When it comes to measuring marketing performance, one metric that has become ubiquitous is marketing sourced pipeline. It’s a number that gets tossed around in board meetings, used to justify marketing budgets, and often serves as a key performance indicator for CMOs and their teams.
But here’s the problem: marketing sourced pipeline is fundamentally flawed as a metric for B2B SaaS companies. It’s an outdated concept that fails to capture the true impact of marketing on revenue generation in today’s complex B2B landscape. In fact, I’d argue that relying on this metric actually reduces sales and marketing alignment and decreases opportunities for growth.
In this article, I’ll explain why marketing sourced pipeline falls short and propose a more effective approach: focusing on engagement over activity. This shift in perspective is crucial for B2B companies looking to drive sustainable growth and maximize the impact of their marketing efforts.
The Pitfalls of Marketing Sourced Pipeline in B2B
In a recent Forrester Report, Analyst Ross Graber says that “sourcing indicators have outlived their usefulness, and B2B marketing leaders must replace them with a better-suited system of measurement.”
To understand why marketing sourced pipeline is problematic, we need to examine its limitations in the context of a modern B2B go-to-market function.
Oversimplification of the Buyer Journey
The B2B buying journey is complex and rarely linear. It often involves multiple decision-makers, each with their own priorities and concerns. These buyers engage with your brand through various touchpoints over an extended period. They might read your blog posts, attend your webinars, interact with your social media content, or speak with your sales team at different stages of their journey.
Marketing sourced pipeline attempts to distill this intricate process into a single attribution point. It asks, “Did marketing generate the lead that became an opportunity?” This oversimplification ignores the myriad ways marketing influences the buyer’s journey beyond that initial touchpoint.
Moreover, it fails to account for the impact of brand building and thought leadership activities. These efforts may not directly generate leads but play a crucial role in establishing credibility and trust with potential customers. By focusing solely on sourced pipeline, you undervalue these essential marketing functions.
Ignoring the Impact of Sales, Product and Other Teams
In the B2B world, revenue generation is a team sport. The lines between marketing and sales are increasingly blurred, especially in account-based approaches where close collaboration is essential. Marketing sourced pipeline artificially separates these functions, potentially creating silos and misalignment.
Consider a scenario where marketing nurtures an account over time, providing valuable content and insights. The sales team then leverages this groundwork to engage decision-makers and move the account into the pipeline. In a marketing sourced pipeline model, this valuable contribution from marketing would go unrecognized.
Furthermore, customer success, product, and even engineering teams can play roles in influencing potential buyers. A holistic view of revenue generation should account for these cross-functional impacts, something marketing sourced pipeline fails to do.
Marketing Sourced Pipeline Reinforces a Short-Term Focus
Perhaps the most significant drawback of marketing sourced pipeline is its inherent short-term focus. This metric prioritizes immediate pipeline generation over long-term customer value. In the B2B world, where customer lifetime value and retention are critical to sustainable growth, this short-sightedness can be detrimental.
By fixating on sourced pipeline, you incentivize marketing tactics that generate quick leads but don’t necessarily attract the right customers or set the stage for long-term success. This approach can lead to higher customer acquisition costs, lower retention rates, and ultimately, reduced profitability.
Shift From Marketing Sourced Pipeline to Engagement-Based Metrics
Given these limitations, it’s clear that B2B companies need a more nuanced approach to measuring marketing impact. This is where engagement-based metrics come into play.
Define Engagement for B2B
In the B2B context, engagement goes beyond simple activity metrics like page views or email opens. Meaningful engagement involves actions that indicate genuine interest and intent. This could include:
- Downloading in-depth content like white papers or case studies
- Attending webinars or virtual events
- Participating in product demos
- Engaging with multiple pieces of content across different channels
- Interacting with specific high-value pages on your website (e.g., pricing pages)
The key is to identify the engagement indicators that correlate most strongly with eventual purchase decisions in your specific market.
Measure Engagement over Activity
By focusing on engagement rather than activity, we gain a more accurate picture of marketing’s impact on pipeline quality. Engaged accounts are more likely to convert, move through the sales process faster, and become valuable long-term customers.
Engagement metrics also drive better decision-making. They allow marketing teams to optimize their efforts based on what truly resonates with potential customers, rather than what simply generates the most leads. This approach leads to more efficient resource allocation and improved marketing ROI.
For the Startup CEO: As a startup CEO, you’re constantly juggling priorities and resources. Focusing on engagement metrics rather than just activity gives you a clearer picture of what’s actually moving the needle. When you’re in the boardroom defending your burn rate or seeking that next round of funding, you’ll have concrete data showing how your marketing efforts are driving real business outcomes. This approach helps you make more informed decisions about resource allocation and strategic direction.
For the Startup CMO: For a startup CMO, the pressure to show results is intense. By shifting to engagement-based metrics, you’re able to demonstrate the true impact of your marketing efforts beyond just lead generation. This allows you to justify investments in critical but often undervalued activities like customer marketing and brand building. You’ll be able to show how these efforts are driving meaningful interactions with high-value prospects, setting the stage for long-term growth rather than just short-term gains.
For the Startup CRO: As a startup CRO, aligning sales and marketing is crucial for driving revenue growth. Engagement metrics provide a common language for both teams. Instead of arguing over lead quality, you can focus on which accounts are showing genuine interest through their engagement. This allows for more targeted sales outreach and better resource allocation. You’ll be able to prioritize accounts that are most likely to convert, shortening sales cycles and improving win rates — critical factors for a startup looking to establish market traction.
Engagement Metrics Excel within an Account-Based Approach
For many B2B companies, an account-based sales and marketing approach is highly effective. Engagement metrics are particularly valuable in this context. By measuring engagement at the account level, you can:
- Prioritize accounts based on their level of engagement
- Personalize outreach and content based on specific engagement patterns
- Identify the most effective channels and tactics for each account
- Align sales and marketing efforts around high-potential accounts
This account-centric view provides a much richer understanding of marketing’s impact than the simplistic marketing sourced pipeline metric.
Pro Tip: Measure Marketing’s Impact with These Metrics Upgrades
Here are some metrics that provide more comprehensive view of marketing’s impact on the business than marketing sourced pipeline:
Account Engagement Score
An account engagement score is a composite metric that takes into account various engagement indicators. This score might include factors like:
- Recency and frequency of interactions
- Depth of engagement (e.g., watching a full product demo vs. just visiting the homepage)
- Engagement across multiple channels
- Involvement of multiple stakeholders within the account
By developing a robust engagement scoring model, you can segment accounts, prioritize outreach, and tailor your marketing efforts more effectively.
Time-to-Revenue
This metric measures how long it takes to convert an account from initial engagement to closed-won business. By analyzing this data, you can assess marketing’s impact on accelerating sales cycles. Look for correlations between specific marketing activities and reduced time-to-revenue to identify your most effective tactics.
Customer Lifetime Value (CLTV)
In the B2B world, the initial sale is just the beginning. Customer lifetime value takes into account factors like retention, upsells, and referrals to provide a more comprehensive view of a customer’s value over time. By connecting marketing data to CLTV, you can identify which marketing activities and channels attract the most valuable customers in the long run.
Product Adoption Metrics
For SaaS companies, product usage and feature adoption are critical indicators of customer success and potential for long-term retention. By tracking these metrics and correlating them with marketing activities, you can assess how well your marketing efforts are setting customers up for success with your product.
The Next Step is Yours
It’s long past time for B2B companies to change their approach to measuring marketing impact. The limitations of marketing sourced pipeline are clear: it oversimplifies the complex B2B buying process, ignores the collaborative nature of revenue generation, and promotes a short-term focus that can be detrimental to long-term success.
Instead, shift your focus to engagement-based metrics that provide a more nuanced and accurate picture of marketing’s contribution. By measuring engagement over activity, you can make better decisions, allocate resources more effectively, and drive sustainable growth.
The future of marketing measurement in B2B lies in these more sophisticated, engagement-focused approaches. By moving beyond the limitations of marketing sourced pipeline, you can unlock new levels of growth and efficiency in your marketing efforts.
As you navigate this shift, it’s important to remember that there’s no one-size-fits-all solution. Each company will need to develop a measurement framework that aligns with its unique business model, market, and objectives. The key is to start the journey towards more meaningful metrics today.
In the end, the goal is not just to measure marketing’s impact more accurately, but to drive better decision-making, foster closer alignment between marketing and sales, and ultimately, deliver more value to your customers. By focusing on engagement and taking a more holistic view of marketing’s role in revenue generation, you can achieve these goals and better position your company for long-term success.
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A version of this article on marketing sourced pipeline originally appeared on marketbuildr.com