Effective and ongoing demand generation is a vital concern for marketing and sales teams—regardless the size of their organization. A consistent pipeline that allows these teams to acquire and execute on valuable leads is, in many ways, the beating heart of a business. It’s what allows a company to grow, to thrive, and to innovate.
While there are very few marketing or sales professionals who would downplay the importance of this apparatus, many enterprises still experience frequent challenges when actually attempting to create a demand generation engine, especially one that provides consistent success and the opportunity for evolution.
Why is this? What nuances are businesses missing? What hurdles aren’t they anticipating? Why do so many of us have stories of marketing and sales teams pointing fingers at each other to no meaningful avail?
In order to get to the bottom of these questions (and many more), Akmazo Capital was thrilled to host its latest CEO roundtable on April 28th, entitled “Building a Repeatable and Predictable Demand Generation Engine.” Featuring speakers Joel Rosen and Mike Lewis, this event sought to dive into the fundamental building blocks of fruitful demand generation, while also looking into some of the miscommunications between marketing and sales that can derail the best of efforts.
Moderated by Akmazo’s Imad Mouline, the roundtable yielded fascinating insights and anecdotes—from our keynote speakers and all those who attended.
For those who could not be there, we wanted to share some of our chief takeaways and highlights, in hopes that you can implement these at your own organizations, and reap the substantial benefits of a robust demand generation engine.
Pipeline Pillars
A frequent refrain throughout the roundtable conversation was, “a strong pipeline sets you up to achieve your revenue goals. A weak one doesn’t.” But the repercussions go beyond that. As Joel Rosen noted, a weak pipeline can actually compel you to chase and accept bad deals in a desperate attempt to meet the goals that seem further and further out of reach.
As such, establishing the fundamentals of your pipeline is one of the most critical things your business must do.
In Joel’s eyes, there are two key pillars to achieving this:
- Ensuring sufficient pipeline coverage you have at the beginning of a quarter: Examining your sales quota for a given quarter, you want to enter into that quarter with somewhere between a 3-5x multiplier of that quota in the pipeline (though this numeral can vary based on a number of factors);
- Building pipeline to meet future quarter requirements: In addition to the pipeline you build up for a given quarter’s sales quota, you need to constantly have your eyes on future quarters. If you’re only building your pipeline quarter to quarter, then any problems that occur with your pipeline will have wider ranging impacts. If you’re simultaneously looking ahead, then you’ll find your business swimming, as opposed to just treading water, and hoping your stamina doesn’t give out.
Pipeline Pitfalls
As you keep these pillars in mind, it’s important to remember that they’re not the only factors that determine the success of a demand generation engine. After all, a building with the sturdiest pillars won’t stay standing if those pillars rest on shaky ground.
This is where the most common pipeline pitfalls most often rear up, undermining what your teams might have considered a solid demand gen strategy.
Here are the five most important problems that our speakers discussed.
Activity Metrics Are Not Results
Pipeline generation is really all about math. This means you need to be very certain the metrics that you use to measure success are actually providing you with a valuable mathematical picture of how your pipeline is performing.
When it comes to demand generation, a frequent problem many marketing teams run into is an over-infatuation with activity metrics—page views, bounce rates, campaign responses. This is understandable! Because marketing teams rarely work under the same quota systems that sales teams do, these are the, seemingly the most effective way to measure the performance of a marketing strategy. However, that’s not actually the case.
While it feels good to see that your latest eBook was downloaded 5,000 times in a month, those downloads don’t actually translate to valuable leads being generated in the sales pipeline. The results that you’re seeing are not the capital-R results by which you can say whether a demand generation engine is actually working. Much more important than downloads or page views are measures like in-pipeline conversion rates—i.e. how many of those 5,000 people that were juiced into the pipeline actually closed with your organization come the end of quarter? What percent of your pipeline is actually turning into revenue?
Marketing and sales may both talk about “conversion,” but one of those definitions is activity, and the other—the one you need to invest in—is results.
Misalignment Hurts Both Sales and Marketing
This leads us to our next major pitfall—a breakdown in communication between marketing and sales. It’s so common as to have become a cliche at this point, but, how often have you heard sales accuse marketing of providing ineffectual leads or poor content? Meanwhile, how many times have you heard marketing grumble that sales isn’t making proper use of leads a campaign has generated, or that they’re not taking advantage of available assets?
As we all learned when we were children, the blame game does us little good; and the best way to succeed is to communicate effectively.
In order to support a dynamic pipeline, there needs to be a common understanding between marketing and sales on the specifics of sales goals, so marketing can actually support them. Key agreements on this subject need to stem from a common definition of what constitutes a strong lead or a valuable opportunity, and a single source of truth on how the pipeline is performing. After all, if two teams are gauging success by two different standards, then when one is less enthusiastic than the other, the conversation becomes about who’s doing it wrong, rather than what you both can do right.
Other powerful alignment strategies include:
- Having sales accept leads and deals before they’re added to the pipeline
- Tracking goals by source in order to discover any blindspots in strategy
- Regular reporting on pipeline data, so issues don’t come as a surprise to one team, come end of quarter
- Routine meetings between sales and marketing—not just check-ins, but detailed discussions about objectives and challenges.
Leads Don’t Last Forever
Did you know that, according to the Harvard Business Review, businesses that respond to a lead within the hour are 7x more likely to have meaningful conversations with key decision makers?
Did you also know that the business which is the first to respond to a lead wins 30-50% of deals?
When it comes to your pipeline, slow and steady doesn’t often win the race, and developing effective strategies for quickly getting in touch with leads and opportunities gives you a much better shot of building a continually churning demand generation engine.
In order to improve your lead velocity, there are a few great steps you can take:
- Establish clear lead routing rules: Who owns what? Who is responsible for responses to each specific lead? Who is responsible for sending those leads along?
- Set SLAs for follow-up and resolution: Communicating effectively with leads around the timeline of a deal—when each of you can expect follow-up, how long an overall deal might take, what the key steps are—is incredibly important. This way, no one feels hung out to dry, and everyone believes their time and resources are being respected.
- Measure and report on response time and aging: In order to better improve your lead velocity, it’s important to actively understand where you stumble, what processes aren’t working, and why certain leads age out of relevance. While you probably won’t bat 1000%, knowing where you missed is essential.
And lead velocity doesn’t just affect a single lead in question. The more leads you let age in your pipeline, the more they’ll make it harder for you to take advantage of new leads. Think of your pipeline like a refrigerator: you let a certain amount of food go rotten, those items are gonna spoil many others.
Your Playbook Should Be a Living Document
Your playbook for generating and executing on leads should be dynamic, constantly evolving. Once that goes stale, your strategy for your pipeline will become increasingly ineffective, despite all the hard work you might be putting in elsewhere.
One great way to ensure that your playbook is always up-to-date is to employ reverse engineering. Look back at all the deals that you’ve won in order to glean key information or notice recurring patterns. What sources do these wins typically come from? What is the cadence of contact or lead behaviors for closed deals? Once you understand these factors, you can make them the foundation of your ongoing approach. And, the more frequently you conduct these reviews, the more effectively you can update your playbook to accommodate changes in these patterns.
Another way to keep your lead playbook fresh is to view your marketing programs through what is known as the 70/30 rule. This dictates that your marketing strategy should consist of 70% programs and strategies that you’ve seen succeed in the past and 30% new initiatives with which you hope to experiment.
By employing this rule, you get to keep all of the consistent good, while also finding novel content types or marketing outreach that might further enhance your pipeline. As you execute these new initiatives, be sure to measure their ROI, so that you can—in relative real time—understand how much pipeline they’re using.
Pipeline Generation and Pipeline Conversion Both Deserve Attention
This represents the summation of many of the pitfalls we just discussed, and is perhaps the most important. Oftentimes businesses will get so focused on their pipeline generation, they won’t pay any attention to pipeline conversion. In these cases, they pay the (literal) price.
Lower conversion rates translate into higher pipeline requirements: making them more expensive and more complicated to manage. The lower your conversion rate, the more work you have to do to meet your revenue targets, which often means higher expenditure on marketing.
When trying to get a good sense of your conversion rate, look at:
- Win/loss versus competition?
- What percentage of pipeline (deals; dollars) ended in the customer not buying anything?
- What percent of the pipeline gets pushed out?
Once you’ve established answers to these questions, you can draw on insights from handling previous pitfalls, as well as additional strategies:
- Enhance sales and marketing alignment on what sales solutions might help your pipeline increase conversion rate
- Establish more rigorous deal qualification standards
- Invest in additional Salesforce trainings to make your teams more agile
Insight in Action
After Joel layed out the fundamentals of these strategies and considerations, Mike shared a real world case study that demonstrates what they look like in action—and what results they yield.
Setting the Stage
The Situation
The case study discussed a 50 million dollar organization experiencing steady growth at 40% annually. While a global presence, this organization was, at the time, focused on one vertical industry with designs on expanding their vertical footprint. For additional context, the average sales price of their deals came to roughly 25,000 dollars.
The Challenges
In order to beef up their pipeline and achieve their goals, this business identified a few key hurdles they would have to overcome. First, they would need to expand their infrastructure and processes in order to accommodate their ideal new pipeline. Beyond this, however, they realized a great number of their problems stemmed from a lack of alignment between sales and marketing.
- They ran multiple campaigns, the strategy of which could be summed up as “one and done,” with little evolution.
- They were fixated on activity metrics that were giving them little success or sense of outcomes vs performance.
- They had no sense of their accurate coverage ratio.
- Sales undervalued reporting provided by marketing, and often viewed it as adversarial to their own metrics.
Strategy and Solution
In order to address these challenges, the company began a multi-stage process that accounted for each issue they faced.
Improving Metrics
Conducting a historical analysis of their pipeline performance, sales and marketing discovered that, for new business, they had a Day 1 conversion rate of between 23-27%. Additionally, their growth with return business was steady enough that they could redirect those resources into closing on new business. With these patterns understood, the teams began to establish a grading system so they could keep an eye on pipeline performance ongoing with a universally agreed upon system.
Delegating Responsibilities
Next, the organization agreed upon the quotas of the three key teams involved in pipeline generation: marketing, sales, and BDRs. Using a reverse engineered sales model derived from the observed pipeline patterns, each team was given both unit and dollar targets to meet.
Establishing Alignment and Agility
With the division of ownership and responsibility clearer than it had been in the past, marketing and sales agreed upon a set follow-up team for leads, and an SLA process that would help both them and their prospects feel abreast of the pipeline journey. They also devised stage requirements and a universal definition for both leads and opportunities. In order to ensure the successful implementation and communication of these strategies, marketing and sales agreed to a weekly meeting cadence focused on health, velocity, and other key concerns.
Enhancing Infrastructure
To build out their pipeline infrastructure, this enterprise continued to build and hone dynamic and robust processes around routing, scoring, and reporting on leads. With their metrics and timelines firmly established, they were in a far better position to parcel out resources to each stage of the pipeline, making sure that everyone had the support they needed to meet their targets, and the most essential growth areas received adequate attention.
Evolving the Playbook
Finally, they pooled all the information they’d gleaned during each previous step and built out a new sales playbook, with a focus on the 70/30 role. Supplementally, they resolved to measure the success of their campaigns daily to give them better ability to pivot and adjust based on what worked and what didn’t.
Results
Within the next three quarters, the results were undeniable:
- The pipeline was not only more predictable, but it grew to 4x of their sales quote for Day 1. With this increased flexibility it was easier to uncover gaps and pivot in time.
- Sales and marketing tension dissipated. Aligned on key points and with a mutual playbook, they were able to work in tandem more effectively.
- BDRs went from undervalued to appreciated and important members of the team
- ROI clarified. Every dollar spent was able to be linked to a given return from specific sources.
- Additional infrastructure made it easy to stick to new and expanded processes, and to grow them as time went on.
- Marketing was able to take control of reporting, and provide clear, actionable insight.
Generate a Better Pipeline, Build a Better Business
The Akmazo team was thrilled to host Joel and Mike, as well as all of our guests—each of whom brought a unique perspective and experience to the conversation. With all of the insights, our speakers shared, there was plenty for participants to dig into, and they did!
While this is only a fraction of what we explored over the course of the roundtable, we hope it provides you with useful ideas about how you can build out your own demand generation pipeline, bring your sales and marketing teams together, and chart a path for growth and evolution for your business. As Mike and Joel explained during our Q&A, these strategies are powerful whether you’re an up-and-coming enterprise or a publicly traded industry leader. In order to achieve higher and higher goals, you need an approach to your pipeline that’s dynamic and responsive.
For those who attended “Building a Repeatable and Predictable Demand Generation Engine,” we thank you for coming and for your questions. For those who were unable to join, we hope you’ll sit down with us at our next roundtable. Akmazo is invested in providing organizations with the knowledge, the tools, and the support to succeed. Nothing helps us do that better, than getting together with experts and participants to tackle the questions on all of our minds.