Meeting your sales forecast and revenue goals — it’s the lifeblood of a B2B company.
Yet, many companies report that their sales forecast is unreliable. They routinely fall short of their revenue goals.
And worse, they say marketing and sales have not aligned their strategies to achieve revenue goals. Marketing does not generate and nurture the leads that Sales needs. Regardless of lead quality, Sales does not accept the leads from Marketing and turn them into customers.
Can companies close this gap?
Many firms use the Demand Metrics Waterfall from SiriusDecisions to bring Marketing and Sales together to improve their sales forecast.
They use the Demand Metrics Waterfall to experience:
- Better communication and accountability between Marketing and Sales.
- Accelerated sales cycles.
- Improved control over their sales forecast.
- Additional wins that are larger and more profitable.
The Demand Metrics Waterfall creates a common language for Marketing and Sales. They use it to describe the stages of the buyers journey in terms that let both teams know what to expect from the other.
Inquiries: Buyers first show up on your radar screen and become an inquiry. For your web site, inquiries are initial visits to your site. They are the fuel that drives your demand generation programs.
Marketing Qualified Leads: Buyers consume the material you provide on your site. They learn about the problem they want to solve and how others have solved similar problems. They study best practices in your industry. They get exposed to your company and how you do business. They become familiar with your offer.
They probably get a call from your telemarketing to find out if they are getting their questions answered.
When these buyers indicate they are ready to move forward, they become a Marketing Qualified Lead. Marketing is ready to pass this lead onto Sales.
Sales Acceptance: If Marketing produces a lead, Sales should accept it, right? Not so fast.
If Marketing and Sales have agreed on the definition of a MQL, yes.
If they have a Service Level Agreement in place that lays out the terms of the MQL and the consequent steps that Sales must take as a result, yes.
Once Marketing and Sales put this agreement in place, then Sales Acceptance is simply acknowledging that Sales has received a lead and that it meets the MQL criteria.
At this point Sales follows up on the MQL in the next one to three days. Rejected leads (for procedural, clerical, or definitional reasons) are routed back to Marketing for further nurturing.
Sales Qualified Lead: Once a lead is accepted, Sales qualifies the lead through communication with the buyer. Although qualified leads may not be ready to go on the sales forecast with expectations to close in 90 days, they do become part of the pipeline.
At this point, Marketing pays attention to the conversion rate of sales accepted leads to SQLs.
It also watches the cumulative size of the leads in the pipeline. Good performing marketing functions contribute 10% to 40% of new business pipeline opportunities. The cumulative size of leads in the pipeline tells Marketing whether it brings in enough buyer inquiries to its web presence.
Closed Business: Marketing continues to pay close attention to the Sales activities that convert SQLs into Closed Business. First, the conversion rate to closed business informs Marketing about the production of revenue from a dollar spent on Marketing. Good to know when budget time rolls around!
And second, the Sales organization will face many of the same situations at this stage of the buyer’s journey. If Marketing understands what Sales faces on a routine basis, it can create tools and information that will enable Sales to help the buyer continue on its journey toward becoming a customer.
The Demand Metrics Waterfall does not by itself fix the gap between Marketing and Sales. It does, however, support a shared process that leads to an improved sales forecast and revenue production.