Funnel Health is a 4-Step Team Sport

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While Account Based Marketing (ABM / ABX) is all-the-rage these days, the reality is that traditional demand gen still plays a large role in driving pipeline and bookings at most B2B SaaS companies. There are many differences between these two demand gen motions, but one thing they have in common is that to work effectively, Sales and Marketing must work as a tightly coordinated team with a set of core principles: 

  1. Having shared goals and defined targets
  2. Targeting, qualifying, and prioritizing best fit prospects
  3. Ensuring tight Sales & Marketing coordination
  4. Monitoring, iterating and optimizing

1. Having Shared Goals and Defined Targets

Ultimately, Marketing and Sales have a shared goal of generating winnable opportunities that can drive ARR growth. This point is worth extra emphasis for our Marketers out there who are used to focusing on MQLs as their primary KPI; see our prior post on Marketing KPIs that Matter to see why this is a mistake. The winnable opportunities should align with the segments, markets, verticals, or customers where the company wants to grow. To ensure Sales and Marketing success, it’s critical to take specific company targets (e.g., new vs. expansion, vertical, geography, or market segment) and apply reverse funnel math to determine how much in pipeline needs to be generated, by whom (e.g., Sales vs. Marketing), and how this translates into Sales or Marketing generated leads. 

Best Practices for Setting Sales & Marketing Goals?

  • Specific vs. General Targets: Set specific ARR targets for distinct activities or parts of the business that require different strategies to drive opportunities and ARR. For example, define separate targets for new business vs. existing business; enterprise vs. commercial teams; and geographic regions. 
  • Bottoms-up, Reverse Funnel Math: Use historical pipeline and lead data (e.g., conversion rates, average deal size, and velocity) by acquisition channel as a baseline to determine how much and when pipeline activity needs to happen to hit company targets. Adjust and update assumptions if historical data no longer applies (or doesn’t exist) and see what you need to believe to make the numbers work. Read more about how to do this in our prior posts on Reverse Funnel Math and A Marketer’s Guide to Forecasting
  • Pipeline, Pipeline, Pipeline: Marketing, BDR, and Sales should have a shared goal of generating high-quality pipeline. Critical KPIs to focus on are weekly and quarterly pipeline generation. Drill into how these numbers compare to what’s needed to hit forward looking booking targets given estimated conversion rates and velocity. 
  • Incentives for the Right Behavior: Related, Marketing and BDRs should be held accountable for, and incentivized, on generating quality pipeline. For Marketing, focusing on MQLs can result in generating lower quality leads (e.g., low conversion rates, ASP) for the sake of volume. For BDRs, focusing on meetings set can cause similar issues with quality while focusing on bookings can be less motivating for BDRs given sales cycle length and lack of direct influence on bookings.

2. Targeting, Qualifying, and Prioritizing Best Fit Prospects

The key to successfully finding, engaging, and handing off leads to sales is having a high-performing lead scoring system in place. While lead scoring is about as exciting as watching paint dry, it’s foundational to your demand gen engine. It helps determine when and what leads move through the funnel. The resulting conversion rates provide guidance to marketing on how effectively they are targeting, qualifying, and prioritizing best-fit prospects. 

Best Practices for Lead Scoring Systems?

  • Jointly Owned by Marketing AND Sales: Lead scoring is not a Marketing only initiative. Sales need to agree on the criteria that make a high-quality, sales-ready lead. This joint ownership ensures that there is alignment, excitement, and follow-up on Marketing generated leads. 
  • Demographic, Behavioral and Intent Data: A high-performing lead scoring system should encapsulate everything you know about what your most attractive prospects look like (demographic data) and an understanding of how they engage with you when they are looking to buy (behavioral data). Ideally, it can also prioritize those that are showing in-market actively in other parts of the web – even if they aren’t engaging actively with you directly (intent data).
  • Continuously Reviewed and Updated: Lead scoring is not once and done – it needs to be continuously revisited to account for changes in company strategy, resources, and market dynamics. When the lead scoring system is first established (or drastically revamped), Marketing and Sales need to be in regular communications (weekly to start) to review performance. These reviews should leverage qualitative (e.g., BDR and Sales feedback) and quantitative data (e.g., MQL to SAL, SQL conversion rates). 

From a survey of our portfolio, 100% of companies who 1) update their lead scoring system at least 1x per month and 2) use demographic AND behavioral data to drive it rated their systems as effective. This drops to just 17% for companies who update their systems less than 1x per year.

Lead Scoring

3. Ensuring Tight Sales & Marketing Coordination

In a relay race, passing the baton requires a well-defined process, consistent and clear communication, and trust between the passer and receiver. To minimize error, the baton passer keeps the receiver in mind and the receiver communicates with the passer and adjusts during the exchange. The same process applies to the handoffs between Marketing:BDRs and BDRs:Sales. When we think of the hand-off between those teams, the following is not a “do’s and don’ts” list but rather service level agreements (SLA) between teams that are adaptable yet focused on the goal.

Best Practices for Defining the SLA?

  • Response Time: The expectations of a B2B buyer are getting closer to a B2C consumer. Their expectation for response is immediate. As a result, the average response for a hot lead is within an hour and a warm lead is within 24 hours. Processes and monitoring have to be developed to achieve those targets.
  • Qualification Criteria: Whether qualification is based on MEDDIC or BANT, the degree of qualification should be defined for the lead to qualify as a potential opportunity. You don’t want to flood the sales team with unqualified leads and take their focus from closing. And you don’t want BDRs holding back potential deals that are high quality. A good rule of thumb is that the BDR should be required to qualify at least 2 of the criteria in BANT (i.e., budget and need but not timing or authority) before passing to sales. Sellers also need to communicate with the BDRs – letting them know if they need more leads and whether specific titles, company size, or technology platform preference are indicators of quality and should be passed through more quickly. 
  • Exit Criteria: Defined qualification criteria and age are criteria for leads to move forward or to exit out of the lead funnel. If the lead is accepted by the seller but fails to qualify within an acceptable time window (e.g., 30 days), the lead should recycle back to the BDR for additional nurture and re-qualification. Rejected leads should flow back to marketing where they can be cultivated. 
  • Revisiting the SLA: The definitions and SLA should be set and updated by the joint team leaders once or twice a year and adjusted when a new go-to-market strategy is implemented.

SLA

4. Monitoring, Iterating, Optimizing

Like all coordinated, dynamic systems, your demand gen engine requires continuous monitoring, iterating, and optimizing. This ensures that it’s efficiently and effectively running, even as the company rapidly scales. To do this, you need to have the systems and processes in place to track and report on core performance KPIs and to facilitate productive and regular conversations between Marketing and Sales. 

Best Practices for Continuous Improvement? 

  • Monitoring Core KPIs: While there are numerous metrics you could monitor, a couple of core KPIs we recommend are below. These KPIs not only monitor alignment between Marketing and Sales, but also provide warnings signs that you are drifting from the assumptions used in your reverse funnel math (and hence, from your ability to hit targets).
    • % ML or Inquiry to MQL: This provides insight into whether marketing programs are generating the right type of leads and/or if the leads need more nurturing.
    • % MQL to SQL/SQO: This provides insight into whether marketing and sales are aligned on lead quality or if lead scoring needs updating. 
    • % SQL to SQO: If % SQL to SQO drops off considerably, it may also indicate a need to revisit qualification criteria and hand-off process to ensure quality and/or curtail potential gaming. For example, if reps are accepting BDR meetings to help them get credit (if goals are not properly aligned).
    • % Leads with Response Time in SLA: This provides insight into whether leads are being followed-up within defined SLAs.
    • Pipeline Created vs. Target: How much pipeline has been generated compared to what’s needed to hit target ARR numbers.
    • Other: Average opportunity size, % SQL/SQO to Won, sales velocity, and any other assumption used in reverse funnel math.
  • Accurate, Easily Accessible, Shared Reports: Having systems and processes in place to enable end-to-end lead to revenue reporting that is accurate, easily accessible, and consistent across Sales and Marketing. This ensures that everyone is looking at the same numbers and helps create a data-driven culture. 
  • Regular Sales & Marketing Meetings: Weekly meetings between Sales and Marketing leadership and functional teams to share feedback and make adjustments. These meetings should include qualitative feedback as well as quantitative performance data from the shared reports.

In a relay race, the passing of the baton occurs in just a small stretch of the race – less than 20 meters of each 100-meter segment. But the actions during those 20 meters can be the difference between winning and losing; it’s nearly impossible to make up time from a poor handoff regardless of the talent of the athlete. The handoff between the groups in the lead process is longer, but the quality of the handoff is no less important.  

Whether it be a successful ABM/ABX program or a traditional demand gen campaign, strong alignment and partnership between Marketing, the BDRs and Sales can make the difference between winning and losing. By implementing the best practices above, you can ensure that your teams are working together and equipped to scale. The goal is to win. But winning doesn’t happen in a vacuum – winning is a team sport.

Reverse Funnel Math: The Science of Hitting Your Number

  • Charlene Chen

    Charlene Chen, Senior Vice President, Marketing COE

    Charlene is a Senior Vice President on the Insight Onsite team. She first joined Insight in 2007, working with cross-functional teams at portfolio companies on various strategic and operational initiatives. Charlene left in 2010, rejoining in 2016, to work with portfolio companies on driving marketing performance and accelerating growth. During…
  • Alison Sullivan, Senior Vice President, Sales & CS COE

    Alison Sullivan joined Insight in 2020. She partners with executives within Insight’s portfolio companies to build and scale effective go-to-market strategies. In addition to helping portfolio companies accelerate revenue growth, Alison drives Sales and CS due diligence reviews of potential portfolio investments. Alison brings over 20 years of…