WHITEPAPER
Transforming Revenue with a Health Framework for Pipeline Generation
Pipeline health refers to the state of the revenue pipeline. A healthy sales pipeline means that there are enough leads and opportunities in each stage of the pipeline to ensure consistent revenue generation.
Contents
Introduction
Let's start with the main point: Marketing teams need to hand over a lot of quality leads to sales teams in order for them to close enough deals to hit the company's revenue targets. Yet most marketers can't accurately predict the number or size of opportunities they are going to generate or the rate at which they will turn into closed-won deals. In fact, in our recent study, 71% of marketers say they cannot predict their pipeline generation and outcomes.
If you can't predict the output of your inbound and outbound efforts, then you definitely won't be able to adapt your strategies to compensate. It's no wonder then that a recent survey by Pavilion Pulse found that a majority of B2B companies are not meeting either sales or marketing pipeline targets.
The old way of measuring pipeline generation is reactive, based on sales forecasting and full of guesswork based on historical conversion rates, which may or may not be relevant to future outcomes and conversions. According to CSO Insights, less than half of all forecasted sales opportunities actually result in a closed deal. Furthermore, these measurements often only focus on the quantity of leads and not the quality of them. This leads to poor pipeline optimization and, ultimately, lost revenue.
It's time for a better way to measure and understand your pipeline health.
Below, you'll discover the current problems with pipeline generation as well as a new way to better understand and approach pipeline. With the new system, you'll not only be able to predict your pipeline generation, you'll be able to adapt your marketing tactics quickly and start seeing growth in real time.
Section 1
Here's why your pipeline is in jeopardy.
Pipeline is a measurement of the total value of open opportunities within your funnel at any point in time. Quantity of pipeline can be measured in the total value as well as the count of opportunities, while quality pipeline is measured based on ideal customer profile fit and velocity through the sales stages. It also helps companies forecast how close they are to reaching sales goals and what kind of revenue they can expect. Often, marketing teams are responsible for creating pipeline opportunities, while sales teams are responsible for closing those deals.
It sounds simple enough. Yet, according to a16z and Redpoint, the top executive problem that kills companies is the lack of a predictable pipeline. When you don't have pipeline, you don't have deals to close. That means you won't be able to hit your revenue targets or growth plan for the year.
But the killer problem isn't just a lack of pipeline; it's a lack of predictable pipeline.
Now more than ever, it's imperative that your team knows when and how to adjust their tactics so you can convert more leads to opportunities. So important that 95% of marketers feel that having the ability to predict pipeline outcomes is important to overall success of marketing, yet over 70% don't know how to measure this.
When you can't predict your pipeline, you're flying blind. You don't know how close you are to your goals or how you can adjust your strategies to improve your pipeline coverage. When you do have enough pipeline coverage to reach your goals, you don't understand how you got there or how you can repeat the feat.
So why is it so hard for companies to accurately predict how much pipeline their teams will create? According to CSO Insights, current weighted pipeline methods are only effective about 50% of the time.
There are a handful of ways that today's pipeline processes fall short.
Problem 1
Sales and Marketing disconnect.
Pipeline is created at the intersection of Marketing and Sales. Usually, this consists of two separate teams and possibly a third if your organization also has a separate SDR/BDR team.
Each of these teams is usually responsible for different aspects of the pipeline with different focuses, responsibilities, and KPIs. Marketing creates campaigns with the goal of turning site visitors to leads until they're ready to be handed over to Sales, who then work to further qualify leads, create opportunities, and close deals.
Over a fourth of marketers we recently surveyed said that the disconnect is so bad, misalignment of Sales and Marketing is a significant challenge to generating pipeline.
Source: The 2023 State of Pipeline Generation Report
This separation can lead to a disconnect between teams with no one team having a complete view of the buyer journey. This fragmented view can be exacerbated if each team uses a different technology to track their portion of the journey from lead to opportunity to customer. Because of this fragmented view, organizations are missing key data, patterns, and insight that could help them refine their processes and decrease their sales cycle. Over a fourth of marketers we recently surveyed said that the disconnect is so bad, misalignment of Sales and Marketing is a significant challenge to generating pipeline.
In some cases, the disconnect can become large enough that each team views the pipeline problems as someone else's responsibility, and so teams remain siloed and the problems never get solved.
Problem 2
Leakage during hand-offs.
Since teams rarely work together seamlessly, there must be a time when marketing hands over the leads to sales for them to further qualify and pursue. Every time this hand off happens is a chance to leak context and knowledge about the particular prospect.
Context is important to the buyer journey. For instance, if your sales team knows that a webinar on a specific pain point brought in a lead, then they can immediately address that pain point in their communications. It gives your sales team an advantage, allowing them to move an opportunity through the sales funnel more quickly.
Similarly, you might have weak spots in your buyer's journey but without all the context, you might not even be aware. In fact, in our recent study we found that two-thirds (66%) of marketers don't know where there is funnel leakage and conversion bottlenecks (source: The 2023 State of Pipeline Generation Report).
Problem 3
Marketing lacks down-funnel visibility.
Instead of having the insights to focus their efforts on bringing in more high quality leads that turn into revenue, their campaigns might end up targeting leads with suboptimal pipeline ROI.
Most marketing teams are aware when they are or are not providing enough leads but fewer teams spend time discussing win rates with sales teams and gleaning insights from that information. So marketing often ends up pursuing whatever leads it can regardless of whether or not those leads will leave sales with a poor quality pipeline.
Furthermore, in most teams' pipeline processes, marketing doesn't have visibility into how well leads convert and which ones effectively drive the pipeline. This is key information that could help marketing shape their entire strategy and yet, most teams are completely in the dark.
Problem 4
Current pipeline metrics are retrospective.
The most popular metrics in the industry are pipeline coverage and pipeline velocity.
Pipeline coverage refers to the amount of pipeline available to close in a quarter divided by the quota for the quarter. This helps Sales assess whether they have enough pipeline going into a month or quarter to hit their revenue quota.
Pipeline velocity, on the other hand, measures the value of opportunities flowing through your sales channel every day. To measure velocity, you take the amount of opportunities times the average win rate times the average deal size and then divide that figure by the average length of your sales cycle.
If you've retooled your targeting or have made changes to the quality of your leads, these figures won't reflect those changes. Thus, current pipeline metrics may or may not relate to the opportunities currently in your pipeline.
Both of these figures-especially velocity--rely on averages and assumptions based on prior pipeline results, making them best-guess figures instead of forward-looking predictions.
Current pipeline metrics leave both marketing and sales in a reactive position. You have to wait until the quarter is over before you can make any adjustments. But by then it's too late and targets have already been missed.
Section 2
Transform your pipeline for good.
While pipeline health is a liability for so many B2B companies, it doesn't have to be. Plenty of companies have found better ways to measure and improve their pipeline and so can you.
The following tips will help you build a better pipeline and help you maintain it without having to wait until the end of the quarter to see whether or not you hit your targets. You'll be able to measure the state of your pipeline and adjust your marketing spend accordingly for the greatest return on your investment.
Transforming Revenue with a Health Framework for Pipeline Generation, © 2023 RevSure.Al
Generate quality pipeline beginning with the lead.
Both pipeline coverage and pipeline velocity are conversion metrics, which means they refer to how well your Sales team is winning deals. However, they don't measure how well marketing generates leads for the pipeline in terms of both quantity and quality.
To do this, marketing needs the insight to understand how their lead generation efforts convert through the sales funnel so they can focus on creating more high quality leads
Instead of having separate funnels like we mentioned above, a better way is to have one funnel that provides actionable data to both sales and marketing.
Having only one funnel allows marketing to understand which leads result in real revenue and spot any patterns that emerge. With this information, marketing will be able to focus their time and resources on the paths that lead to more revenue.
After all, having maximum pipeline coverage will ultimately be worthless if none of those opportunities convert.
Make your pipeline proactive.
There can be a significant lag time between realizing you missed last quarter's targets, adjusting your strategy, and then determining the most recent figures to learn whether or not your changes made a difference. That's too slow in today's market.
In order to be proactive, you need to measure the pipeline-to-be-generated- such as MQLS, SQLS, SALs-as well as the current pipeline. There are tools today that can help you make pipeline predictions instead of relying on best guesses.
You need to know, in real time, whether or not you're bringing in quality opportunities and, even more importantly, whether your adjustments are having any effect. Without that insight, you won't know how to maximize the return on your marketing spend.
Implement feedback loops.
Current pipeline metrics have no innate feedback loops. Marketing teams-and especially demand generation teams-want to know how to improve either the lead-to-opportunity conversion or improve win rates down the funnel. Often, Marketing has no idea which leads will turn into the highest value deals.
The data already exists. The difficulty is making sure that sharing the knowledge is a key part of your process. Make feedback loops a key part of your pipeline processes so everyone and every team has all the data they need.
Instead, Marketing needs to better understand their buyer journey. By implementing feedback loops, you can learn which leads turn into the most revenue and what tactics accelerate their conversion, thus improving your targeting.
Section 3
How to increase revenue with the pipeline generation health index.
The truth is that pipeline generation health is the only true measure of the effectiveness of go-to-market spend because it measures how well your team generates high quality leads according to their pipeline and revenue potential. This measurement directly impacts revenue outcomes, yet it's one of the hardest metrics to gauge.
Transforming Revenue with a Health Framework for Pipeline Generation, © 2023 RevSure.Al
Make predictable pipeline generation your true goal.
Marketing often measures leads when they should be measuring pipeline, the true goal for handover between marketing and sales. While marketing teams have reams of reports on lead generation, they have very little data on which leads result in actual revenue or how they do so. They have even less data they can apply to their marketing campaigns.
Advancements in Al mean you can now use predictive modeling to understand in real-time how well you're generating pipeline. By quantifying the pipeline value of leads and the predicted outcomes from all active demand generation campaigns, the pipeline generation health index provides early visibility into where the pipeline generation will land vs. targets.
With this information, marketing teams can minimize pipeline surprises and course-correct faster.
Course correct faster with pipeline generation health index.
Learn tactics that can accelerate revenue.
The pipeline generation health index uses Al to deliver actionable insights into how your pipeline responds to marketing tactics.
With insights into what attributes-such as firmographic, technographic, engagement, etc.-drive conversion behavior, marketing teams can refine campaigns to target quality leads with both high lead-to-opportunity conversion as well as pipeline win rate conversion.
Marketing teams can also decipher what tactics can accelerate conversions into pipeline and revenue. Next time someone asks what levers you can pull to drive more revenue, you'll have a clear, data-backed reply.
Improve ROI from your campaigns.
Sophisticated models provide new granularity into the opportunities that are actually within your pipeline so you can stop relying on best-guess figures and start relying on real, current data. Better yet, you will gain true understanding of how your marketing spend directly contributes to revenue in the form of pipeline generation.
Analyzing what channels, campaign types, lead sources, etc. are most effective in driving pipeline ROI allows you to fine-tune your sales and marketing spend so you see your best possible return
Gain true understanding of how your marketing spend directly contributes to revenue in the form of pipeline generation.
About RevSure
Drive confident and profitable growth with RevSure
In a recession, your sales cycle will naturally grow longer. This is especially true the more your company is trying to reach enterprise customers. Dealing with senior stakeholders and a more complex evaluation process slows sales, making it harder to track the results of your campaigns.
Improved performance, predictable outcomes
Through Sales Pipeline Readiness, RevSure shines a light on those murky mid-pipe stages, offering you:
- Confident pipeline generation
- Improved conversion rates
- Optimized campaign performance
And it's all powered by advanced Al predictions that help you capitalize on what converts and adjust what doesn't.
B2B Marketing made whole
We know what's been holding marketing teams back. And we're confident that our platform could help you and your business scale the trickiest obstacles you face in 2023.
From planning to analysis, Sales Pipeline Readiness creates dependability and predictability when you need it most.
From planning to analysis, Sales Pipeline Readiness creates dependability and predictability when you need it most.
An unpredictable pipeline leads to unpredictable revenue generation. Sales Pipeline Readiness is the missing link in driving predictable & profitable revenue growth, and Pipeline health needs to be on every revenue leader, CEO, and Board's agenda
Deepinder Singh Dhingra
Founder & CEO, RevSure.Al
No more random acts of marketing.
Pipeline & Revenue Predictions, Attribution and Funnel Intelligence in one place.
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