The cost of your leaky pipeline: Are you are leaving money on the table?
When we think of leaky pipes, we imagine the damage that can occur when water seeps through the floors or ceilings. But have you considered the risk of a leaky hidden pipe? One that damages your home without you knowing until it’s too late.
In the customer acquisition journey, there are multiple hidden leaky pipelines that can cost you and negatively impact growth. Marketing plays a crucial role in moving leads through the funnel to close a sale. However, when marketing and sales teams work independently, without proper alignment and collaboration, sales cycles move too slow, your becomes disconnected, and revenue growth suffers. How do you know your sales and marketing are aligned and that there is proper collaboration? Ask yourself:
- Do you have a revenue sourcing model where sales and marketing targets exist for the number leads each must source, the number and dollar value of opportunities/pipeline and the number and dollar value of deals required? – Is the model updated quarterly to reflect business realities – such as conversion rates or average deal sizes?
- Do marketing and sales each have specific accountabilities for lead prosecution? Things like SLAs for lead follow-up and defined dates for multi-touch lead nurturing? Is every lead treated as precious based on its lead score? After all, we all know that prospects look for reasons to talk themselves out of why they were interested in the first place.
According to HubSpot, only 20% of companies have effective lead-generation strategies. Part of the reason for this stems from marketing delivering too many low-quality leads to sales. This adds significant burden to lead prosecution because puts a huge emphasis on lead qualification. All this lead qualification adds unnecessary friction in the sales process. It’s also why so many organizations have acronym soup associated with their funnels. Things like MQLs, SALs, SQLs… It’s a waste of time. All that really matters is whether your leads generate pipeline and revenue to support the attainment of revenue objectives called for in your business plan. Therefore, to achieve success, we must shift our focus from lead generation to pipeline marketing.
Pipeline marketing is an efficient strategy that simplifies and optimizes the sales cycle, and focuses on lead quality, efficiency, velocity, and buyer readiness. Marketers must shift their focus to measuring pipeline and revenue contribution rather than vanity metrics like the number of leads or MQLs generated. This gives businesses far greater understanding of what marketing activities actually source revenue and as such, they can allocate budgets more efficiently and align sales and marketing efforts where they matter most.
So, how do we execute an effective pipeline marketing strategy?
First, start by forecasting the amount of pipeline marketing needs to source. This is accomplished via a 5-step process.
- Set your annual target of marketing generated pipeline revenue broken down by month to account for seasonality
- Separate out “net new,” “renewal” and “up-/cross-sell” pipeline forecasts, as the three behave differently. (Marketing typically focuses on net-new and up-sell/cross-sell)
- Determine, by market segment, the average win rate & average deal size (i.e., enterprise, mid, small)
- Be specific if the win rate differs by product, customer size and/or industry
- Determine the marketing pipeline coverage rate coverage rate
- (3x- 4x) – mtkg needs to generate 3-4x $X for the year (with a win rate of Y)
- Define historical spend & conversion metrics for each channel, used to forecast future spend & pipeline results
- Make sure channels are aligned to actions customers take at each stage in the buyers’ journey
- Develop marketing revenue-generated pipeline forecast
- Use historical conversion to pipeline & win rates to forecast mtkg generated pipeline for forward quarters
Next, marketers need to generate quality leads through targeted, valuable content and high-intent tracking. Too few CMOs understand what content captures the imagination of their target audience and gets them to respond For example, at Thycotic, we knew that our buyers were responsible for securing their privileged passwords, but they had no idea how many they actually had. So, we decided to offer a free tool that would discover those passwords and give them a report of the risks they had and what they needed to do to reduce the risks. This free tool offered massive value and we defined the logical next step which was a free trial of our solution. Marketers must work closely with sales to define roles, responsibilities, expectations, and hand-offs for lead prosecution. A key to this is understanding your sales cycles. At Thycotic we knew that if a lead didn’t convert into an opportunity in 15 days, it probably wouldn’t convert at all. Knowing this, we designed a follow-up process that focused on building relationships with buyers within 15 days and removed friction wherever possible.
Key pipeline metrics io track include the lead-to-opportunity conversion rate, total number and dollar value of opportunities and velocity, marketing-sourced pipeline actual vs. goal, opportunity-to-deal conversion rate, total number and dollar value of wins and velocity, marketing-sourced revenue vs. goal, revenue and opportunity by marketing source, and customer acquisition cost (CAC).
Here are 5 ideas for building your pipeline:
- Omni channel content marketing – “your backbone”
- How-to guides, trends, checklists, quizzes, use case videos, “live for content” and valuable free tools
- Marketing-focused customer advisory board – representative of all customer avatars & segments
- Use effective Call to Action (CTAs) in every blog post and in every webinar
- Multi-touch, educational/value-focused nurturing streams – make the most out of every lead
To execute an effective pipeline marketing strategy, we must stop thinking about sales and marketing as separate departments and become clear, intentional, and strategic in every step of the customer acquisition journey. Remember, Rome wasn’t built in a day, so have a plan to get there.
About the Author:
Wall Street Journal Best Selling author Steven Kahan has successfully helped grow seven startup companies from early-stage development to going public or being sold, resulting in more than $5 billion in shareholder value. His latest book, High-Velocity Digital Marketing, Silicon Valley Secrets to Create Breakthrough Revenue in Record Time will give you a foundation in digital marketing best practices. It provides several innovative, implementable methods to get found online and get buyers to purchase—fast. Get your copy now.