5 Strategies Marketing Leaders Need to Succeed in 2023

The famous Roman Stoic Seneca once said, “Luck is what happens when preparation meets opportunity.” Ultimately, you need both to succeed. The same might be said to marketing leaders in 2023: prepare, prepare, prepare!

There is no way to predict how the macroeconomic climate is going to shift or how it will impact B2B SaaS marketing teams. But one thing is clear — marketing leaders have their work cut out for them to thrive in what is likely a challenging environment. Many best practices that previously worked will be challenged, and agility remains critical.

Based on Insight’s close partnership and expertise in helping companies scale, we’re tracking the emerging questions we believe will shape marketing strategies in the coming year:

  1. How should you change your digital marketing strategy?
  2. What role will customer marketing play?
  3. Events: In-person? Virtual? Hybrid?
  4. How can personalization and generative AI help?
  5. What can be done to keep the marketing function whole in the face of organizational restructuring?

Read on for the marketing strategies we think will make a meaningful impact this year.

Organic efforts can yield higher ROI

One of the most significant challenges B2B SaaS organizations will face is the increasing cost of demand generation. With buyers pushing decisions out, there is a need for more touches to drive leads through the buyer’s journey, and marketers will have to be creative in order to keep their costs low.

Additionally, social media is becoming increasingly difficult to use for targeting given the recent changes across the major platforms and increased scrutiny around privacy. Facebook, LinkedIn, and TikTok have all seen CPM (cost per thousand) increase significantly in 2022. Facebook, and parent company Meta, is particularly difficult since they’ve been at the center of numerous data-related scandals, while Twitter’s shifting focus and paid options have been difficult for marketers to navigate. Twitter’s Ad Manager volume and roster of advertisers both fell sharply in October and November 2022. LinkedIn remains a great platform for targeting, though limited inventory and expensive ad spaces are becoming more common.

Key Insight: Your ROI on investing in stronger organic will likely be higher than paid digital. Reallocate budget to content and SEO.

Invest in customer marketing

As businesses started to experience a slowdown in new business ARR in 2022, customer retention and expansion became critical. Across the Insight portfolio, we saw our companies experience a 4% increase in expansion ARR between Q3 FY21 and Q2 FY 22, while new ARR was flat over the same period. Furthermore, our high-performing companies tend to see greater marketing spend efficiency due to a focus on retention and expansion.

marketing spend vs new and expansion ARR

It’s clear that customer retention will continue to be a major focus for B2B SaaS marketers. As the world continues to grapple with an unfolding economic crisis, businesses across all industries need to fight harder than ever to keep their customers from jumping ship and going to competitors that offer a cheaper price. Investing time into creating an effective customer marketing function is essential.

Key Insight: Expansion revenue will be cheaper and easier to drive than new logo this year. Consider reallocating both budget and people resources to these initiatives.

For more on the importance of customer retention and the role of marketing, read How to Grow by Marketing to Customers.

Shift the events mix

Overall, 41% of Insight portfolio companies indicated event budgets in 2023 will remain the same compared to 2022, while 25% are increasing budgets, and 34% are experiencing a decrease in budget.

events budgets in 2023

With inflation hitting everything from travel expenses to on-site cappuccino machines, events may become a more difficult and expensive prospect in 2023. Data from Insight portfolio company, Bizzabo, suggests that in-person events remain important and are here to stay: 72% of event organizers indicated that in-person events remain a crucial part of their overall event strategy, 98% plan to host at least one in-person event next year, and 85% plan to host at least three.

However, for companies experiencing significant budget constraints, virtual event platforms could provide the solution. Think webinars, tailored content facilitated by virtual assistants and AI bots, as well as interactive 3D experiences. These solutions can help marketers reach new customers and keep current ones engaged in a more cost-effective manner, allowing them to maximize their budget. According to Bizzabo, 68% of event organizers plan to have a virtual component at their next in-person event, and 53% are “focused” or “very focused” on a virtual events strategy for 2023.

Key Insight: Maximize your event budget by getting the right mix of virtual, live, and hybrid events. Make sure to include multiple tactics to drive multiple objectives for events such as brand building, pipeline acceleration, and partner marketing.

For a full playbook on how to think about Hybrid Events, read Virtual, In-Person & Hybrid Events? Oh, My!

Enlist help from AI

Personalization will be key in 2023. As the target market continues to become more demanding, B2B SaaS markets must lead the way in providing a bespoke journey for each customer. From tailored content and products to automated emails and personalized ads, marketers need to find ways to make their customers feel like they are the only ones that matter — and it needs to be done at scale.

Many companies are also starting to experiment with generative AI in creative ways. From creating short-form bespoke content and LinkedIn posts, to brainstorming webinar ideas and product names, the use cases for generative AI are expansive. Be careful to validate content produced by generative AI to ensure the facts are correct.

Key Insight: Personalization demands more content than most marketing teams are capable of creating. Begin experimenting with tools like Jasper and Writer to leverage the power of generative AI and bridge the gap.

For more on generative AI, read What Marketers Need to Know About AI-Generated Content.

Keep marketing’s seat at the table

Marketers will need to fight hard to keep the marketing function whole in the face of organizational restructuring. Marketers need to be aware of the dangers of “siloing” their team. It’s becoming increasingly common to split off demand generation and put it under the CRO’s domain, product marketing connected to the product organization, and marketing operations placed under revenue operations. As B2B SaaS organizations continue to become more complex, it’s important for marketers to have a seat at the table and ensure that their efforts are aligned with business goals. Tools like BlueOcean can help marketers quantify their collective business impact by providing insight into how ads, content, brand messaging, and more compare to competitors. By directly tying brand value and other marketing activities back to business impact, marketing leaders can maintain a seat at the table.

Key Insight: While some marketing activities may seem to fit better under another functional area, the loss of integrated messaging and tactics will cost the organization far more.

2023 is likely to be an interesting year, but with the right strategies in place, B2B SaaS marketers can emerge as winners. So, start preparing now and maybe your organization might get lucky with a strong year of performance.

Editor’s note: Jasper, Writer, BlueOcean, and Bizzabo are Insight portfolio companies.

How to Grow by Marketing to Customers

With many ScaleUps prioritizing customer retention and growth in 2023, marketers must deepen the impact of their customer marketing program.

Engaging customers is good for business, as they can be a company’s most efficient source of growth. GTM teams can generate additional revenue from customers for as little as 1/10th the cost of new business. It takes less time, effort, budget, and companies typically win customer opportunities at a higher rate.

When new business demand wanes or customer churn increases, ScaleUps must respond by changing how they market throughout the revenue cycle. But, in our mid-2022 survey, only 11.1% of Chief Marketing Officers (CMOs) reported feeling “very well prepared” amidst increasing macroeconomic uncertainty. Meanwhile, 87.3% were experiencing softening demand.

CMOs’ uneasiness might, in part, stem from their comparative lack of engagement with customers after the deal is won. Throughout recent boom years, most CMOs have focused on generating new business. As a result, they’re ill-positioned to retain and expand business from existing customers.

From Insight’s Budgeting & Planning survey of ScaleUp companies, we know that customer marketing has received the least investment out of the seven key marketing functions. By comparison, the typical ScaleUp adds a CSM for every 19 enterprise and 34 mid-market customers. Additionally, just 1 in 5 account-based marketers say customer expansion is in their remit.

Read more: CMO Playbook for Economic Headwinds: Make Your Move Before It’s Too Late

To mitigate softening demand and diversify a business’s revenue mix, marketers must help expand customers. Doing so will supplement near-term deficits in growth and improve marketing’s efficiency over the long term.

“It’s a team effort. Marketing must play a role in driving growth throughout the revenue cycle. They connect sales with new buyers and help close deals. After the sale, marketing partners with customer success to deepen our relationships with our existing customers, driving product adoption and expanding across divisions or territories within a single account.”

-Tal Kain, CEO of Velocity

How? By collaborating with their peers in sales and customer success to do the following:

  1. Forecast addressable customer revenue
  2. Set objectives, goals, and KPIs
  3. Develop a post-sale strategy
  4. Resource and integrate post-sale teams
  5. Execute a joint tactical playbook
  6. Operationalize a unified “go-to-customer” process

Forecast addressable customer revenue

Why it matters: Know the size and types of opportunities within your customer base to decide where to focus and how much to invest. Consider how investments in customer retention and expansion impact your firm’s “Rule of 40” performance (e.g., X% growth rate + Y% profit margin = 40%).

Analyze your current opportunity mix:

  1. How quickly and efficiently do you generate profit?
  2. What changes could you impart on your opportunity mix by investing in post-sale marketing
  3. How might your changes to your opportunity mix impact how efficiently you generate profit?

Based on your forecast, scope your post-sale marketing initiative:

  • Pilot. If the size of the opportunity seems modest or uncertain, plan a narrowly scoped, but representative, pilot. You might focus on improving one or two post-sale outcomes by deploying a small tactical play in a limited customer segment.
  • Sprints. If the opportunity is significant and certain, introduce customer marketing elements in waves, evaluating their impact along the way.

You’ll likely need to make tradeoffs, prioritizing which investments you make within your opportunity mix.

“As a startup company, your rapid-growth strategy for Year 3 should have a lot more customer opportunities than Years 1 and 2.”

-Kerry Cunningham, Senior Principal of Product Marketing, 6sense, and co-author of The Demand Unit Waterfall™

Set objectives, goals, and KPIs

Why it matters: GTM teams must align on goals and how they measure their progress toward said goals.

Once you’ve forecasted the ideal opportunity mix, define your objectives to focus your post-sale program plan. You could:

  • Accelerate time-to-value.
  • Improve product adoption and/or drive more utilization.
  • Upsell to more and/or higher price tiers.
  • Cross-sell the same buyers to additional products.
  • Cross-sell new buyers within a customer account.
  • Secure renewals, reduce churn, and/or prevent downgrades.

Once you’ve homed in the changes you seek to impart on the customer lifecycle, determine which KPIs best measure those changes and set goals for each KPI.

You can use benchmarks to help you set goals. But the benchmarks aren’t your goal, they’re a conversation starter. Consider variables, such as growth stage, expansion motion, and customer characteristics.

Develop a strategy

Why it matters: Businesses must focus on just a few key ways they can provide value to customers–beyond the product itself–and a few key ways in which they can enable staff to deliver on said customer value.

Here’s how:

  1. Brainstorm all the levers you could employ to create value.
  2. Prioritize those levers which create the most value. Pick no more than a few.

Once your go-to-customer strategy is set, refine your customer marketing strategy. Develop customer ICPs, personas, and buyer journey models. Then use those models as a basis for your post-sale messaging strategy.

Customers can be different than buyers in several ways:

  1. Marketers should clarify the differences between pre- and post-sale customer profiles.
  2. They must get to know which personas emerge once the buyer has purchased a product.
  3. They must understand their customer’s journey.

With these insights in hand, marketers can develop messages that motivate a customer to move through the post-sale cycle.

Resource and integrate post-sale teams

Why it matters: Resource your post-sale team well enough to deliver value to the customer, without burdening post-sale efficiency. Hire the right people and place them into the right structure.

Start first by identifying who in your company already owns each part of the customer journey (e.g., Customer Success Manager, Account Manager). Then, consider which marketers might be best suited to partner with them:

  • What capabilities do I need?
  • Given my targets, how will I resource the team? Which hires must I prioritize?
  • How will I balance in-house and outsourced talent?
  • How will I structure my staff?

Your opportunity mix offers clues, as does the functional scope of other GTM teams. Though the marketing team could outsource some of the work, it’s best done by in-house staff who have the skills and business acumen to engage precious customer points of contact.

Execute a joint tactical playbook

Why it matters: GTM teams can employ a nearly endless array of tactics. So, they must draw on their go-to-customer strategy to determine which tactics to execute. The delivery must be well-orchestrated if the message is to have its intended effect. The right tactics, at the right time, with the right people.

Like a sports team might coordinate its offensive players against the defense, a GTM team executes a post-sale play oriented to a target customer’s traits and the business’s objectives.

  1. Based on your objectives and strategy, which plays will you run?
  2. How do those plays suit your customer ICP, personas, and journey?

Based on your answers, create a playbook in partnership with cross-functional GTM teams.

Operationalize a unified “go-to-customer” process

Why it matters: Ensure customer-facing stakeholders know what, when, where, and how to support the customer.

“Our marketing team is partnering with customer success to offer additional value to our customers. We host product release webinars for customers, where they learn how early adopters are putting to work new software capabilities. We’ve found our customers respond better to learning from their peers — and are more likely to ask for a demo — versus a marketing email alone.”

– Jamie Walker, EVP Marketing at Keyfactor

Build boosters and remove blockers to ultimately create value for employees, suppliers, and customers.

  • Incentives. Evaluate your performance-based pay to ensure incentives align to customer outcomes and KPIs.
  • Recognition. Revise your internal communication and meeting cadences to celebrate customer wins.
  • Technology. Evaluate your tech stack to determine if you have the right tools, configured to meet the requirements of customer engagement. If you don’t, procure new tools and/or change the configuration of your existing ones.
  • Vendors. Evaluate the capabilities you have on-staff, the capabilities you need, and the gap between. Outsourcing might be the most efficient way to fill these gaps.
  • Enablement. Seek out ineffective elements of your cross-functional customer operations. Then, develop a “learning agenda” that addresses those elements via an enablement program.
  • Documentation and monitoring. Evaluate your operational performance. Then, define essential processes and monitor their performance.
  • Report. Brainstorm the key questions post-sale staff must answer for themselves. Then, consider which metrics they’ll need to answer those questions and how best to present the metrics in a self-service dashboard or report. Finally, decide which systems to use for reporting.
  • Automate and outsource. Audit your processes and procedures for opportunities to outsource and automate.
  • Fun and relationships. Foster an engaging culture for your post-sale staff and create avenues by which they can build relationships with your customers.

For many businesses, customers represent a compelling source of efficient growth. This growth results from strategically creating value for customers, as well as for employees, suppliers, and partners.
GTM teams can carefully craft tactical plays, executed by way of tightly coordinated go-to-market operations, to deliver an excellent customer experience. In doing so, they’ll earn their customer’s loyalty and advocacy, generating better margins for the business.


Examples in practice

To illustrate the strategies outlined above, let’s use an imaginary drone data analytics company to show how these principles work in practice.

Forecasting addressable customer revenue

A drone data analytics company offers software modules that each process three different types of aerial images: photographs, infrared, and thermal.

  • Most customers start by purchasing the photography module.
  • The software provider licenses the modules on an annual subscription and charges a small fee for each image processed.
  • Infrared costs more than photographs; thermal is the most expensive.

Here’s how they might evaluate their opportunity mix:

  1. Increase Utilization: Photography. The marketing team forecasts that it would cost $0.05 per image to drive more photograph processing (i.e., increase utilization). But they earn just $0.01 in revenue for each image processed.
  2. Cross-sell Infrared to the same buyers. They expect that marketing the cross-sale of the infrared module would cost $2,500 per sale, but earn the business $10,000 ARR.
  3. Cross-sell Thermal to different buyers within existing customer accounts. Supporting cross-sales of the thermal module would likely cost $5,000 per sale, but earn the business $20,000 ARR.

So, the marketing team will prioritize support for the thermal module, since it has the best dollar-cost return ratio, followed by infrared (if they have budget leftover). They won’t help drive more photographic image processing, since they forecast a net negative outcome.

Set objectives, goals, and KPIs

KPIs (Output Metrics)

1. Cross-sell thermal modules to 50 new buyers within customer accounts.
2. Cross-sell infrared module to 100 existing buyers within customer accounts.

Key Results (Input Metrics)

1a. Generate 100 cross-sale opportunities
1b. Improve win rates for thermal cross-sales from 35% to 50%

2a. Generate 135 cross-sale opportunities

Develop a strategy

Customer Value
• Community. Create an “advanced imagery” community, where pro users of infrared and thermal imagery can share best practices with novices.
• Training. Develop an “advanced imagery training program” to help photo users learn how to use infrared and thermal imagery.
• Discounts. Offer “existing customer” discounts for infrared and thermal modules.

Staff, Vendors, and Suppliers Value
• Incentives. Offer a spiff/bonus to relevant GTM staff for attaining net new cross-sale goals.
• Training. Direct all GTM staff to take the same “advanced imagery training program” we offer to customers.
• Data-based targeting. Develop a predictive data model to identify prime cross-sale targets.

Resource and integrate post-sale teams

The drone company will hire:
• Community Marketing Manager
• Learning & Development Content Marketing Manager
• Product Marketing Manager, Infrared and Thermal Sensors

They’ll outsource:
• Customer community event production
• Technical copywriting
• Training content design

Execute a joint tactical playbook

Here is an example of how a customer marketing playbook could look for our drone company.

customer marketing playbook example

SaaS Pricing Tactics for a High-Inflation Environment

Key Takeaways

●    Inflation is at its highest level in 40 years, creating a different environment for technology businesses.
●    Inflation impacts ScaleUp valuations, margins, and cost of capital.
●    Better price management is the best way to take action in an inflationary environment.

Inflation is at its highest point in 40 years, and software ScaleUps should act to ensure their prices don’t get left behind. A recent reading of the U.S. all items Consumer Price Index (CPI) suggests that, at its recent peak, inflation rose at an annualized rate of 9.1% in the U.S. For comparison, at the start of 2021, that number was 1.4%.

Generally, a CPI of between 2% and 3% per year is considered healthy — it suggests that the economy is expanding and wages are increasing in a controlled, predictable manner. You would have to go back to January 2012 to find an instance when U.S. inflation exceeded 3%, and all the way back to 1981 to find inflation as high as the current levels.

Historically, software and SaaS prices have lagged behind the CPI and continue to do so. With the notable exception of 2015, software inflation has been far below that of consumer goods for at least a decade, usually oscillating around the 0% mark. Even since the pandemic, as hardware prices surged up to 20% over the past two years, software prices rose only around 5% to 7%. This means that your software contract values fall because price increases haven’t kept pace with overall inflation.

SaaS pricing v consumer price index

Tech stocks have historically fared poorly during bouts of elevated inflation. As stock values fall it becomes harder for tech companies of all sizes to raise capital. In addition, while the price of software typically lags behind CPI inflation, costs don’t. During times of inflation, software companies see a significant increase in the costs of hardware, infrastructure, and labor. This squeezes margins and increases cash burn unless ScaleUps act to keep pricing current with the times.

SaaS Pricing Provides Untapped Potential

Properly setting prices is an untapped opportunity for SaaS providers to squeeze more value out of what they offer. We often see companies who haven’t touched their pricing for three years or more — which might explain the lack of inflationary growth in the sector. Usually this means companies have built up a significant amount of pricing power through market growth and product improvement which they haven’t yet monetized. While this was also the case well before the current inflationary environment, now the opportunities are even greater — while the risks of not adapting your pricing are more severe.

The opportunities for ScaleUps to review their pricing lie in multiple paths. You can change your price metric, your packaging, or simply how much you charge. While, historically, companies have been able to generate significant revenue from either price-metric or packaging changes, in the current environment, a well-thought-out price-level change or contract-based escalators (see below) can also add significantly to your revenue growth.

The work of determining pricing is also never done, is all the more critical in today’s high-inflation environment. Thus, ScaleUps can continue to dynamically assess their pricing as inflation ebbs (hopefully soon) and flows. It allows you to see whether pricing changes reflect the value of what is on offer, and when and if adjustments need to be made.

4 Tactics ScaleUps Can Use To Combat Inflationary Pressures

The challenge of inflation is not insurmountable. There are a number of ways to respond, and it is not a matter of either/or. Any B2B SaaS business facing margin erosion has a number of options open to them:

  • Add price escalation terms to contracts. If you have pricing power, we would strongly recommend you consider including price escalation terms into your software contracts so that your prices can keep pace with both your costs and the significant investment in product that is typical of most ScaleUps. In general, we recommend that pricing escalators consist of an inflation component (typically CPI) as the baseline, plus between 3-5% to cover any significant product improvements that customers get “for free” with their current subscription. You should also consider allowing your sales teams to negotiate these numbers down as needed to maintain strong win rates – but for less price-sensitive customers it can provide a helpful boost in future contract years.
  • Review your pricing. Compare your prices with the value you generate. If you are underselling, maybe this is the time to review your pricing strategy (by changing metric or packaging) or increase your prices to match what the customer is willing to pay. While this can be a very effective measure, it’s important to think carefully about your price changes and how they will be received by the market. For more information on the “right” way to increase price, see our checklist for success.
  • Focus on premium products. If you’re selling a portfolio of products rather than just one, it’s important to keep in mind that premium options in your portfolio are likely to have higher margins and provide higher average contract values. In times where inflation drives up costs, guiding customers who are willing to pay for more expensive products and services can be a good way to improve margins and cash flow.
  • Optimize the costs you can control. As my colleague Eli Potter wrote, “a useful framework for strategic cost optimization… helps companies evaluate the trade-offs between benefits, costs, risks and viability of different cost-optimization initiatives.” She recommends a four-step process:
    1. Asset management
    2. Align infrastructure to reduce demand
    3. Rationalize portfolio and infrastructure
    4. Offer tiered, need-based service levels


Regardless of how high price levels go, or how “transitory” the current inflationary cycle proves to be, CxOs who are able to apply the right strategies will be well-positioned both in today’s inflationary environment and the future.

Quantity vs. Quality: Should We Lower Our Lead Score Threshold in Order to Send More MQLs to AEs?

Lead scoring is a critical tool for scaling companies of all sizes to ensure efficient funnel performance. However, lead scoring should never be set it and forget it since it is a key component of funnel health. We encourage Insight Partners portfolio companies to establish a lead scoring council, co-owned by sales and marketing, with customer success and, for those with product-led growth (PLG) motions, Product. This lead scoring council should meet at a minimum quarterly to assess business performance and stress test the model to ensure that lead scoring is calibrated based on maximizing lifetime value. This is critical to ensure that sales and marketing are efficiently converting prospects that create sustainable lifetime value for the business.

The leadership at one of our portfolio companies recently asked, “Should we relax our inbound lead score threshold in order to send more MQLs to our AEs?” There are several situations in which this is most relevant:

  • The company wants more at-bats as it recently went on a hiring spree for both SDR/BDR and AEs
  • The company is actively launching new products, testing new markets and/or segments where they don’t have historical data and need to gain traction
  • The company is investing in more top of funnel, with lower MQL rates, but steady opportunity generation and win rates, so the company can test the waters to drive additional pipeline generation

To decide whether this is the right path for your company, there are relationships between variables to consider: lead quality to win rate, and capacity to sales effort. While we are proposing a quantitative approach to answering this question, you will want to make sure you collect qualitative feedback from the go-to-market (GTM) team to validate that this is the best path forward.

Lead quality to win rate

To begin, consider that the win rate improves with lead quality as illustrated in Figure 1.  For very poor lead quality, the win rate is nearly zero.  At some point, the win rate improves rapidly.  Ultimately, the win rate slows and saturates due to diminishing marginal returns on lead quality; even CxOs who submit demo requests will not close at 100%.

Standard S curve, lead quality on x axis, win rate on y axis
Figure 1: Actual Win Rate vs. Lead Quality

If the company doesn’t have strong analytical talent, it can identify the optimal trade-off of lead quality to win rate by testing a “null hypothesis”.  The “null hypothesis” method would be to leverage A/B testing and a best guess for volume increase: Increase the leads for a particular territory while keeping the other territory constant.  Measure the win rate impact and compare.  Other measurements to validate lead quality are: the conversion rate of leads to pipeline, average sales cycle, and ACV. For more precision on what point on the “S” curve is most optimal, we use math!

Since the math can get a bit tricky with the curve in Figure 1, we can use a piecewise linear estimate to approximate the relationship between win rate and lead quality.  In Figure 2, the win rate increases in steps from w3 to w2 to w1. A good way to think of this is that each step represents a different combination of lead source (demo request vs. content download), persona (VP vs. Director), and overall engagement (repeat- vs. first-time visitor).

S curve superimposed on ladder. x axis: lead quality Y axis: win rate. Ladders occur at w3 w2 and w1 (y axis)
Figure 2: Piecewise Approximation of Win Rate vs. Lead Quality

Imagine a company only serves AEs a quantity of leads (L1) of the highest quality (w1) with a fixed average annual recurring revenue (ARR) for closed won deals (A).  Then, the total ARR booked is:


Now, assume the company relaxes the inbound lead score threshold and allows some quantity (L2) of leads to flow to reps with the next tier of quality (w2).  Though the win rate is lower, let’s assume the average ARR is still A.

We need to add two practical complications since salespeople have limits on sales effort and capacity.

Sales effort to capacity

Turning up the volume on lead gen is great as long as the company has the capacity to execute.  If the pipeline exceeds its ability to execute, the company is then faced with aging leads and deals, over-whelmed sellers, wasted marketing funds, and potentially dissatisfied buyers.

When testing the influx of leads in the test territory (as mentioned in the “null hypothesis” above), capturing the # of leads and opportunities worked by a rep will help with calculating a rep’s workload.  Does the lead and opportunity influx result in greater booking and personal attainment? Simple pattern analysis may work if the company is testing for smaller teams.

It is important to understand how sales effort or “energy” is factored in calculating capacity to execute. The first complication is that handling L2 additional opportunities may lower the win rate on the L1 leads from w1 to (w1 – e).  We will refer to ‘e’ as the energy factor since doing more in the same amount of time typically results in lower performance.

The second complication is that reps may have an upper bound to the number of opportunities they can handle.  By adding L2 leads, the number of leads the rep can handle may drop from L1 to (L1 – c * L2). Here, c is a capacity factor.

Putting everything together, the company should let through some amount of lower quality leads if doing so will result in increased overall bookings.  This can be expressed as:

𝐴 (𝑤1∗𝐿1)≤𝐴[(𝑤1−𝑒)(𝐿1−𝑐∗𝐿2)+(𝑤2∗𝐿2)]

In our experience, AEs are more energy limited than capacity limited.  Setting ‘c’ to zero and solving for the energy factor, we find:

 𝑒 ≤ 𝑤2(𝐿2/𝐿1)

In words, we can feed reps lower scoring leads if the reduction in the win rate (e) of the original higher quality is less than the win rate of the lower quality leads (w2) times the ratio of the lower quality leads (L2) to the original higher quality leads (L1).

Example scenarios

By way of example, assume AEs normally get 50 leads per quarter (L1) with a win rate of 30% (w1). Now, we’d like to send reps 10 additional leads per quarter (L2) but these leads have an expected win rate of 20% (w2).  We should do so if we can expect the win rate on the original leads to drop by no more than 4% (from 30% to 26%):

 𝑒 ≤ 0.2(10/50)
𝑒 ≤4%

It is hard to know in advance exactly how large the adverse impact will be on the original win rate.  However, we encourage companies to pilot (A/B test) this to determine the actual impact on rep productivity.

Notably, our example assumed that the quality was relatively high for the additional (L2) leads. If the L1 leads are VPs with inbound demo requests and the L2 leads are Directors from the same source, then this is a safe assumption.  However, if the L2 leads are demo requests from Managers or even prospects who attended thought-leadership webinars or downloaded content, then w2 would be much lower.  As w2 goes down, e goes down which means that we would not tolerate even a small negative impact on the win rate (w1) of the high-quality leads.

Beyond rep energy and capacity, we also need to consider the overall economics of the business under the assumption that reps should at least be able to achieve quota. To explore this, let’s assume we are thinking about hiring an incremental AE to exclusively handle the Tier 2 (w2) leads instead of sending these leads to the existing reps.

Continuing our prior example, AEs win 60 deals per year given 200 leads and a win rate of 30%.  These are typical numbers for SMB so let’s further assume a deal size of $12.5K which yields bookings of $750K per year.  Assuming a 5x quota:on-target-earnings (OTE) ratio, their compensation is $150K. Notably, the 5x quota:OTE ratio is the key link to the economics of the business since the percentage of bookings paid to AEs is usually the largest component of customer acquisition cost (CAC) which in turn directly impacts cash flow and profit.

Applying the same math with a 20% win rate, bookings would be $500K and OTE would be $100K.  With current B2B OTEs for entry-level AEs starting at $120K, hiring reps to pursue the lower-quality leads in this example does not seem feasible.

Always test before “going live”

As we explored, the decision on whether to lower the lead score threshold in order to provide additional opportunities to reps depends on energy for a closed won, and capacity, as well as the practical economics of the business. Regardless of whether a company leverages math or simply tests in real-time, it boils down to relationships between win rate, lead quantity, and average ARR. Companies should always pilot (A/B test) rather than go full scale should they wish to explore the economic impact of (slightly) lower quality lead sources with the caveat that the lowest quality leads, content downloads, for example, are almost never worth pursuing and should instead be nurtured via marketing automation to ensure it passes the quality threshold. As long as leaders across the organizations accept that funnel performance may decline, and there is a clear process in place to measure the fluctuations, then companies should regularly look to always test the limits of their lead scoring model.

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