Optimizing the B2B Sales Pipeline To Move the Needle
In this post, I’m trying to break down some key metrics you can measure and optimize in a B2B sales pipeline that helps move the needle.
In a typical B2B SaaS setup, the marketing is responsible for generating the pipeline, and the ‘sales’ is to close the deals. When it comes to the pipeline, there are multiple configurations and it all depends on the company. The most popular definition considers only the ‘opportunities’ aka SQLs (Sales Qualified Leads) as the sales pipeline, which is the subset of the funnel – the MQL stack (Marketing Qualified Leads). Of the MQL bucket only those leads that have a clear buying intention (based on sales defined criteria – clear problem, budget, urgency, clarity of time etc.,) are progressed over to the sales pipeline and handed over to the sales. This helps sales keep its unwavering focus on closing the deals while the other functions vet out the flaky ones.
Note: By definition, the MQLs only include ‘qualified’ leads.
In most setups, the lead qualification is done by the SDR teams (Sales development Reps) – a type of inside sales functions that calls-out to prospects with a set of leading questions to qualify the leads and help with segregation (and or any segmentation for marketing to leverage).
Moving the Needle
It’s simple, to move the needle sales needs to close more deals. Period. So, let’s say, that your sales teams’ avg. close rate is 20%, so sales will win 2 out of every 10 opportunities. As you see, by increasing the SQLs by 10 the sales is able to bring home 2 more deals!
So clearly, marketing’s responsibilities towards the funnel doesn’t stop at just getting in the MQLs, it needs to ensure higher MQL to SQL conversion on a given funnel, to help sales close more deals and thus help move the needle! There are multiple instruments to do this – webinars, emails campaigns and any funnel engagement focused on addressing the SQL criteria. But here are some key metrics and little optimization hacks that focused on moving the needle:
SQL Conversion Rates
It is the number of SQLs generated per 100 MQLs for the given period. To optimize, breakdown the MQL stack by source and channel and measure their individual SQL conversion rates. It’s now easy to understand which channels (or sources) bring in more opportunity compared to the others. Form funnel point of view, marketing can now re-align it’s efforts and focus on channels to simply scale those lead-gen channels that bring in the most SQLs.
Pipeline Dollar Value
It is a common practice to measure the number of leads and opportunities and multiple with the avg. deal size. There is nothing wrong with it except, a whole lot of insights are lost by simply averaging the size across the funnel.
Measure the dollar value of the pipeline in its entirety. If applicable, segment the pipeline based on deal size (say small, mid, and big) and measure all the vital metrics for each of them – Source, SQL conversion rate, close rate, sales cycle etc.,
Now moving the needle means ‘significant’ impact. So, with this insight, marketing can choose Its optimization battles – say a lot of small deals, some of the mid deals, or a just handful of the big ones and strategize the tactical stuff.
Bonus: This insight goes beyond just funnel optimization. This can help drive business decision, example: you now know the dollar value of the pipeline against each size, now compare this against close rates and sales rep’s quota, instantly you’ll not just know when to hire a new sales guy, and also, who you exactly need – an inside sales guy or an enterprise talent!
The Sales Process
Another little process hack that works for most B2b SaaS is re-aligning the sales process according to the funnel. The intention is to get automate all the small ones while the core sales team only focuses on deals that move the needle. With this approach, the SDR or the inside sales can focus on closing small deals while the automation works towards closing micro deals (tending to zero touch). This is especially important, especially for start-ups, even more so if you bootstrapped.
Let me know what you think! :-)