The Problem of the Elusive Pipeline
According to a recent Pavilion Marketing Leadership Pulse Survey of 76 companies, 49% of CMOs said they missed their April '22 Pipeline target.
Ask Marketing or Sales leaders in the B2B SaaS space, and they will vouch that Pipeline Generation is one of the goldilocks metrics for Marketing.
In many companies, Marketing is responsible for, among other things, Pipeline Generation for the next quarter, while Sales focuses on Pipeline Conversion for the quarter.
Pipeline Generation is where Marketing and Sales come together naturally. If the Pipeline at the beginning of a quarter is not promising, then Sales cannot meet their conversion and revenue targets.
As a Founder of a $200M ARR Cybersecurity SaaS company recently told us
“My problem is not the forecast for this quarter, but will we have enough Pipeline going into the next quarter?”
In many cases, Pipeline Generation gets confused with Lead Generation. While there is an interdependence, Pipeline Generation requires many steps after the initial Lead Generation.
Lead generation stops at unqualified Leads or MQLs, while Pipeline Generation requires taking the MQLs through to SALs, SQLs, and Opportunity creation. Therefore, the success of Pipeline Generation depends on the success of many steps in the Lead to Opportunity journey.
It is not only the numbers that matter but also the quality of the Pipeline. The Pipeline mix of volume and quality impacts the Pipeline Conversion and potential for revenue generation. There is a problem if the opportunities created are not of the right combination and quality.
So how does one try to boost Pipeline Generation?
Pipeline Generation efforts focus on increasing investments in lead generation and demand generation. However, this implies more dollars spent attracting new Leads rather than concentrating on the problem's crux in the Lead-to-Opportunity journey.
"The first step in improvement in any skill is awareness. "
-- Edward De Bono
A systematic focus on the defining, analyzing, and measuring the Lead-to-Opportunity journey can boost Pipeline Generation significantly:
1. Define and Map the entire Lead to Opportunity Journey
Marketing and sales teams often clash swords regarding lead generation and the quality of the lead, and the ambiguity between the two results in the drying up of the Pipeline.
While there is the creation of Leads and MQL Leads, they don't end up in the Sales Pipeline, often due to misalignment in the definitions.
If the Leads are not picked up and worked on by the SDR teams or Sales, there is a significant loss of Opportunity.
So, the first step is to define and align the Lead-to-Opportunity journey.
What are the stages and standard definitions of Leads, MQLs, SALs, SQLs, etc.?
What are the criteria for recycling, disqualification, and acceptance of Leads as the Leads make a transition from and to different stages and teams?
2. Create one connected view of the Marketing Funnel and Sales Pipeline
Connect the data of the Lead-to-Opportunity journey into one view by stitching the data from the Marketing Funnel and Sales Pipeline together.
Marketing funnels and Sales Pipelines operate at different levels but connecting them requires a translation between the two worlds. If the teams look at one standard view stitched from their trusted data sources, it will build better alignment.
Further, the view should enable aggregate metrics and drill-downs to reveal conversion bottlenecks and leakages.
3. Provide systematic, data-based actionable insights and recommendations on how to move Leads closer to an Opportunity
While the connected view of the Leads-to-Opportunity journey will build better operational alignment between sales and marketing, one also needs insights on how to move the Leads closer to an Opportunity.
Teams often use tactics based on best practices and anecdotal evidence of a few instances.
However, what is needed are systematic insights and recommendations generated and acted upon at the most granular lead level information on an operational basis (weekly/monthly) based on actual conversion behavior, attributes, and activity data.
E.g., What lead types are converting better and which ones to prioritize?
4. Measure the Outcomes to close the loop
You can't improve something that is not measured.
Ensuring everyone is aligned on the critical outcome Pipeline Generation metrics, and the methods of calculating them are essential.
Some metrics to measure and follow are:
- Lead-to-Opportunity conversion
- $ New Pipeline generated week/month/quarter vs. target
- Number of New Opportunities created week/month/quarter vs. target
However, it is not only about the numbers but also about quality.
An essential indicator of Pipeline Generation Quality is the downstream impact on Pipeline Conversion.
Measuring Win Rates, Average Opportunity Size, and Sales cycle lengths are an essential feedback loop into Pipeline Generation quality.
The End Game
Predictable revenue growth in SaaS is a function of Pipeline Generation and Pipeline Conversion into Revenue.
While there has been a lot of focus on Sales Forecasting and Pipeline Conversion, Pipeline Generation has not received as much attention.
No wonder Sales leaders spend so much time in Pipeline scrubbing with their teams at the beginning of each quarter.
Many people confuse sales forecasting accuracy with the predictability of revenues. That is only partially true. Sales forecasting comes in after a Pipeline exists as an input. The Pipeline Generation process starts much earlier and is vital to generating predictable revenues.
As one RevOps leader shared with us recently,
"If Pipeline Conversion is not a problem, then Pipeline Generation is a problem, and those answers are not in the Sales Pipeline. They are much before in the top and middle of the funnel; in the Lead-to-Opportunity journey".
Boosting Pipeline Generation is crucial for revenue predictability, especially in this economic environment.
If you are interested in learning more, sign up below for a preview of the solution we are building and how that solution helps boost Pipeline Generation.