Part 2 – The Goals That Do Matter (To The Executive)
As we established in Part 1 of this blog series, the most important metrics that indicate good marketing performance in B2B companies are qualified leads, sales accepted opportunities, and closed deals. Many organizations look at marketing as simply providing the first of these items, but that view discounts the strategic role marketing plays in the revenue generation process. It is an end-to-end process that must be optimized in the organization, from initial lead to closed deal. Marketing influences all parts of the pipeline. Let’s look at how we define and think about each of these items.
Defining the metrics that matter.
QUALIFIED LEAD. People use “lead” in so many ways. If you think “lead” is going to cause confusion, use “response” or “inquiry.” What needs to be delivered here is something that gives your inside sales team (or your sales team, depending on who is doing the qualification) a reason to pick up the phone and engage in a warm conversation. It should be a natural follow-up opportunity. It is NOT simply a prospect name and contact information. There must be some action the prospect has taken in response to marketing outreach or content. Better response types lead to better conversions to sales-accepted opportunities. Some response types we use are “webinar registration,” “white paper download,” “booth conversation,” “contact us form submission.”
Now let’s discuss “qualified.” There should be agreement across marketing, inside sales (if applicable), and sales as to what “qualified” means, and it should flow directly from the growth strategy. The organization of the prospect should be consistent with the market segment, organization size, and other criteria that identify the strategic target segment. The criteria of the prospect person should be consistent with the strategic stakeholders, typically defined by title or role, but many other criteria could be important. Typically, these criteria get more specific as they enter the opportunity stage, as the qualification process may use some intermediate roles to get to the desired role.
Document the qualification criteria, and track the criteria in your CRM system. Over time, this data will help you optimize your marketing programs. For example, we will be able to answer questions like, “which prospect role is more likely to generate an opportunity, and what programs are generating leads with that role?”
SALES-ACCEPTED OPPORTUNITY. This is an opportunity that is accepted by a sales rep. The ownership of the opportunity transfers to the sales rep (the ownership may previously have been the inside sales rep), and the opportunity becomes part of the value of the sales pipeline. This is the point at which sales deems this a viable, qualified opportunity for which they are willing to be held accountable for closure. If you have an inside sales team, there may be an intermediate stage here, such as a meeting or phone call that tees up the sales qualification process for the sales rep.
You may be asking – don’t you want to look at the portion of those opportunities that are the result of marketing efforts? Well, you can, especially if your marketing function is fairly new. However, the most powerful growth functions I have seen do everything they can to eliminate the “us vs. them” mentality. We are strong advocates of a jointly-owned pipeline, where we win and lose together. The way we look at optimization is across all opportunity sources – various marketing campaigns, inside sales outreach, and sales outreach. All of these can work together, but as your marketing function matures, the vast majority of new opportunities should be marketing generated. Then your question is how to optimize marketing investment.
CLOSED DEAL. Well, a closed deal is a closed deal, and is the ultimate measure of marketing success. Marketing can influence the successful conversion across the various stages of deal progression with enablement tools such as presentations, ROI models and calculators, collateral, case studies, reference programs, branding and awareness, etc. This is the point at which you can truly optimize marketing efforts, because if a deal doesn’t close, all the previous steps and stages of the pipeline were wasted energy and money (ok, a little dramatic there, but you get the point). Analyze the commonalities of your closed deals, compare them with your strategy. Some closed deals cost more than others, some take longer than others to close. You want to improve all of those metrics if you are going to optimize ROI from marketing. In addition, you may find characteristics of closed deals that feed back into your strategic decision making. (That is a topic for another blog…).
Setting the right goals for each metric.
We have been modeling sales pipelines for decades. We engineer goals backwards from bookings targets. Seems straight-forward enough – keep using the conversion rates to determine the value of the previous stage, use the stage lengths to understand when the pipeline needs to be built for future bookings. But fair warning – the devil is in the details.
The model requires a few inputs:
- The consistent definition and execution of the marketing, inside sales, and sales process (these may be different across revenue streams, such as new sales and customer upsell)
- The bookings target(s) by revenue stream, average deal size
- The characteristics of deal progression – conversion rate from stage to stage, and length of each stage
Depending on the complexity of your growth organization, you may need a few more inputs, but let’s keep it simple here. If you have those items, you can calculate exactly what you need at each stage (qualified lead, sales-accepted opportunity, and closed deal are 3 stages).
If you hit these goals, and your model is correct, you will hit bookings. That is simple math.
While this approach allows you to set marketing goals that matter, you will also create complete transparency for the executive team on the probability of hitting bookings. You will know very early whether you are likely to hit your bookings target, giving you time to adjust if you’re off course. You also know where you are falling short (whether it is the initial lead generation function or the demo or the contracting phase, for example), so you can focus on the right area(s) for improvement.
The beauty of the resulting system.
We have given you the metrics that the executive team should be watching all the time, and which should define marketing success. We have defined the metrics in a way that builds a powerful marketing and sales execution engine – where everyone knows what the process needs to be from end to end, and what their contribution is to the overall success of the organization.
The good news: You don’t have to build this yourself. We have been building and refining our modeling and optimization tool for decades. We have automated the work of defining marketing and sales process, modeling pipeline, setting goals and tracking progress. It is the piece of your sales and marketing automation systems that is missing – the strategy, the precision, the clarity.
If you’d like to learn more about our strategy platform, ayeQ, and how it can help you set goals that matter, let us know!
