Marketing grows business, but only if you can prove it! In our Essential KPI’s series, we demonstrate how Pipeline Contribution can be leveraged well and its common pitfalls to avoid.
Pipeline Contribution
Pipeline Contribution is Revenue
Pipeline contribution is potential revenue that marketing brings into the funnel and can be expressed as a share of total potential revenue. It is typically measured in dollars and based on the number of leads that marketing delivers to sales (marketing qualified leads). A dollar amount is assumed to represent the total revenue value of a given lead.
Avoid Common Pitfalls
Like all metrics, the devil is in the details and pipeline contribution is no exception. Factors such as industry, time to customer acquisition, business model, pricing, and product line should be considered when evaluating pipeline contribution. In this section we’ll cover the main assumptions that teams make when arriving at a pipeline contribution number.
Qualifying Leads
The perennial misalignment between sales and marketing revolves around the quality of leads. Marketing’s role isn’t to provide only slam dunks but to provide leads that are either ripe or nearly ripe – everything else needs nurturing. Where there is a major disconnect, get buy in from your revenue team on what qualifies as a ‘good enough’ lead in order to move them along into the sales funnel. Make the deliniation based on a clear and quantifiable event such as ‘booked a demo’, ‘clicked pricing ten times’, or something that shows purchasing intent.
Revenue per Lead
When evaluating the revenue per lead, you should be asking lots of questions:
- What products are most popular?
- What do they priced at?
- How often to customers buy them?
- Does the product mix change based on the ideal customer profile (ICP) or is it random?
- Has our pricing or product mix changed recently compared to history?
Most teams don’t go down the SKU level because of the complexity and time involved or their ICP isn’t well aligned against the products that are being sold.
KPI Timing Considerations
Some examples of pipeline contribution are straightforward and others are not. An average revenue per customer is easy enough to calculate and assessed over a given time interval such as monthly, quarterly, or annually depending on the business. This can be tricky in order to smooth over seasonlity issues, so this can be overcome through only including those in a lagging twelve completed months.
Oftentimes management wants to see how fast sales can convert Marketing Qualified Leads (MQL’s) to Sales Qualified Leads (SQL’s) within a given period. Needless to say, dates are an important here to ensure they align with management’s desired fiscal periods (oftentimes quarters and years).
Please note that this is not Customer Lifetime Value Potential. More about this metric can be found here.
Traditional Data Analysis
If all of this gives you a headache, you’re not alone. Oftentimes it takes a team of people meeting frequently just to get traction on clear, business-appropriate definitions. On top of that, subject matter experts (SME’s) aren’t usually the ones who put together the analysis. Data analysts, data scientists, and data engineers who are trained in analytics tools can help when they have nothing else on their plate.
Deciphyr AI Siplifies Complexity
At Deciphyr AI, our AI-powered data analytics engine accelerates operational agility, strengthens business strategy, and drives results for marketing, revenue, and sales teams.
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We’ve packaged our decades of data analtyics experience within an application that puts them in the driver seat of their marketing strategy. Instead of waiting for days on traditional business intelligence solutions, we accelerate innovation by providing answers in seconds. Faster results means reduced costs and real-time analysis for your dynamic marketplace.
Deciphyr AI > Other Analysis Tools
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What are you waiting for?
Deciphyr AI can grow your pipeline, save you time, and lower your costs. It’s that simple.
Grow your Pipeline Today
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