How do you tell if your sales team and marketing team are working well together? There’s a simple diagnostic that I’ve come to use. Compare the slopes of marketing’s lead generation efforts to sales' bookings trajectory.
The marketing pipeline trend should be the pipeline for this quarter, pipeline that’s available to close (ATC). ATC is a concept I learned from Lambert Billet, the CRO at Looker. It means the prospect will buy this quarter. Sometimes, teams report aggregate pipeline generated, but prospects ready to buy 12 months from now aren’t relevant.
If the marketing slope is up and the bookings slope is up, the teams are aligned. Ideally, the marketing slope is greater than the sales slope, which means the marketing team generates more pipeline than sales can close. If the slopes are identical, that’s fine too. Marketing sources enough pipeline for sales to hit their numbers.
If the marketing slope is up, and the sales slope is flat to down, then there’s a disconnect between marketing and sales. This is the most common scenario in startups. There’s a problem with the handoff between marketing and sales. Some potential causes:
- Marketing focuses efforts on non-ICP prospects. A product leader at a B2B marketing mega-cap shared with me only 7% of marketing spend is targeted to sales prospects, which is why ABM has become so popular.
- Marketing efforts may not be well qualified. Many demand generation marketers focus on SQLs rather than MQLs as their target metric to align themselves better with the sales team to mitigate this.
- The initial marketing pitch resonates, but the product fails to deliver, or the sales team isn’t trained well enough yet to close the customer.
There are many potential causes here. These are just some of them that I have observed. Regardless, if the slopes have this configuration, it’s worth spending time to understand the issue better.
Marketing slope is down but sales slope is up is a rarer configuration. But it is possible. These are some possibilities:
- Presages a decline in bookings rate because the sales team is converting older pipeline.
- Sales sources the majority of leads through outbound, and marketing isn’t a meaningful contributor. This may be possible in large ACV products where outbound sales can be up to 80% of lead generation.
When analyzing the ratios of lead generation and sales bookings, it’s worth looking at the share of leads generated by marketing vs. sales. I’ve seen companies with 80% sales sourced leads and others with 80% marketing sourced leads.