We’ve developed this handy marketing funnel calculator to help marketer’s figure out how much activity is needed at the top of the funnel to meet revenue goals.
So why use a metrics funnel?
Today, marketers benefit from marketing and sales automation tools that capture data about what is happening with a lead over its lifetime. And, when used correctly, this information gives marketers a leg up when it comes to planning. Studying the performance of your leads as they go through their buying journey allows you to build a predictive model that can determine how many leads will turn into customers. There are many names for the process of measuring lead conversion throughout the sales cycle. Regardless, the more that you study the metrics in your marketing funnel, the more you will understand which levers to pull to improve program performance.
How does the funnel work?
A funnel, is only as good as the data behind it, so be sure to do your homework ahead of time. Most companies have put considerable time and effort into determining how to qualify each opportunity stage a buyer has reached and howto show that in their forecast. Due to the challenge associated with this, don’t feel bad if your sales team and marketing team haven’t agreed on what it takes to become a lead AND how to mark the proper lead stages before they get to the opportunity stage. Obtaining alignment with sales as to what the definitions are for an MQL, SAL and SQL are critical to your joint success.
Companies with best-in-class processes vs. companies with average processes achieved 25% or greater improvement in Waterfall Conversion Rates
– SiriusDecisions, Field Marketing 2.0: The Heart of Growing Conversion Rates
The funnel uses conversion numbers between lead stages to help determine how much you must put in the top of the funnel to meet a certain goal at the bottom or, it can do the opposite – track how much you will get out of the bottom if you put a certain volume in at the top. Either way, there is a lot to be learned from tracking how these leads convert from one stage to the next. Define the stages for yourself using the guidelines below:
- Marketing Qualified Lead (MQL). A contact who has engaged with your marketing efforts enough to meet your company’s definition as ready to be passed from marketing to sales
- Sales Accepted Lead (SAL). An MQL that has been determined by a member of the sales team (likely an inside sales rep) to be accepted and worth exploration by a sales person. Companies use different methods to determine an SAL, the BANT method is a popular one.
- Sales Qualified Lead (SQL). A lead that has been explored by a salesperson and determined to be qualified for their pursuit. This is often considered to be the beginning of the sales process.
Make sure that you set up a way to track these conversions within your marketing and sales automation tool so that it is applied consistently and has a time/date stamp to capture each conversion. You’ll be able to use your own conversion numbers within the funnel to predict outcomes of your marketing programs. And, you will be stunned at how useful the information is!!!
Don’t have historical conversion data? You have to start somewhere, how about beginning with an educated guess. Turn to industry thought leaders like SiriusDecisions, MarketingProfs, Marketing Sherpa, or your favorite marketing experts to develop a baseline using their program averages or best practice numbers. The first time you build a funnel it is scary (especially when you’re using someone else’s conversion data), but remember, everyone has to start somewhere. Put a stake in the ground!
As the year progresses, you should compare your actual data to your starting funnel. Build a funnel to support your annual plan, but also make stand alone versions for each of your major campaigns. By measuring programs in flight alongside how you are doing against your annual goal, you will be able to make course corrections quickly to ensure your overall success.
Pathway to success:
Now you are able to step up to the table and provide an actual forecast – based in real numbers – about the impact that you can have on your company’s bottom line. Using the funnel tool you have a method to forecast your contribution and also manage your performance against it. Good luck!