Sangram Vajre, Director of Marketing at Pardot, shares his insight on the sales pipeline in his new Pardot blog series, Executive Perspective.
What single metric brings sales, marketing, and finance together?
Before we get to the answer, let’s talk forecasting. When your CEO, CFO, and CSO get together, one of the key activities they spend their time discussing is revenue forecasting. Have you ever wondered what they’re really looking at to figure out how much revenue they can achieve in any given month, quarter, or year? It’s “pipeline.”
For marketers, this can be a tough nut to crack — not because marketers lack the aptitude to figure it out, but because it’s not what anyone expects marketing to talk about. More often than not, marketers are not even involved in these conversations, despite the fact that forecasting is key to determining a company’s success. Instead, marketers are tasked with creating infographics, presentations, handling company attendance at events, and writing content — all of which, ironically, are tools that drive more pipeline.
With the growing emphasis on forecasting and pipeline, modern marketing departments are beginning to devote an entire person (or persons) on their team to this metric. This has enabled marketers to finally gain a seat at the table when it comes to forecasting discussions. But what exactly should this person be paying attention to? What constitutes your “pipeline,” anyway? Let’s take a look at a few ways that marketers can start looking at their pipeline.
Your Actual Pipeline
How much pipeline in annual contract value (ACV) resulted from direct marketing sources
To get this number, you’ll want to look at the ACV of opportunities generated by marketing, so you’ll want to create a report that sums the ACV of all opportunities sourced by marketing and created that month. For example, monthly pipeline would show for the month of December that marketing sourced X number of new opportunities that are worth $X. This number will reflect how marketing is contributing to the business.
For every dollar spent by marketing, how much pipe was created?
This metric will compare the cost of each campaign and the opportunities that were sourced by that campaign (basically, cost vs. ACV). To get this metric, sum up the ACV of all opportunities sourced by a specific campaign and compare that number with the total spend. In order to say that the campaign was not a waste, you’ll want at least a 1:1 ratio. Anything better than that means your campaign was a success.
How much of the pipeline was actually closed (this can help you evaluate your win rate)
If marketing sourced X number of opportunities this month, how many of those opportunities have closed as new business? You can use this to predict how much pipeline marketing needs to generate a certain revenue number.
With these metrics in hand, marketing can contribute to revenue forecasting just as much as sales — helping to bring your sales, finance, and marketing teams together in a whole new way.
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