As Steve Woods succinctly states in “Digital Body Language”: “It’s no secret: sales and marketing have never enjoyed the smoothest of relationships – especially in complex sales environments.”
In the world of finance and accounting, definitions are clear and consistent – NPV, gross margin, cost of capital, retained earnings. While there is some room for organizations to interpret these definitions, all stakeholders are speaking one language. And when they don’t (e.g., Enron, WorldCom, etc.), the consequences are dire. But when it comes to a common sales and marketing language, I am reminded of the line from the move “Cool Hand Luke”:
“What we’ve got here is failure to communicate.”
There are some great books on marketing metrics. My favorite is co-authored by (conflict of interest disclosure) my friend Dave Reibstein, Marketing Professor at The Wharton School: “Marketing Metrics: 50+ Metrics Every Executive Should Master” (Paul W. Farris, Neil T. Bendle, Phillip E. Pfeifer, David J. Reibstein). You’d think that with 50+ metrics they would have it all covered. But, you see, the 50+ metrics in this book are marketing metrics. That’s great for the marketing department. But what about those terms at the intersection of sales and marketing – like “inquiries” and “opportunities”?
If your sales and marketing teams don’t always see eye to eye, you are not alone. From working with hundreds of organizations, the first step to success is to speak the same language.
Here’s the good news – you don’t have to master 50+ metrics! There are five that matter. But getting them right is really hard. Once you have them right – with Marketing and Sales in agreement – you have the foundation for success.
Over the past few years, with the help of consulting organizations like Sirius Decisions, a consistent language has begun to emerge. Most of the best performing marketing and sales organizations have adopted some version of these five stages of the buying process:
Inquiry: A prospect takes some sort of action – a “hand raiser”. This might be submitting a form, registering for an event, or viewing a demo.
Marketing Qualified Lead (MQL): Using a set of agreed-upon criteria (e.g., budget, authority, etc), Marketing deems the lead ready for Sales engagement. (Important: marketing and Sales must agree on the criteria)
Sales Accepted Lead (SAL): Based on a review of the data on the MQL, Sales agrees to engage with the prospect
Sales Qualified Opportunity (SQO): Sales engages with the prospect and agrees that the prospect is a real revenue opportunity
Closed Business: The transaction is completed.
The math on conversions – from inquiry to close – can seem daunting. According to data from Sirius Decisions …
- An average-performing organization with 1,000 inquiries will close 2.5 deals
- A strong-performing organization with 1,000 inquiries will close 5.8 deals
- A best-in-class organization with 1,000 inquiries will close 13.5 deals
The spread in performance between “average” and “best” is about 5x!
It is critical that Marketing and Sales discuss and agree on these definitions. A failure to agree on definitions is the most common failure I have seen in companies reaching their revenue potential.
It can take many months to reach agreement. Don’t despair. Keep talking.