“The solution is fundamentally eliminating marketing-specific and sales-specific KPIs, and instead creating shared KPIs and a shared commission pool for anyone responsible.” – Jarron Vosburg in today’s Tip 1789
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Transcript
Scott Ingram: You’re listening to the Daily Sales Tips podcast and I’m your host, Scott Ingram. Today’s tip comes from Jarron Vosburg. Jarron is the Vice President of Growth at JumpCrew, where he’s spent the past 6 years. Jarron has helped the company scale from fewer than 50 FTEs to over 350 since joining the company, working with companies such as Experian, WAZE, X (formerly Twitter), Unilever, and Alibaba. Here he is:
Jarron Vosburg: There’s this running bit that sales and marketing teams are always feuding, and they can never get along, and everybody a ha ha ha after that, and we all just move on doing the same thing over and over and over again. It’s reaching a point now where businesses literally cannot afford to continue making that same joke a reality. You’ve got marketing on one side who’s incentivized to drive as many leads as possible. On the other side, you have sales who’s incentivized to close as much business as possible. On the marketing side, it’s pretty damn easy to throttle up and throttle down lead quantity. And then you show up to a reporting call and you say, Hey, look at our leads growth. We drove 10% more leads this month than the prior month. Woohoo, we’re great. Go marketing.
On the other side, you’ve got salespeople who are fielding this increase of lead, many of which aren’t necessarily qualified. And their singular objective is to close business. So they’re getting more leads that have very little recourse as to the quality. And they’re trying their best to achieve this phantom quota number by fielding and trying to close these leads. Therein lies the problem. This feud that we about is fundamentally baked into the way in which these two departments are being measured. How many leads can marketing drive versus how much can sales teams close?
Salespeople end up getting terminated because they aren’t able to create ROI against their cost. Marketing folks aren’t getting any commission, whereas salespeople are. So they’re set on this set it and forget it model, hoping that someday they’re recognized for their work, but they’ll never see that monetarily. So you have misaligned KPIs, you have misaligned earning potential, and you’re fundamentally breaking your business from the inside out. The solution is fundamentally eliminating marketing-specific and sales-specific KPIs, and instead creating shared KPIs and a shared commission pool for anyone responsible. Instead of looking at how many leads can I drive or how many deals can I close, those two departments should share KPIs like these.
Kpi number one that I’d recommend is MQL to SAO conversion rate. Marketing qualified lead, meaning the point at which somebody raises their hand and says, I’d like to learn more information. And MQL is not an e-book download, by the way. That is the least qualified lead of all time. And then SAO, sales accepted opportunity, which means that sales says this was an opportunity that I’m going to continue to work. If you can establish a baseline conversion rate of how those leads are translating to opportunities, you’re identifying both the quality of those leads and the standardization between marketing and sales on what an opportunity actually is.
The next shared KPI would be qualifying call to closed deals deal sales cycle. Qualifying call meaning that you actually got somebody on to an initial intro call, and then closed deal, obviously being that they signed a contract and they’ve paid their first invoice, and that they’re now a customer. If you can decrease the time associated between person who you actually spoke to on the phone and now assigned customer. That is a leading indicator of your ability to have educated your customers through your marketing funnel, to have well-trained your salespeople on how best to qualify and move those sales opportunities through the funnel, and ultimately your ability to sign customers as efficiently as possible without a ton of unnecessary overhead and long sales cycles.
The next KPI would be lead gen payback period. I think about lead gen payback period as both any digital activities that marketing might be driving to drive leads, and then also outbound. I would stack your entire outbound team, whether it’s SDRs and AEs, under the same expense line, and then blend that with your marketing expenses because that represents your entire lead gen motion. So you get that dollar value, and then your payback period represents when the deals associated with the efforts of lead gen have closed and have been customers for X, Y, Z period of time, and then recoup your investment from the period in which they were created.
The next one would be Qualified Opportunity Pipeline. Because marketing and sales have to align on what that SAO criteria is, we are able at any given time to be able to visualize the totality of Qualified Opportunity Pipeline month over month. If we can see what is the total amount of dollars associated with our sales pipeline from one month to the next, is that number increasing? That is a good indicator that you’re getting a better feel of who your target customer is. You’re increasing the average deal value. And if you’re shortening the sales period, you’re able to stack more qualified opportunity pipeline in any given month.
The last KPI is more obvious, which is opportunity created to close deal conversion rate. Of the 100 opportunity opportunities that I created this month, how many of those did I close? This conversion rate requires forced alignment between marketing and sales so that salespeople aren’t hyper inflating their opportunity numbers for the optics of it, and that marketing isn’t raking sales over the calls for not creating enough opportunities from the leads that they’re driving.
Scott Ingram: For links to connect with Jarron and follow him on LinkedIn, just click over to DailySales.Tips/1789. Once you’ve done that, be sure to come back for another great sales tip. Thanks for listening!