Balanced scorecard: how to measure B2B marketing so it actually means something

Balanced scorecard: what it actually measures and where the result comes from

Balanced scorecard, in plain terms a strategic scorecard, is a way of linking financial goals with goals that are not financial: customer service, process efficiency, and team capabilities. The idea dates back to the 1990s and is today one of the most widely used planning and control instruments at company level. Kreutzer writes about this in his management control handbook, noting that the scorecard is displacing classic, pyramidal goal systems (Kreutzer 2019, chapter 2.4).

The key difference from an ordinary sales report is that goals from different perspectives are defined at the same level of the hierarchy and must be achieved simultaneously. That sounds harmless until you try to reconcile "lower the cost of lead acquisition" with "raise lead quality". Then it turns out that the scorecard is a tool for exposing conflicts that exist anyway.

In B2B marketing, the balanced scorecard most often takes the form of four sets of indicators, linked by a single logical formula:

Financial result = (number of sales opportunities × conversion rate × transaction value) - cost of acquisition and servicing

Each element of this equation has its own perspective. The number of opportunities depends on marketing activity and visibility. The conversion rate depends on lead quality and the work of sales. Transaction value depends on positioning and segment. Cost depends on process efficiency and how many times you repeat the same work. If any of these links is missing from the scorecard, the number at the end will be true, but useless.

One caveat is worth adding. The scorecard measures what can be measured, not what matters most. That is why in service companies, including in B2B marketing strategy, alongside numerical indicators, a short list of qualitative assumptions is kept that explains why the numbers look the way they do.

Four perspectives, one board: how to read a strategic scorecard

In B2B practice, the scorecard comes down to four columns, each answering a different question. Below is a version that can be implemented in a company employing anywhere from a few to a few dozen people in marketing and sales.

Financial perspective

Question: does marketing return its cost? Indicators: revenue from marketing channels, customer acquisition cost (CAC), return on marketing investment (ROMI), share of revenue from customers acquired in the last 12 months. This is the only column the board reads without translation, which is why it is worth keeping short.

Customer perspective

Question: does the customer see us where they are looking? Indicators: share of market conversations (so-called share of voice in selected channels), number of quote requests, average time from first contact to decision, customer churn rate. In B2B, the last one is especially important, because the cost of acquiring a new customer is usually many times higher than retaining an existing one.

Internal process perspective

Question: is the way we work eating into our results? Metrics: response time to an inquiry, number of leads rejected by sales (lead rejection rate), time to prepare a proposal, number of manual steps in the process. This is where it most often turns out that the problem is the fact that a lead reaches the salesperson three days after it stopped being relevant, rather than the budget. At one manufacturing company, a lead from the technical director of a large plant came in on a Friday afternoon. The salesperson saw it on Monday morning, called on Tuesday, and heard: "Thank you, we closed the deal with another supplier on Friday, you were third in line." Three days of delay, one lost opportunity, and zero information in the report, because in the report the lead was there, it just ended up as "no contact".

Learning and growth perspective

Question: is the team growing along with the market? Metrics: how many people completed training on analytical tools, what is the turnover in the marketing team, how many improvements were implemented in the quarter, is the data available in one place. This column is most often skipped, yet it explains why two companies with identical budgets achieve different results.

Kreutzer points out something that is easy to overlook: goals defined across different perspectives must be achieved simultaneously, which often leads to conflicting goals (Kreutzer 2019, chapter 2.4). In practice, this means the scorecard is not there to make all metrics green. It is there to consciously choose which metric will be red this quarter and why.

What results are good and what results are bad in B2B companies

There is no single set of thresholds that fits every B2B company, and anyone who claims otherwise is selling you something. The ranges differ between industries, sales models, and the length of the buying cycle. Below is what can be said honestly. Disclaimer: the ranges given are editorial estimates based on implementation experience in B2B projects, not the results of a survey or data from a single source. We derived them by comparing observations from several dozen marketing measurement implementations with publicly available industry reports and conversations with people running B2B sales. Treat them as a reference point for your own data, not as a hard benchmark.

Data on the scorecard itself as a tool is better documented than industry data. Tomczak, Reinecke, and Kuss describe that since the 1990s the scorecard has been an extension of traditional metric systems that were focused mainly on finance, and that its value lies in considering the financial, customer, internal process, and learning and growth perspectives together (Tomczak, Reinecke, Kuss 2018, chapter 6.3).

Reporting is a separate problem. In the Handbook of Marketing Decision Models (edited by B. Wierenga, 2017 edition), we find the observation that despite the strategic importance of marketing metrics, only some of them are routinely reported to the highest levels of the organization, and at senior levels the language of finance still dominates. The quote comes from the chapter devoted to measuring marketing effectiveness; the exact chapter number and title are worth verifying in a specific edition, since the content layout differs between printings. This explains why many scorecards in B2B companies exist only on paper: they are written in a language the board does not use every day.

How to improve a balanced scorecard in B2B marketing: seven moves

The steps below are ordered from the cheapest to the most engaging. Not all of them have to be done at once, but skipping the first two means the rest will not work.

1. Establish one definition of a lead and write it down. If marketing and sales count leads differently, the scorecard will be measuring two different companies. The definition should include qualitative criteria, not just the fact that a form was filled in.
2. Measure response time to an inquiry for two weeks. This most often reveals the biggest gap in the process and requires no budget at all, just a spreadsheet and honesty.
3. Limit the scorecard to eight metrics.Two numbers per perspective. A scorecard with twenty indicators stops being a decision-making tool and becomes decoration for the quarterly meeting.
4. Add an owner and a reaction threshold to each indicator.The point is the level at which someone has to do something. An indicator without an owner is a number that everyone knows and no one acts on.
5. Repeat the measurement on the same cycle.Monthly for process indicators, quarterly for financial and customer ones. Changing the frequency mid-year makes comparison impossible.
6. Write one assumption into the scorecard that may not hold true.For example: "we believe that a 20% increase in the number of inquiries will not lower their quality". After a quarter you check whether that is true, and that is the real value of the scorecard.
7. Decide who runs the scorecard.In companies without an analytics department, this task often falls to someone outside the marketing team. In that case a sensible option is an interim marketing manager, who comes in for a defined period, sets up the measurement and hands it over to the internal team.

A separate matter is bsc marketing, that is a scorecard narrowed down to the marketing function. In this version the financial perspective comes down to impact on revenue, the customer perspective to the quality of inquiries, the process perspective to campaign efficiency, and the development perspective to team competencies. Such a scorecard is easier to implement, but it has one drawback: it does not show where marketing ends and sales begins. That is why in companies with separate teams it is worth keeping one shared scorecard, even if some indicators are duplicated.

Finally, something that is hard to accept but saves time: a scorecard does not improve results. What improves them is the decision made on the basis of what the scorecard showed. If after a quarter no action has changed, that does not mean the indicators were wrong. It means the scorecard serves a decorative function in the company.