At the Wheel of the Revenue Engine (Setting Targets)

by Michelle McGinnis on Monday, August 16, 2010 in Sales & Marketing Alignment

In my series of blog posts I write about our mission to run the highest performing revenue engine in the SaaS industry. This mission started with one simple question, “Why are the demand generation results running 23 percentage points higher than revenue production?” In the last post I wrote about the cage fight that occurred after I dropped this bomb on the sales team, “We will only be populating your lead scoring dashboard with highly scored leads.” With that bowl of habanera chili simmering on the stove, Brian (our CMO) and I turned our attention to the benign topic of “Setting Pipeline Targets.”  Oh snap…

Abraham Lincoln once said, “A goal properly set is halfway reached.” Inside Eloqua, we distinguish between four goal levels; clear, stretch, extraordinary and pipe-dream. You have lots of confidence achieving the clear goal by working the way you regularly work. You may be less sure of reaching the stretch goal, but you will get there working the way you usually do, just with more effort. The pipe-dream is a goal so far from reality, no one believes it. The pipe-dream is unattainable and it de-motivates the team. The important goal is the extraordinary one. This is a goal you can barely see in the mist - it is audacious and will require you to change the way you currently work. At Eloqua a properly set target is one with extraordinary goals.

Initially the recipe for setting pipeline targets seemed simple - like the back of an instant pancake box: 2 cups Aunt Jemima® Original Complete Pancake Mix, 1-1/2 cups water, 1 tablespoon butter. (Fourteen mother’s days later, I almost have this memorized.) How hard could the pipeline be? The recipe might consist of 2 cups “Next Fiscal Year” revenue targets, 1-1/2 cups “Conversion Rate”, 1 tablespoon “Extraordinary Goal” concept. So Brian and I scheduled an hour meeting, mixed up that recipe in the first five minutes and then spent 55 minutes comparing notes on Family Guy episodes and congratulating ourselves on our executive acumen. Turns out according to Lincoln’s definition we were only about 5% of the way there. We discovered this when we turned the marketing and sales pipeline targets into a Key Expectation.

In their book, “How Did That Happen”, Roger Connors and Tom Smith define Key Expectations.  “A Key Expectation is one that must be achieved and requires everyone involved to do what needs to be done to deliver the result. Key Expectations are formed when not delivering is not an option. Everyone must see it, believe in it and share the responsibility for making it happen

Brian did not want me to feel alone in the sport of management ‘bomb dropping’ so he rolled out with, “Everyone in marketing will be paid on attainment of our Sales Qualified Opportunity (SQO) target.” Crickets. Head snaps.  Dry heaves.  Fainting.  Chipped teeth as jaws hit desks. Now that the pipeline targets became Key Expectations, folks became insanely interested in the goals.  This was our tipping point because now we had real, extraordinary, Key Expectations. We broke down our revenue targets between existing clients and new clients. We carved it by geography. We assessed expected sourcing between partners, marketing and sales. We looked at historic and projected conversion rates, capacity of various organizations, even time necessary for different groups to source and convert leads. From there we developed waterfall metrics (MQL, SAL, and SQO) for each channel and each organization.  Inside Eloqua there is one corporate pipeline with agreed to metrics that all parts of the revenue engine are running after. And it is a Key Expectation – not delivering is not an option.

With the pipeline targets set we were off like Doc and Happy, a couple of the seven dwarfs, singing ‘Whistle While You Work’ as we set about teaching the sales force to own their forward pipeline – Oh snap…


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