For performance-oriented B2B organizations, marketing is expected to make a measurable contribution to revenue outcomes. In fact, 83% of CEOs look to marketing as a growth engine for the business today, since they facilitate prospects through an increasingly significant portion of the buying journey.
In this context, B2B demand generation activities and their outcomes (e.g., pipeline volume, velocity and value, MQLs) need to be tied to the actual revenue outcomes.
In practice, this translates to prospects generated at the top of the funnel smoothly progressing through the middle as MQLs and SALs, and finally converting into SQLs, opportunities, and customers towards the end of the sales cycle, in the most efficient and effective way possible.
The challenge for B2B marketers
B2B demand generation activities go through an increasingly complex and connected buying journey. The buying collective has become bigger and more diverse, engaging across multiple channels and touchpoints, through a relatively long buying cycle (over weeks to months).
These funnel complexities make it a challenge to connect activities that are executed earlier in the funnel with revenues that occur much later in the funnel.
So while marketers want to connect their activities to revenue outcomes, they often have to focus on upper-funnel metrics such as reach, website traffic, content downloads, event attendees, and MQLs generated (often called vanity metrics), because it’s just not practical to wait for the entire sales cycle to play out to ultimately know what worked.
While such upper-funnel metrics are important performance indicators, they’re not necessarily as closely correlated to revenue as some of the lower-funnel metrics (e.g., MQL-to-conversion, time-to-conversion, cost-of-conversion, average deal size, etc.). For subscription-based solutions, metrics such as the churn rate and customer lifetime value are also important measures of the true effectiveness and efficiency of marketing activities.
Addressing the complexity of B2B sales
funnel metrics
So how can B2B marketers ensure that the activities they’re investing in at upper-stages of the funnel are making a significant impact on revenue outcomes and feeding into the lower-funnel metrics? Here are five tactics to consider.
1. Adopt a full-funnel marketing approach
This approach recognizes that prospect needs evolve at each stage, tailors marketing messages and activities to address those needs, and ensures the activities are connected through the cycle. Not only does this create a seamless and cohesive experience for buyers, it also puts the spotlight on activities that progress prospects to the next stage. This means we can better see the link between marketing activities at each stage of the funnel, instead of stand-alone metrics that may not have a bearing on actual revenue.
With this approach, marketers are able to work with a broader set of connected indicators to help see if they are on the right track at various milestones. This approach recognizes the link between each metric through the funnel and makes it easier to tie top-funnel metrics to revenue outcomes at the end of the sales cycle.
2. Ensure marketing and sales agree on funnel metric definitions
Metrics can be misleading when marketing and sales measure themselves on different yardsticks, and marketing activities are disconnected and stand-alone at each funnel stage. In this scenario, what works can be interpreted quite differently by sales and marketing leaders.
For example, marketing may see a large volume of MQLs as an indicator of success, but sales may report that these MQLs either didn’t convert, converted at a higher cost of acquisition, or converted at a lower average deal value than other sources. In B2B buying cycles, these realities may come to light only towards the latter stages of a long sales cycle – which may be too late for marketing to course correct on MQL quality.
Once the marketing and sales leaders agree on the definitions of success for each stage of the funnel, they can work together to optimize conversion rates between each stage. It’s important to note that communication is key to refine programs. For example, if marketing delivers a higher number of MQLs, success can be measured by tracking conversions to SQLs. Based on the results and feedback from sales (e.g., lead quality, bandwidth for higher volume of leads), marketing can course correct and optimize their activities.
3. Invest in attribution capabilities
Members of the buying collective are on multiple channels over the course of the buying journey, so brands need to provide a smooth and cohesive experience to customers and optimize their marketing spend based on which engagements are most valuable to buyers and the business. Business leaders want to know, with the highest confidence, which of their activities and channels are actually leading to conversions and revenue outcomes, and if they are doing so in the most efficient and effective manner possible, in terms of cost, speed, and value of conversion.
Finding and investing in the right attribution models and solutions is important to know where customers are coming from and which channels deserve credit.
4. Experiment to stay ahead of evolving customer preferences
With a full-funnel marketing strategy, alignment on the metrics that matter, and a dependable attribution capability, marketers can test and experiment more, through the funnel. Experimentation is important because what “works” keeps evolving and changing. What worked in previous years may not necessarily work now – it’s important to regularly test different marketing activities to find which deliver the best results, and optimize for the metrics that matter at each stage of the funnel. This way, marketers can improve the efficiency and effectiveness of marketing activities.
5. Find a demand generation partner that supports your revenue-led performance goals
Most lead generation vendors stop with the leads that may or may not generate revenue. What you need is someone who can work with you through the funnel to generate the kind of quality leads and MQLs that help sales convert faster.
Rather than backing you into a one-size-fits-all program, based on strategies and tactics that are easiest to deploy and most profitable for them, find a vendor who can help you reach, nurture, and engage your best prospects at each stage of the funnel; build campaigns based on your unique goals; and optimize for the metrics that are best aligned with your sales strategy.
Putting these five practices into action will help your B2B leads pipeline deliver on volume, velocity, and value – all the metrics that ultimately define sustained revenue.