The concept is simple: predicting and measuring revenue relies on your ability to track the progress of leads as they travel along the road to revenue. However, like many things, it is easier said than done as this road is fraught with distractions. Even when you can measure it, how do you know what good looks like? A recent Aberdeen Group study of 199 marketing and sales professionals revealed the average conversion rates at five key points in the road; checkpoints where leads drop off or fail to convert.
I call them tollgates; points of equitable exchange occurring between the buyer and a vendor’s marketing and sales team. They’re places you can stop, measure, and optimize within the marketing funnel. Here are the five identified within Aberdeen’s recommended framework for lead management, along with average performance benchmarks for you to compare to:
0. Starting line: Marketing database – not officially one of the five tollgates, but something that is essential to measure from the get-go. The size of your marketing database should be used as an input to an equation, using average conversions of future tollgates to predict revenue that marketing can help create. Focus on quality, as well as quantity. Aberdeen estimates that the average marketing database has 70% good data.
Related, 66% of Best-in-Class companies employ cleansing and de-duping methods vs. 36% of All Others.
1. Tollgate one: Marketing-Engaged Contact – often known as a response, this measures the conversion of a contact to a known prospect. 22% of marketing-engaged contacts become marketing-qualified leads, on average.
2. Tollgate two: Marketing-Qualified Lead – whether qualified by marketing automation or by a dedicated telemarketing resource, qualified leads are one of marketing’s most important outputs. Average conversion from marketing-engaged to marketing-qualified lead is 22.3%, Best-in-Class see 35.6%, and Laggards 9.7%.
3. Tollgate three: Sales-Actioned Lead – the definition of a sales-actioned lead should be agreed upon by both sales and marketing, and should be a confirmation of the qualified lead status (the correct demographic and firmographic profile, complete contact information and amount of engagement with marketing). An average conversion of qualified leads to actioned leads is 36.2%, Best-in-Class achieve 53.4%, Laggards 10.6%.
4. Tollgate four: Sales Opportunity – the conversion from sales-actioned lead to sales opportunity signifies sales’ ability to convert qualified leads into pipeline for the company. Respondents to our survey indicated an average conversion of sales-actioned leads to sales opportunity of 32.8%. Best-in-Class saw a 56.8% conversion rate and Laggards considerably less at 9.8%.
5. Tollgate five: Closed Deal – where the rubber meets the proverbial road, tollgate five is the decision point. Conversion from opportunity to close-won was measured in a recent Aberdeen survey, details of which can be found in my colleague Peter Ostrow’s report Breaking the Laws of Physics: Shortening the Last Sales Mile through Workflow Automation. Average sales team achieve a 29% conversion from opportunity to close-won, while Best-in-Class lead with 45% and Laggards come in at 21%.
When tollgates are being captured by marketing and sales automation technology, conversions from stage to stage can be easily calculated and compared to goals, providing a solid foundation of metrics by which to measure your sales and marketing machine.