Many companies, particularly
older SaaS companies, are still stuck with a lead based sales and marketing system
while testing an account based system.
For those with a lead based system, the handoff points between sales and
marketing can be critical.
In many client
scenarios, we see low conversion rates between MQLs and SALs. This is a sample set from all Marketo
customers that ranges from 20% to 33% based on the maturity of the company of
their funnel conversion. The conversion
rate is a function of Average Selling Price, Total contract value, sales cycle
length and sales cycle type.
In our experiences of
seeing a pattern of low MQL to SAL conversion, this situation can usually be
traced to 1 of 4 items or combo of items:
- No rigid acceptance
criteria by the receiving function (SDRs) and/or no clear lead definition criteria
agreed upon by sales and marketing – no accountability by parties or dashboards
that can trigger non-compliance alerts and thus finger pointing.
- Too high of quantities
of MQLs pushed to SDRs that are of low quality or low value – this is what we
see most frequently as evidenced by actual conversion rates
- Lack of capacity of
SDRs to execute on MQLs that marketing produces, so SALs are left untouched.
- SDR function that
works for head of sales who is more motivated to do pure outbound ‘dial for
dollars’ than to follow up on inbound.
Sometimes Marketing is
unfairly asked to contribute even MORE to pipeline year over year across a flat
or minimally growing budget against a weak conversion point that we spelled out
above – we see that phenomenon quite a bit in the first quarter of the year. In some cases, this calculation makes sense
as investors want to see a more efficient sales/marketing engine as evidenced
by a lower Cost of Customer Acquisition (CAC) over time. However, Marketers are asked to make a “step
function” change in CAC which is extremely risky to hit expectation wise.
There are ways to
combat this increased pipeline challenge of marketing shouldering all the
burden and other ways to improve revenue for the company that marketing can
- Fix the MQL to SAL
problem – depending on the cause as identified above, one could address this
overall conversion issue.
- Reduce churn – with
customer marketing, you can help drive better LTV and with better churn
numbers, you can reduce the pressure sales AND marketing feel on generating new
business – you have to generate fewer new MQLs to sustain revenue
- Ask your CFO what
he/she thinks about the sustainability of a step function change in CAC; in our experiences, that is not a scalable solution
in any SaaS environment, a good CFO will know that and may come to your defense.
any of these areas will help for better sales and marketing alignment, improved
stakeholder satisfaction, and longer term tenure by a head of marketing.
trends are you finding in your waterfall lead metrics?