How Much?

According to a Sirius Decisions study, more than 52% of B2B marketers claim that lead generation is their biggest challenge.  This is a staggering statistic!  Lead generation is one of the key aspects for which marketing is responsible.  Yet more than half say it is their biggest challenge. Why is this?

Perhaps one reason is that most marketers don’t have any idea what their goal is when it comes to lead generation. If you don’t know what success looks like, how will you know when you achieve it?  The study conducted by Sirius Decisions indicates a missing element in most B2B marketing organizations: Lead Planning.  As part three of our series in “What is Lead Management?”  we’ll look at the value of Lead Planning within the Lead Management framework.

Most organizations would agree that one of the major roles of marketing is lead generation.  But it’s also true that most marketers don’t plan for what happens once the lead is generated, i.e. how each lead should be managed.  When it comes to lead management, most are charting an unknown course. A well-oiled lead management machine will help marketers  stay on track.  And Lead Planning has to be one of the first aspects of the overall Lead Management equation to be worked out.

When it comes to Lead Planning, most marketing departments cannot answer questions such as…

  • What percentage of quarterly sales revenue (in terms of leads) is marketing responsible for?
  • How many leads does sales need to ensure they hit revenue targets?
  • How many overall responses need to be generated in order to arrive at the required number of qualified leads?
  • At what rate are we converting
    – Responses to leads?
    – Leads to sales?

The most effective way to answer these and other questions is for marketing and sales to come together  and discuss.  During this all-important step of collaboration with sales, seek to determine the following:

  • Overall sales revenue quota (quarterly, annual, etc.)
  • The percentage of revenue quota assigned as “marketing  generated”(in other words, what percentage will marketing be responsible for?)
  • Average Sales Price (ASP) per product or service
  • Conversion rates through the buying cycle.  At minimum, determine the rates for converting…
    – A response to a lead
    – A lead to a marketing qualified lead (sent to sales)
    – A marketing qualified lead to a closed deal 

Once sales and marketing has come to agreement on the conversion rates, marketing now has the data it needs to determine the number of responses and leads it needs to generate. By working backwards from the revenue number, marketing can have a clear picture of what needs to be accomplished.

Look at the following example:  

  • A company has a quarterly sales quota of $25M. 
  • Marketing is responsible to generate 40% of that quota. So, marketing is responsible for $10M of quarterly revenue.
  • The ASP is $50K. So, marketing needs to deliver enough leads for sales to close 200 deals.

Marketing now knows what it has to deliver.  However the work is not completely finished. Marketing still needs to determine the number of marketing qualified leads needed to close 200 deals.  This is a different way of looking at things for most organizations. Traditionally, marketers have focused on filling (or even “over filling”) the top of the lead funnel with responses in hopes they will eventually translate to sales.  However the process based Lead Management approach forces marketing to look downstream at marketing qualified leads, a measurement more closely tied to revenue.

Continuing with the example above, marketing now knows it needs to deliver enough marketing qualified leads for sales to close 200 deals.  Here’s where the work on determining conversion rates comes in: 

  • Working with sales, marketing has determined that the sales close rate is 33% on marketing qualified leads.  So, in an ideal world, marketing must deliver just over 600 qualified leads so sales can meet the quota.
  • However, marketing and sales have also determined that sales only accepts 80% of marketing qualified leads.  So, that means marketing must now provide 750 marketing qualified leads to sales.
  • Moving further up stream, marketing and sales have determined that 40% of all responses convert into marketing qualified leads.  At that rate, marketing now knows that 1,875 responses must be generated in order to meet their goal for marketing qualified leads sent to sales.

Going through this exercise (especially the first time) may take significant time and effort.  However, if marketing truly wants to deliver value to the company, it must be done.  Knowing and tracking these numbers on a regular basis will alleviate a great deal of the pain that most (52%) of marketers feel.   It is virtually impossible to track success or failure if you are not clear on the goals and targets. Marketers who try to do so are simply flying blind.