publications.
We must also commit to improving our understanding of compliance rules—and ensuring that we always adhere to the golden standards for clinical practice, documentation, and coding. After all, $400 million in overpayments would be enough to spur any business to focus its attention on offsetting that unnecessary expenditure. And when we do flex our advocacy muscle, we must be able to back up our position with data—and we must be willing to make concessions when we negotiate.
Ultimately, the best advocates that we can possibly get in our corner are our patients. They are the people who know exactly what the stakes are when Medicare denies them care that could help them significantly improve or maintain their quality of life. They know exactly what they’re missing out on—and they are perfectly positioned to launch a grass-roots-style advocacy program without appearing self-interested.
But, more importantly, we need patients to capture the eyes and ears of the people who have the power to make legislative waves. “We are going to need Congressional help on this one,” said Dunn. “CMS cuts the very care that keeps seniors mobile and functional at home!”
All of that is easier said than done, of course, which is exactly why we decided to make it as easy as physically possible for you to mobilize your patients and empower them to advocate on our behalf. In fact, we have written a complete letter—download it below!—that patients can sign and mail to CMS and/or their state government representatives. So, the next time a patient has to sign an ABN, or runs out of visits for the year, or comes upon any other barrier that compromises his or her ability to access your care, sit down and have a serious conversation about why these sorts of rules and regulations should never prevent patients from obtaining the care they need to maintain their health and wellbeing—and live their lives to the fullest. Then, provide the patient with the prewritten letter available below and ask him or her to send it to his or her local representative as well as the administrator of CMS, Seema Verma.
Help your patients advocate for their health.
Enter your email below, and we’ll send you copies of prewritten advocacy letters—and a congressional directory—that you can provide to your patients.
If you find patients who are deeply invested in advocating for their therapy benefits, you could also encourage them to get involved with a nonprofit advocacy group like the Center for Medicare Advocacy or The Medicare Rights Center. Additionally, they can always submit complaints about their coverage directly on Medicare’s website via this form.
If we want to be paid fairly and get the recognition we deserve as musculoskeletal experts, it will be hard. It will be an uphill battle. But, I believe we can do it—as long as we accept this payment cut for what it was: a wake-up call. It’s time to unite as a profession—as a community—like we never have before. I am sending out the rally cry. Are you ready?
The post Founder Letter: Is the 8% Payment Cut the Wake-Up Call Rehab Therapists Need? appeared first on WebPT.
Long before I put on my first veterinary assistant scrubs, I was in health and life insurance sales. On one memorable occasion, I was visiting Mr. Morrison at his home for a follow-up appointment we set. He lived alone but…
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Allbound takes the top spot of high-trajectory PRM vendors based on user satisfaction scores, employee growth, and digital presence
Allbound, the fastest-growing solution for Partner Relationship Management (PRM), announced today that it has been named #1 in the G2 Momentum Grid® for Partner Relationship Management, outperforming solutions such as Salesforce Communities, Impartner, Channeltivity, and Magentrix.
The G2 Momentum Grid® highlights industry leaders who have demonstrated trending growth in the PRM Market in the last year and also helps buyers discover solutions that are innovators in their field, have considerable influence on the market, and best fit their needs at scale. G2 provides unbiased user reviews and representation of the customer voice.
“We are honored that G2 has recognized Allbound as the leader in the PRM industry,” said Daniel Graff-Radford, CEO. “Allbound strives to continually push the boundaries of innovation and drive a more effective, efficient and customer-centric sales approach. This acknowledgment from G2 shows that there is customer demand for a next-generation PRM solution that is both easy to implement and use.”
Allbound has also won multiple awards in various G2 Grid for PRM, including #1 in Satisfaction for Mid-Market. In addition, Allbound has been acknowledged by G2 as a leader in the Fall 2019 Partner Relationship Management report, providing leading-edge capabilities like partner onboarding and deal registration to reduce channel conflict.
It’s essential for all companies to have a contact form on their business website, no matter what their size. Contact and lead generation forms require website visitors to enter their email address and other kinds of personal information. Since they are used to gather information about prospects, contact forms give companies the opportunity to keep track of new leads and learn more about them.
For this reason, it’s essential to include information on your forms that will help you determine if a prospect is a good fit for your company. There are many data and form analytics tools that can help you uncover insights about your prospects and evaluate the effectiveness of your contact forms. Here are 5 things you can learn about your leads by analyzing your contact form data.
1) Whether they’re likely to become a customer (or not)
According to a recent study by Hubspot, most mid-sized to large companies acquire less than 5,000 qualified leads per month. This indicates that many companies lack an effective lead qualification process and waste time on leads who aren’t ready to become customers.
One way companies can address this problem is to restructure their forms to attract high-quality leads. At the very least, your form needs a clear call-to-action so website visitors know what they’re getting in exchange for filling it out. Your form should have a limited number of fields to avoid overwhelming your visitors, which can cause them to abandon your site.
Companies can also qualify their leads by implementing website tracking and lead scoring software. Lead scoring software allows companies to analyze the leads collected through their contact forms so they can identify the ones who are most likely to become customers.
2) Whether they’re a good fit for what you’re offering
By asking for some key information from your leads — for example, the size of their company and their industry — you’ll have a much better sense of whether they’re a good fit for what you’re selling, and whether the relationship will be fruitful for both parties.
It goes without saying that larger companies with bigger budgets are much more likely to be able to afford your services. But even if they’ve got enough money to invest in what you’re offering, their industry or business model might mean they’re not a great fit. (For example, if your lead-gen services favors a focused, quality-over-quantity approach, a big company that wants to generate a huge number of leads won’t be the best partner for you.)
The bottom line: It’s always a good idea to ask your leads about their position and industry to assess whether they are promising leads.
3) If your forms are actually winning them over
It’s essential for companies to test out their contact and lead generation forms to make sure they’re actually working. This is where form analytics tools come into play. These tools give you insights into how effective your forms really are.
Traffic and conversion analytics tools are especially important when it comes to measuring the effectiveness of your forms. These tools will uncover data that reveals whether your forms are successfully winning over leads. For instance, they’ll tell you how many site visitors filled out your form and converted, as well as how many of them started but didn’t complete the form, or otherwise failed to submit it. This is useful information that lets you know whether or not your forms are effectively engaging your leads.
4) Why people are abandoning your forms
Your contact form data can also be used to find out if people are finishing your forms. Analytics tools — like CallRail Form Tracking — will help you understand why your website visitors are abandoning your forms and at what point they are most likely to stop filling it out.
Form tracking assist you with analyzing the traffic that reaches your forms, and understanding the ‘why’ behind how your prospects are engaging with you. Some other metrics these analytics tools assess are drop-off rates and the average length of time it takes people to fill out the form fields. Some tools even generate detailed reports that reveal which fields cause visitors to abandon your form, which fields frustrate them, and how long it takes them to fill out your forms.
Above all, form tracking will help you figure out why people are abandoning your forms. This can help you to better understand what the problem areas are, and how to address them.
5) What form fields are driving your leads crazy
The number of form fields and the questions you ask on your contact forms can make or break a potential lead. That’s why so many studies have been done to uncover the optimum number of fields.
Close analysis of your form fields can also reveal which fields are engaging your website visitors and which ones are frustrating them. In order to uncover this information, you will need a form analytics tool. These tools can help you identify which fields are causing problems for leads and analyzes what fields might be causing them to abandon your form. By understanding which fields are causing problems for your site visitors, you can address these pain points and develop a more effective contact form.
Contact forms are capable of revealing much more than simply your prospect’s name and email address. In fact, they can provide companies with extremely important information about their prospects. Companies can make the most of their contact forms by using form tracking and analytics software to assess their forms’ performance and gain valuable insights to help them qualify each lead.
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Product life cycle is a term used to describe the stages of creation, growth, and retirement that any product goes through as it makes it way to and through the hands of its users. The traditional stages are a product life cycle are development, introduction, growth, maturity, and decline.
The product life cycle lives mainly in the hands of Product Managers and marketing teams. Marketers and Product Managers use the stages of a product life cycle for related, but different reasons. Marketers use product life cycle to create marketing strategies that will reach a broad audience of consumers, to brand as well as to determine product pricing. Product Managers use product life cycle to evaluate development resources, investment and maintenance in a product or feature.
The product life cycle stages
Ideation is the informal beginning to the product life cycle. It begins with an idea that is formed into a concept. Ideation is the process that includes evaluating the goals for the new product, market fit research, market demand, competitive analysis, usability research, potential revenue opportunity, and potential costs. Many parts of the organization are typically included at this stage including Marketing, Product, Engineering, Design, and the organization’s leadership.
Development begins after market demand is assessed and ideation has resulted in a formalized plan for a new product. Artifacts of the development stage include final designs, written requirements, and acceptance criteria. Engineers, Product Managers, UX Designers, QA Analysts are typically the main contributors at this stage. Marketers find themselves in the strategy stage as the product enters development and they begin planning market positioning and pricing for the Introduction stage.
Introduction begins after development is complete. In an Agile framework, “complete” can be relative and introduction would begin as soon as a workable product is available for use. At this stage, the market will be introduced to the product for the first time. Many times, marketers take the lead in introducing the new product to the marketplace based on the strategy they created during the development phase. The introduction strategy includes which segment of the market they intend to reach, what channels and ways of advertising will be used to introduce the new product, and what messaging will be used when marketing to consumers.
Growth is the stage where customers are adopting the new product. Product adoption is continuing to rise and profits increase. Sales teams may even be incentivized to sell the new product prospects and existing customers. Development teams are typically continuing to make changes and enhancements to the product throughout the growth stage. Teams are monitoring the product for the achievement of the goals they set during ideation. The product is still receiving investment in the form of marketing and development efforts.
Maturity is reached when product adoption is no longer growing at an exponential rate and has reached its market saturation. Teams may decide to continue to invest in the product in order to remain competitive, or they may leave it unattended while they focus on other earlier stage product efforts. Many times at the maturity stage, the product is receiving at least minimal development for maintenance but marketing efforts have become minimal.
Decline is when the market no longer needs the product in the same way that it did during the earlier stages of the product life cycle. Customers are leaving the product and sales are likely declining. Many teams decide to stop supporting the product during the decline stage and they will abandon the product or they may decide to remove it from the market altogether. This happens when customer usage declines to a low percentage of the overall customer base. Some teams may reinvent the product at this stage by adding new features, finding new market segments for the product, or repackaging the product to allow for new marketing efforts. Whether the product is abandoned or reinvented, letting a product reach the decline state allows the team to focus on the product life cycle all over again.
The importance of managing a product’s life cycle
Understanding the product life cycle is critical for both product and marketing teams, as well as the broader organization. The stages help teams understand what level of investment a product should be receiving, which products in a company’s portfolio should have the most focus and investment, and which products have the most opportunity for growth, revenue, and profit. Life cycle management impacts many teams in the organization, most notably sales, marketing, and product development. The product life cycle framework helps teams make tough decisions about existing products while helping new ideas grow.
The buyer’s journey has never been more complex. With new technologies are drastically revolutionizing the way we market and purchase products, it’s no longer as simple as a customer walking into your store and buying something they need.
Nowadays, consumers are inundated with ads on their phones, laptops, TVs, and, of course, billboards. More choice for them means more competition for you. To stay competitive, businesses need to be highly strategic about how they identify and interact with their prospects.
That’s where MQLs (marketing-qualified leads) and SQLs (sales-qualified leads) come in. It’s highly probable that you’ve heard of these two acronyms before. But what differentiates the two? And why do they even matter?
Throughout this post, we’ll also explore why lead qualification and lead scoring are such critical business practices, the nitty-gritty criteria which set MQLs and SQLs apart, and how to nurture an MQL into an SQL.
What are MQLs?
If you haven’t already, read our detailed guide to MQLs here. But if you’re short on time, here’s the gist of it.
Marketing-qualified leads have demonstrated an interest in your company and your products. They’ve usually intentionally interacted with your brand by taking part in some sort of quid pro quo exchange — they leave their contact details in exchange for promotional emails, a resource download, or a webinar sign up.
But not everyone who demonstrates an interest in your company automatically becomes an MQL. In some instances, they’re not the right leads to be going after (more on this later).
However, if they do fit your lead qualification criteria, then they can be accepted into the sales funnel and classified as a marketing-qualified lead.
Once a marketing-qualified lead has been identified, it’s now the marketing team’s job to lead them further down the funnel until they’re ready to speak directly with the sales team (and hopefully purchase).
What are SQLs?
SQLs are further down the funnel than MQLs — they’ve usually been nurtured by the marketing team’s efforts and are now closer to purchasing than they were previously.
Once they’ve demonstrated a significant interest in your products, it’s now the sales team’s job to close them. Simple as that.
Of course, not all SQLs are created equal. Someone who fills out a form immediately requesting a demo is probably a hotter lead than another prospect who visited your website multiple times but over a long period of time.
It’s also useful for a salesperson to know which particular pain-point their leads are trying to solve. Usually, this information can be gathered by analyzing the lead’s interactions to date with your organization.
Which of your social media ads did they click through on? Which of your marketing emails did they open? Which website pages did they visit? Which forms did they fill out?
This, provided with some general lead qualification data (industry, age, position, etc.) should give the salesperson all they need to contact the prospect with confidence.
Differences between MQLs and SQLs
Essentially, MQLs and SQLs aren’t all that different — they describe a prospect who’s shown interest in your company, but for whatever reason hasn’t yet become a customer.
The main difference between them is how far along their buyer’s journey they are, and which of your teams are responsible for handling them.
As you might imagine, the marketing team is in charge of MQLs. These are top- or middle-of-funnel prospects who aren’t very far along in their buyer’s journey. They require a softer, more generalized approach than prospects who are further along the sales funnel.
At this stage of the sales funnel, you need to steadily raise their awareness of your organization and pique their interest in your products. You’re also acquiring data so that you can work out what precisely they need and tweak your marketing outreach accordingly.
Once a prospect has shown enough continued interest to be classified as a bottom-of-funnel SQL (we’ll delve into more detail later on about how to properly make this distinction), they’re then passed over to the sales team to complete the sale.
The principle of lead qualification
Before you can classify a lead as an MQL or an SQL, you need to first make sure they’re worth pursuing. As a business, you don’t want to waste time, money, and effort going after people who won’t actually end up purchasing anything — this is where lead qualification comes in.
Lead qualification refers to the strategy that businesses have in place for identifying potential leads and nurturing them into becoming customers.
You basically want to work out whether or not:
- The prospect is in the right industry or company for your product
- They have pain points which your products can solve
- They’re in a position to make buying decisions
If prospects don’t meet these criteria, then you should automatically disqualify them. Sure, it feels good to have lots of people interested in your products. But if they’re ultimately never going to purchase, there’s little point in trying to convert them.
Ineffective (or nonexistent) lead disqualification can have a worrying impact on organizational morale. You don’t want your marketing and sales teams constantly coming up against people who simply won’t ever become buyers.
Not only is it a waste of resources, but it also prevents your team members from succeeding at their roles.
How to score MQLs and SQLs
Qualified your leads as valid prospects? Great. Now it’s time to engage in a lead scoring process to figure out exactly how far along the funnel they are.
As the name suggests, lead scoring involves giving each lead a score (usually out of 100). In general, the higher the score, the further down the funnel — and the closer to purchasing – they are.
Lead scoring gives you a quantifiable, standardized measurement for classifying each lead as an MQL or SQL.
Leads can be scored on a variety of potential actions: the number of times they’ve visited a website, the percentage of marketing outreach emails that they’ve opened, if they’ve downloaded a whitepaper, or if they filled out a form asking for a demo.
This list is by no means exhaustive. For example, a prospect attending an event is also an indication that they’re interested in your products. It’s up to each individual company to decide which specific actions would affect a prospect’s lead score.
Before creating your lead scoring process, it’s important that you deeply analyze your company’s customer history.
For example, do you find that people who click on LinkedIn ads are more likely to purchase than those who come via Facebook? Do event attendees more readily convert than those who download your whitepapers?
This is where your company data is vital. The more you know about your prospects, the better. For B2B businesses, you’d ideally know which company they work for, how large it is, where it’s located, and which industry it’s in.
Once you have a tangible measurement outlining where a prospect is in their buying journey, you can then classify them as either an MQL or an SQL — and pass them off to the marketing or sales teams.
What you need to decide
It’s critical that sales and marketing come together to determine what makes an MQL/SQL, and how to approach each of them. It might even be worth drafting up an SLA (service level agreement) which provides answers to the following questions:
- What’s each team’s objective? Is the marketing team focused on the number of SQLs but the sales team on revenue? Keep your team’s overarching goal in mind — this will help when fine-tuning both your lead generation and lead qualification processes.
- What precise lead score makes an MQL? Or is an MQL any qualified lead that hasn’t yet converted?
- How do you follow up with an MQL? How quickly do you follow up on any new leads, and how do you get in touch with them?
- How many follow-up attempts do you make before an MQL is downgraded back to being a prospect?
- What precise lead score makes an SQL? What does an MQL need to do to become an SQL?
- How will you maintain ongoing communication between sales and marketing teams? Sales needs to let marketing know what makes a good prospect, and marketing needs to alert sales as to each prospect’s pain points, the content they’ve consumed, and what their buyer journey to date looks like.
How do you know when an MQL becomes an SQL?
Working out how and when MQLs turn into SQLs is a complex process. If you send leads across before they’re ready, they probably won’t end up converting — and you’ll incur the wrath of your sales team.
However, if hot leads are left languishing for too long without speaking to a sales representative, then they may start to look elsewhere.
This is an ongoing process that requires constant dialogue between marketing and sales teams. Ideally, marketers should pique a prospect’s curiosity, increase their interest in the company and products, and get them to confirm themselves that they’d like to be passed over to sales (by filling out a demo form, for example).
There should also be a clear cut-off in your lead scoring process where MQLs become SQLs. For example, an MQL might have a score of 40+ (out of 100), and anyone who has a score of 80+ becomes an SQL.
Each time that an MQL visits the site, their score increases by five points. Each time they click on a link from a marketing email, their score increases by 10 points. If they fill out a demo form, they are automatically passed over to sales.
Once you’ve decided how you’re going to weigh each touchpoint, map this out in your CRM (or marketing automation software) and let it automatically take care of the rest.
By assigning a numerical score to your leads, you avoid having to rely on sentiment. It’s hard to know how ready someone is to purchase according to how you feel — it’s far more accurate to use a standardized, agreed-upon, organization-wide measurement.
Why do MQLs and SQLs matter?
Without clear parameters outlining who’s an MQL and who’s an SQL, the entire sales process would be a messy melee with different teams bombarding the same prospects from different angles.
You don’t hire marketers to close sales. Sure, if they do then that’s great — but their job is to raise awareness of your brand, pique your prospects’ interest, and get them excited about potentially buying your products.
Likewise, you don’t hire salespeople to raise awareness or interest. Salespeople are there to aggregate all the information you have on a prospect, tailor their pitch accordingly, and close a sale.
Simply put, lead qualification ensures that marketing and sales teams have clear boundaries — that they know which prospects to go after and at which stage of the buyer’s journey. By properly scoring and assigning MQLs and SQLs, you’ll keep your sales and marketing engine organized and effective.
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A partner portal – whether it’s a PRM or a homegrown system – can be an amazingly effective way to empower your team with the tools and resources it needs. But like any system, it needs regular monitoring and maintenance to make sure everyone’s reaping maximum benefit from it.
Because your portal is partner-focused, there’s no indicator more vital or telling than whether your partners are actually using and benefiting from it. Luckily, a modern and insightful partner portal gives you the power to monitor the clues your channel partners are giving about their engagement. This knowledge will give you confidence when things are going well and the intel to tweak and evolve your portal when they aren’t. What should you be looking out for? Here are some of the KPIs that will help you consistently measure engagement – and thus, the overall effectiveness of your partner portal.
How many times a partner logs in to the portal.
A partner can’t be engaged if they aren’t using your system regularly – or even worse, not logging in at all. That’s why the very first thing you should be tracking is whether your partners are actually logging in to your portal, and how often. If they aren’t logging in, you need to encourage them and that probably means improving your to-partner marketing.
Tip: If you need your partners to log into your portal more, try incentivizing them to check out new content sales enablement playbooks on a weekly basis (or whatever you decide). This way, your partners are more inclined to add logging into your portal to check out company updates on a more regular basis.
The amount of times they’ve been in contact with your partner team.
Hearing crickets? That’s a bad thing. Typically, an engaged partner will be reaching out to you. A potent, automated onboarding process will naturally eliminate some of that outreach because basic questions will be already covered. However, you can expect that engaged partners will come to your team with more advanced requests like guidance on the right prospects to go after and feedback on how they’re performing. If you’re surrounded by the sound of silence, ask yourself why. Do partners know where to go for help and questions? Is it easy for them to reach out? Are you creating a welcoming, open and collaborative atmosphere?
Tip: If you need to increase the frequency of communication between your partners and you, try creating processes around meeting cadence and check-ins. If there’s a standard meeting on the calendar for a status update, it could open the door for better conversation or eliminate confusing processes your partners may be experiencing.
How many learning tracks or pieces of training they’ve completed.
A thirst for knowledge is a great indicator of engagement. If a partner is fully on board, they’re going to want to continually learn and grow with you. Keep an eye on the learning tracks or training they’re completing in your partner portal. Make sure partners know and understand the learning resources available to them and foster an environment that promotes continuous education and improvement.
Tip: Increase learning tracks and onboarding certification completion through gamification. Who doesn’t like incentives?
How much content they’ve viewed, shared or downloaded.
You can have a whole library of resources on your partner portal, but if partners aren’t using it, it’s useless. The more content they view, the more they know about your company and the better brand ambassadors they become. Keep an eye on what they’re viewing and using. If content isn’t being used, ask yourself why. Is it a matter of to-partner marketing, or is that your content needs an overhaul?
Tip: Alert partners when new content is uploaded to your portal. This is a good reminder for them to engage with relevant collateral you spend time creating.
How much content they’ve co-branded.
The power of co-branded content is strong – it’s the most effective way for partners to solidify their connection to your brand in their prospects’ eyes. Although not all partners should be able to co-brand content, it’s important to keep an eye on those that can. Are they using the full functionality of your co-branding resources? If not, ask yourself if they fully understand its power and if your process is simple enough.
Tip: Give them co-branding ideas and use cases to help increase the volume of content co-branded.
Look at it in totality.
Now that you’ve examined engagement levels at a granular level, take a step back and look at the big picture. The simplest way to track overall channel health is to look at the percentage of your partners that are engaged. If overall partner engagement is dropping, it may be a sign that you need to revamp your strategy. If engagement is on the rise – give yourself a pat on the back, you’re doing it right! Either way, never stop keeping a close eye on engagement. A portal is your partners’ home base. Make sure it’s always giving them what they need to succeed.
The post These KPIs Will Tell You if Your Partners are Truly Engaged appeared first on Partner Relationship Management Software (PRM).
Customer Lifetime Value (CLV) is the total value in revenue a customer represents to a company over the entirety of their business relationship or customer life cycle. It is one of the most important metrics to track for overall business performance.
The importance of measuring CLV
Customer Lifetime Value (CLV) can be one of the most important metrics for you to track in your business for a host of reasons. Three of the most important reasons to track CLV include, but are not limited to:
- Developing marketing strategy & measuring marketing performance
- Building effective revenue projections for your business
- Assessing your company’s valuation
Customer Lifetime Value (CLV) is sometimes used interchangeably with Lifetime Value (LTV), and is a current projection of future revenue. In the strictest sense, CLV is the present value of the future cash flows attributed to the customer relationship.1
In the case of marketing, understanding CLV is possibly the most important metric that you need to understand in order to make both strategic and tactical decisions. When evaluating how your business is going to acquire new customers, and how much you are willing to pay to do so, it is essential that you understand exactly what a customer is worth to the business so that you are not exceeding that value with your marketing efforts. Quite simply, Customer Acquisition Cost (CAC) cannot be greater than Customer Lifetime Value (CLV). Remember, marketing is a driver of growth and revenue in a business, not a cost center. If your marketing efforts are not generating a profitable return on your investment, you are doing marketing wrong.
Customer LTV for repeat purchases
For example, assume that you run an e-commerce website and your average order value is $25 and your margin is 50%. If you know that on average a customer will return to purchase from you again 6 times over the course of the next two years, then you know that your CLV is $75. (($25 * 50%) * 6) = $75 Armed with this knowledge, you know that you can confidently spend $18.75 to make that first sale, even though $18.75 is greater than your profit on that initial purchase ($25 * 50% = $12.50), because that new customer will likely continue to purchase from you five more times over the next two years, resulting in Marketing Return On Investment (MROI) of 400%, which is a solid return on marketing investment.
Customer LTV for recurring revenue Models
In the case of subscription-based companies, or recurring revenue business models, if a customer spends $10 per month and has an average lifecycle of 4 years, a 75% profit margin will result in a Customer Lifetime Value of $360. This means that as a marketer you can spend as much as $90 to drive that initial customer conversion of $10 and still see a 4x return on your marketing investment. This is one of the reasons that recurring revenue business models are so attractive for business owners and investors as it leads to a long-term relationship and supports a base of loyal customers.
Using customer lifetime value to develop marketing strategies
As an intelligent, data-driven marketer, knowing your CLV and comparing it to your Customer Acquisition Cost (CAC) is a smart way to evaluate the effectiveness and efficiency of your individual marketing tactics and channels. However, CLV also plays a critical role in strategic development, and this is where the power of customer segmentation really moves the needle for marketing performance.
Segmentation is effective in part because delivering marketing messages to specific & similar groups of consumers allows marketers to increase messaging relevancy and speak to unique consumer pain points. But customer segmentation also drives strategy when the concept of CLV is applied to understanding customer cohorts and what groups of customers a business should seek to acquire. Whether you are segmenting by demographic characteristics (such as age, gender or geographic location), firmographic fields (ie. industry, employee size or revenue), or behavioral factors (ie. recency/frequency of purchase), your segmentation matrix is incomplete without understanding which are your most valuable customers. When you have accurately identified your most profitable customers, you can focus your marketing efforts on attracting those specific customer segments, improving your likelihood of producing a positive MROI.
This critically valuable information can also inform business managers and product or service developers as they evaluate the future direction of the business. This kind of insight is at the heart of what is called consumer-centric marketing or marketing-led business development.
How to measure customer lifetime value
While this metric is typically expressed in terms of an average and based on past customer data, in certain circumstances it is used in one-to-one relationships and can be a fixed, known number, such as in contract sales or one-time purchases.
Lifetime value calculation
CLV = Margin ($) * (Retention Rate (%) / 1+Discount Rate (%) – Retention Rate (%) )
CLV = (ARPU ($) * Margin (%) ) / Churn Rate (%)
CLV = Revenue – (COGS + Cost of Services)
Customer Lifetime Value (CLV) is almost always calculated as the value after gross margin, or the actual profit attributed to a customer after the cost of delivering the service and the Cost of Goods Sold (COGS), the raw inputs that go into creating products. Sometimes CLV can include the Customer Acquisition Cost (CAC), how much must be spent on the process of acquiring a new customer, or a similar metric such as Cost per Acquisition (CPA), the average cost of acquiring a customer, into the calculation2. But in other cases, CLV is weighed against CAC metrics to evaluate the effectiveness and efficiency of marketing and sales efforts.
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Time-decay attribution is a multi-touch attribution model that gives some credit to all the channels that led to your customer converting, with that amount of credit being less (decaying) the further back in time the channel was interacted with.
The assumption here is that the first advertising channel your customer interacted with merely planted the seed, and the customer’s interest in committing to a purchase grew over time with repeated exposure to various marketing channels. As such, the way that the time-decay attribution model assigns credit to your different channels can be interpreted as a rising level of interest and commitment from the customer.
Application of the time-decay attribution model
1. First, a friend mentions an old movie, and I think “I wonder if a t-shirt exists for that?” – this leads me to an organic search for the item on my phone during a lull in conversation. I see a few different options. I click one, but when my friend wants my attention again, this passive activity ends as I close the window and return to being present. I would not remember my fleeting desire for this shirt.. unless I was somehow reminded..
2. Two nights later, I’m scrolling through my Instagram feed before bed. (We’ve all seen the studies on electronics usage affecting sleep. That doesn’t mean people don’t do it.) Between pictures of my friends’ pets and what they had for dinner, an ad appears for the site I went to earlier. I go to it again. I wisely decided that I shouldn’t make a purchase while half-asleep, but the item is more firmly lodged in my brain at this point.
3. At work the next day, I scroll through Facebook after a string of meetings to give my brain a break. Surprise! There’s another ad for the site. I go back to show my co-workers the shirt for the social approval I need before making a $20 purchase. They co-sign on it, but as a responsible employee, I then get back to writing articles like this one.
4. The following evening, I’ve decided to pull the trigger on my new t-shirt that will proudly display my knowledge of obscure film. By this point, I remember the site’s name, which would have been in doubt after my first (or even second) encounter with it – thanks, advertising! I make a direct visit to the site while fully lucid, I complete the transaction.
I became a conversion, and my conversion path was:
Organic Search (4 days ago) -> Instagram (2 days ago) -> Facebook (1 day ago) -> Direct visit
Using the time-decay attribution model, this effectively reads as the journey from curiosity to taking action. For any math-inclined readers, the basic formula involved is y = 2(-x/7), with the results then converted proportionately to fit into a neat 100%. Accordingly, the conversion credit break down as:
Organic Search: 19.8%, Instagram: 24.1%, Facebook: 26.6%, Direct: 29.4%
Of note, this illustrates how important the time aspect of this model is: the above example plays out over four days. Many purchases beyond a $20 t-shirt take much more time to consider, so the difference in conversion credit percentages above becomes much more drastic the longer the customer journey is.
Since this t-shirt cost the company $4.50 to make, the profit is $15.50 for the sale. The time-decay model gives Facebook ads spend credit for 26.6% of this profit:
$15.50 * 26.6% = $4.12
And, Instagram gets 24.1% of the profit:
$15.50 * 24.1% = $3.74
Using a hypothetical cost of $1.70 per click for Instagram and $1.05 per click on Facebook, we can see that in this case the lower value spent on the Facebook click drove more value. This helps make the decision to maintain or raise the Facebook Ad spend.
To be more accurate, the example would include other business costs, lifetime value of customers and be applied across many purchases and customer touchpoints to measure overall profitability.
Pros and cons of using a time-decay attribution model
- Sharing is Caring. Gives some credit to all touchpoints
- Always Be Closing. Touchpoints closest to the conversion are valued the most, which gives preference to marketing channels that tend to do more of the “closing” work
- Consistency is Key. Applying a standardized formula to all of your campaigns will easily highlight fluctuations in the activity of individual channels
- Didn’t See You Back There. Gives less credit to the first touchpoint, which might be the most difficult to execute
- One Size Doesn’t Fit All. Customer journeys are not always a straight line, so the path they took may not be best represented by lowest to highest value interactions
- Hard Numbers. The math involved, while consistent, could be a little complex
Time-decay attribution is especially helpful to measure longer sales cycles, as time between channel interactions will really serve to highlight the difference in conversion credit they receive. Timed campaigns also do well under this model since the time measurement aspect is what this model is based around. Consistency is also a major benefit, since the y = 2(-x/7) formula is standardized, so fluctuations in activity are easily measurable. By using a set formula that uses the number of days prior to conversion as a key variable, every marketing channel receives credit based on the assumption that the more time that has passed since the first interaction, the closer the customer got to the actual sale.