Three Ways to Use your Demand Funnel Part 2. Get your Leads Moving Again.

It is great to have an accurate diagnostic tool that will effectively tell you what is wrong with your Demand Gen programs. However, diagnosis is not very helpful if you do not have a treatment plan to solve the problem. The good news is, no matter the diagnosis, your Demand Gen problem has a cure! Matching the fix to the problem is usually not at all difficult. Let’s look at the proper approach.

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First, let’s recall the three things you can affect relating to total Demand:

• The number of Contacts in each stage (the sum of those representing the entire Funnel).
• The conversion rates from stage to stage.
•  Time in stage, which reveals the Funnel velocity.

 Understanding these metrics also provides us with the diagnostics necessary to understand our funnel problems and remedy those problems. We’ll look at three common problems and the remedies you can apply to each. Before we address those remedies, let’s recall a few principles of our demand funnel, so we can properly diagnose the problem and apply the remedy.

• The funnel should always be shaped like a funnel. That means early funnel stages should always contain more Contacts then later funnel stages. Although the exact numbers will vary from organization to organization, the general shape should be constant.
• Conversion rates should get higher as the Contact gets lower in the Demand Funnel. This should be universally true, since Contacts only progress as they become more and more likely to purchase. It would be highly unusual to find a higher conversion rate for MQLs than SQLs, for example.
• Time in stage will vary from organization to organization, with one exception. MQL-to-SAL should never take very long. In general, an MQL sitting in stage awaiting acceptance by Sales should not last more than 7 days. Otherwise the buyer’s interest level could wane and he or she moves on or forgets about the interest. We will look at this in our cases below.

 Case 1: Stuck Inquiries

This case often happens when organizations do not have a content strategy. Without that strategy, communication is often also stuck in first gear, with messaging focused on attracting net new contacts into the funnel, rather than converting those already in the funnel. This is remedied with a comprehensive contact strategy that targets specific messaging to Contacts at every stage in the funnel, rather than sending the same message to everyone every time. Conversions from inquiry to MQL are all about offering additional information about reasons to move now.

Case 2: Stuck MQLs

This should be the simplest case to solve. If your organization has proper agreement between Sales and Marketing on the attributes of a “qualified” lead and the SLAs for Sales acceptance, nothing should ever get stuck in MQL state. If MQLs are getting stuck, it is most likely a process issue in which the responsibility for sales acceptance is not properly understood. Training and close management of the process will remedy this situation.

The second possibility is a technical process malfunction. Lead routing (usually performed on the CRM side) may not be actually sending MQLs to the proper queue or individuals. This is usually easy to diagnose by the complaints coming from the Lead recipients who are not getting the expected MQLs in their queues. Fixes usually need to be made in the Lead Assignment rules or MAP-CRM integration.

Case 3: Stuck SQLs

SQLs should never be technically “stuck.” If your product or service requires a long sales cycle, consideration for the length of cycle should already be in place. However, when leads do get stuck, in nearly all cases it can be tracked back to lack of discipline in dispositioning lead or opportunity status (see this {Demand Gen Brief} article: Four Ways You Are Marketing Backwards). Dispositioning leads in SQL stage is critical to the health of your demand funnel.

Change the conversation.

When Sales wants more leads, the conversation almost always ends up addressing adding new leads to the top of the funnel. Rarely does an organization take the time to examine what is going on mid-funnel and address concerns there, even though this will almost always provide a faster, cheaper and higher quality lift in lead flow. Although we’ve addressed some common fixes there, there are always considerations unique to your organization’s process and lead flow. Take the time to examine what is happening mid-funnel before rushing to add more leads to the top, which may only compound your problems.

Notes:

Your Demand Funnel is your chief diagnostic tool for Demand Generation.

Diagnose first, and only then apply the solution to the trouble spot.

Mid-funnel fixes are often faster, cheaper and of higher quality than top-of-funnel.

                                    

Now we’ve learned how to use our Demand Funnel as a diagnostic tool and how to apply remedies to the problems we’ve found. These are critical steps to maintaining the health of your Demand Funnel. However, we don’t want to just maintain our Demand Funnel, we want to improve it!  Next week we will look at ways to improve our overall Demand Funnel performance in: Three Ways to Use Your Demand Funnel, Part 3. Optimize Your Lead Process!

Three Ways to Use your Demand Funnel, Part 1. It’s an Always-on MRI to diagnose Marketing Effectiveness.

Back to a medical analogy, wouldn’t it be great if you had tools like your doctors have? Tools that could magically see inside your Marketing “body” and allow you to instantly diagnose problems. Not enough MQLs? Instant diagnosis. Conversion problems? There’s a cure for that.

The truth is - you do have an “MRI” for your Marketing troubles. It’s called a Demand Funnel. If you are using it properly, you have all the diagnostic tools you need to completely understand what is and what isn’t working properly in your Lead process!

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Interestingly enough, most organizations have some semblance of a Demand Funnel in place, but many are only used as reporting tools and some are not used at all. Step number one is to understand exactly what your Demand Funnel is telling you. When using an MRI machine as a diagnostic tool, if the doctor has no idea what to look for in the imagery created by the machine, it is useless. Your Demand Funnel works the same way. If you, the Demand Gen expert, don’t know what to look for, it is not effective as a diagnostic tool. Let’s make sure we understand what we’re looking for in your Demand Funnel diagnosis.

Basic Demand Funnel Metrics

In your Demand Funnel, you are measuring the three things you can affect that relate to total Demand:

• The number of Contacts in each stage, and the sum of those representing the entire Funnel.
• Conversion rates from stage to stage.
• Time in stage, which reveals Funnel velocity.

Before we move to diagnostic details, here are a few things to consider. You may not have complete or reliable data past MQL. (For more information, see this {Demand Gen Brief} post.) This is OK, because you can perform a diagnosis on the data you do have. If your MAP is not automated to the point of updating Funnel stages in a timely fashion, you probably need to build (or have built) a program to match your funnel stages, definitions and attributes of Contacts in stage. Otherwise, you will not be working with up-to-date data.

Reading your Demand Funnel MRI

We just determined the three things you can affect relating to total Demand, so now you need to determine the metrics that tell us how well your Demand Gen team is doing. First is to determine the volume of Contacts in each Funnel stage. While your Demand Funnel will be different, it should look something like this:

Prospect              191,302

Inquiry                    22,956

MQL                        11,019

SAL                           10,138

SQL                             2,433

Secondarily, we need to determine the conversion rates from stage to stage and, in turn the composite conversion rate for the entire funnel. Based on this example:

Prospect – Inquiry:          12%

Inquiry – MQL:                 48%

MQL – SAL:                       92%

SAL – SQL:                         24%

Prospect – SQL:                01.27%

Finally, we need two additional data points to determine stage velocity throughout the funnel: stage date (a date/time stamp applied when the Contact reaches any given stage) and time in stage (a calculation based on the stage date for the next stage in the series minus the stage date for the calculated stage). We want to understand this number because total demand is a function of both how many contacts in the funnel convert and how quickly they convert. Think of velocity this way: with the identical conversion rates, if you can cut the time in stage across the entire funnel in half, you can create twice the SQLs at any given point in time. Like conversion rates, time in stage adds up to a composite across the entire funnel. Based on this example:

Prospect                8 days (Inquiry Stage Date 10/18/2014 – Prospect Stage Date 10/10/2014)

Inquiry                  18 days (MQL Stage Date 11/05/2014 – Inquiry Stage Date 10/18/2014)

MQL                      22 days (SAL Stage Date 11/27/2014 – MQL Stage Date 11/05/2014)

SAL                         2 days (SQL Stage Date 11/29/2014 – SAL Stage Date 11/27/2014)

SQL                        15 days (Closed Stage Date 12/14/2014 – SQL Stage Date 11/29/2014)

Composite            65 days

Your next step is to begin documenting the Demand Funnel baselines for each of these metrics on a periodic basis. Start documenting on at least a monthly cadence, with the intention to move to a weekly cadence. The objective is to determine if your metrics are moving in the right direction. Your conversion rates need to go up and your time in stage needs to go down. Volume then becomes a calculation based on how many MQLs or SQLs your sales team needs.

Change the conversation.

Your MRI training is now complete. You know how to read it and diagnose your Demand Funnel problems. Conversations that used to revolve around how many contacts need to be added to the top of the funnel can now be fine-tuned to talk about conversion rates and velocity. Remember, the ultimate goal is closed business (Closed/Won Stage) and the conversation needs to be about how to get there as quickly as possible, rather than how many nebulously-defined “leads” can you generate. You have a powerful diagnostic tool. Use it to your advantage!

Notes:

Your Demand Funnel is your chief diagnostic tool for Demand Generation.

Using the tool to determine specific problems will lead to specific, focused solutions.

Remember, the issue is closed business, not the number of undefined “leads” in the funnel...

                                    

You will also be able to understand where Contacts are “stuck” in the funnel and apply tactics designed to move them to the next stage. That is where we will pick up next week – using your Demand Funnel diagnostics to determine where to apply specific tactics to solve specific problems in: Three Ways to Use Your Demand Funnel, Part 2. Getting Leads Moving.

Four Ways You Are Marketing Backwards. When was the last time you asked Sales to properly disposition their MQLs?

There is another recurring phenomenon I’ve seen in one hundred percent of the Marketing and Sales organizations with whom I have consulted. Literally - every single one of them. This phenomenon has a name and, even though it is not published or circulated in any formal way. But every time I see the phenomenon in an organization, I can invoke this name and marketers everywhere immediately understand it. It is “The Black Hole.”

The Black Hole
Of course, this Black Hole has no cosmic origin, but it does seem to have cosmic relevance – at least in terms of Demand Generation. To understand the significance of The Black Hole, we need to first revisit typical Demand Funnel operation and its implications in Closed-loop Reporting. If we go back to our previous discussion about building a Lead Management process, we’ll recall that there need to be specific stages through which a buyer – or Lead for our purposes – must travel to become a customer. Each of these stages have definitions, actions in stage and triggers to move them either forward to backwards in the process.

In a typical Demand Funnel, there is a specific handoff between Marketing and Sales between the MQL (Marketing Qualified Lead) to SAL (Sales Accepted Lead) stages. At this point, Marketing (typically via the MAP, or Marketing Automation Platform) no longer initiates changes to the Demand Funnel stages. Sales (typically via the CRM, or Customer Relationship Management system) initiates changes to the Demand Funnel as a result of conversations with the prospect. These updates are called dispositions. For example, when a Sales Rep has a conversation with a prospect and discovers specific BANT qualifications have been met, she might need to open an Opportunity and trigger Demand Funnel movement from SAL to SQL. This is a typical type of Demand funnel disposition.

This is also where we discover the Black Hole! Most Demand Gen organizations have little to no insight into what happens to a Lead once it exits the MQL stage and is being dispositioned by Sales. Once these Leads exit Marketing’s jurisdiction, they fall into The Black Hole, never to be seen or heard from again. Why is this a problem? It makes closed-loop reporting impossible, since Marketing has no idea how or when Leads move through the Funnel to finally close – either won, lost or other (usually a class of leads that don’t buy at all – either from you or your competitors). Critical data is lost, and Marketing cannot, with any reliability, attribute revenue to its Marketing activities.

Why Sales should care

We’re going to start this discussion with a key topic we’ve discussed earlier: creating a solid MQL-to-SLA agreement on the definition and SLA. Further discussion on this topic with Sales is impossible without this agreement, so make sure you have it in place. Often, when we get to this question – why should Sales care? – we get a number of responses, such as:

·         We consistently close our quota, so why should we have to enter a bunch of stuff that is only relevant to Marketing?

·         This stuff is irrelevant to my job and takes too much time I could be using to talk to prospects and sell more.

·         I already fill out my weekly prospecting report for my Sales Manager and this is a duplication of effort – I shouldn’t have to do this twice.

These are all powerful arguments, so how does Marketing respond to these objections?

1.       First, understand this is a team effort. It is not “us vs. them” and if you treat it that way, it will become that much harder to gain consensus on the right way to disposition Leads so everyone benefits. Approach the subject as a collaborative effort to improve the entire organization’s results.

2.       High performers consistently meet and exceed quota, and often are accorded a lot of credibility when it comes to sales process to close business. Let’s face it, what Sales Manager would not want to have everyone emulate their top performers? What’s relevant here is that these dispositions are not only relevant to Marketing, they are highly relevant to Sales! The more the Marketing team can understand about how Leads process through the system, the Marketing will get at identifying and qualifying better prospects to send to the Sales team. Do top performers want to spend less time with poorly matched prospects and more time with those prospects who fit the ideal buyer profile? If we want to stop wasting time, let’s stop wasting it talking to prospects who are unlikely to buy in the first place!

3.       Why are Sales managers asking their reps to manually fill out additional reporting when everything they need to know should be dispositioned in the CRM system? If the CRM system is not set up with the correct hierarchies allowing managers full visibility into the activities and results of their teams, the organization has an infrastructure issue that needs to be resolved. Every leading CRM system has a way for managers at any level to see the current state of their entire team’s pipeline in real time or near real time. The rep is correct – she should never have to enter the same information twice.

There is one final argument we often hear, but should be moot if you have begun with that strong MQL-to-SAL agreement. That argument is that Marketing only sends over junk leads. If Sales and Marketing leadership have aligned and agreed on the definition of an MQL, this argument is actually one against Sales leadership, not Marketing. If that agreement is in place, anyone complaining about the quality of Leads should be referred to the Sales leader who agreed to the MQL definition, because that individual determined the attributes of a properly qualified lead

Change the conversation.

There should never be a question about why Sales should disposition Leads in a timely and effective manner. Change the conversation to how Marketing can help Sales accomplish those dispositions so the data acquired can help both teams improve the quality and quantity of MQLs being sent to Sales! That way, everyone wins.

Notes:

Understand Lead disposition is a team effort. Timely and proper disposition of Leads helps everyone succeed.

The information gained through timely and proper disposition helps both Marketing and Sales..

We’ve used the Demand Funnel to show why we need a complete picture of the Lead lifecycle from Marketing to Sales. We’ve convinced Sales it is in their best interest to disposition Leads in a proper and timely manner, so we can rely on our Demand Funnel. Next, let’s dig into some ways we can leverage your Demand Funnel in  Three Ways to Use your Demand Funnel to Improve Marketing Effectiveness, Part 1.