It is a huge challenge for marketing organizations to justify cost and prove return. But your job as CMO depends on it.
Your organization’s pipeline contribution goes a long way in proving ROI. Connect marketing spend to revenue by showing how marketing contributes to opportunities.
Today we’ll discuss the five steps of conversion and how they influence pipeline contribution. . We’ll also introduce you to a tool that will make evaluating your pipeline contribution quick and easy.
Proving the Value of Marketing: The Five Steps of Conversion
To realistically evaluate marketing’s pipeline contribution, start by measuring the following five conversion rates. This will give you a solid picture of what is working and what is not. And it will give you compelling data to present to the CEO.
1. Start with web traffic.
Is your company’s web traffic going up, going down or staying the same?
If traffic is going up, find out:
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What is the quality of the traffic?
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What factors are contributing to the increase?
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How are people finding the website? Through organic search? Through pay-per-click advertising?
If traffic is going down, segment each traffic channel to determine which is underperforming. This will help you make a decision on where to shift funds.
All web traffic isn’t created equal. Take the time to dig deeper. Find out how traffic is coming in and what channels are performing the best.
2. Consider traffic to inquiry conversion.
How much of that web traffic is then filling out an inquiry form?
If conversion is going up, ensure that those inquiries are also high quality. Find out what your team has done differently that is driving interest.
If conversion is going down, there might be a mismatch between visitors and offers. Reexamine the offers and make sure they are aligned with the buyer persona.
3. Then consider inquiry to marketing qualified lead conversion.
How many inquiries are turning into marketing qualified leads?
If conversion is going down, you may be attracting the wrong audience. Even if the call-to-action is generating interest, it’s not from the right people. Most likely those raising their hands don’t fit the ideal customer profile.
4. Measure marketing qualified lead (MQL) to sales qualified lead (SQL) conversion.
How many MQLs are turning into SQLs?
If the rate of conversion is going down, check your criteria against BANT:
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Budget – do they have the ability to spend?
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Authority – do you know who will write the check?
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Need – what are the indications that they might need your solution?
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Timeline – When will they need a solution? Are there any compelling events?
Marketing and sales must collaborate to make this specific to your leads and solutions. If it’s too narrow, sales reps will not receive enough leads. Too loose and sales reps get flooded with more leads than they can handle.
If poor quality leads are slipping through, review your Lead Development Rep’s performance. Your LDR may be at capacity, or their methodology may need review.
5. Finally, look at the rate of conversion from sales qualified leads to opportunities.
How many SQLs are turning into sales opportunities?
If conversion is going up, review the quality of each channel. You should see a pattern that identifies some channels as higher quality than others. This will help you determine where to shift funds.
If conversion is going down, review your LDR’s qualification methodology. A decrease in win rates may indicate a problem in the qualification process.
Dig Deeper:
We developed a Marketing Contribution Checklist to give you a concise list of activities to measure. The tool will show you what “good” looks like and make evaluating your contribution to revenue a snap. Download it here:
Two Metrics to Watch Out For
Beyond the five steps of conversion, these two metrics are also important to examine.
First, the number of SQLs that are rejected by the sales organization.
A high or increasing number may mean misalignment between sales and marketing. Find out:
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How often are SQLs rejected?
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Why are they rejected?
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What happens to those leads?
Second, how many MQLs lead to closed sales?
This number is incredibly important in proving ROI. Though every company is different, a good metric to shoot for is 12-15% conversion. Where does your organization stand?
A 2-Step Plan for Approaching the CEO
Sometimes the numbers aren’t good. As CMO, this means a meeting with the CEO. It also means the risk of a marketing budget cut.
Approach the CEO with this two-step plan to navigate this conversation successfully.
First, following the five steps of conversion above, diagnose why the problem is happening. Break the whole sales process down from web traffic to closed sale. Only then will you discover where the breakage is happening. Start your conversation with the CEO by presenting your “diagnosis.”
Then offer your “prescription.” It’s tempting to just report the news, but the CEO wants a solution. Use predictive analysis to forecast what will happen when you make particular changes.
Don’t just report the news. Use this diagnosis-prescription approach for a better conversation with your CEO.
