The risk of incorrect assumptions to your marketing pipeline performance
In our previous blog post, we argued that ‘qualified pipeline’ as opposed to MQLs should be true north for the modern CMO. We also discussed that while most marketers intuitively understand this concept, tracking pipeline is hard because marketing applications are designed around delivery of sufficient leads (vs. pipeline). In fact, in the same Fortella survey that we previously cited, 79% of marketers believe that ‘qualified pipeline’ is either an ‘extremely important’ or ‘very important’ metric for measuring their performance. So how do most marketers currently create their pipeline plans? And what are the shortcomings of the current process?
Marketing Pipeline Planning Today
Most CMOs start with a corporate bookings plan that has been agreed at the executive and board level and usually maintained by the CFO. They determine the type (e.g. new vs. upsell) and proportion (e.g. sales vs. channel vs. marketing) of the total corporate pipeline that Marketing is responsible for. And then they make three key assumptions for inputs needed to create their marketing pipeline plan: conversion rate, opportunity size and sales cycle. Conversion rates determine the rate at which leads will convert to opportunities. Opportunity sizes determine the number of opportunities needed to achieve the pipeline plan. And sales cycles determine when the opportunities need to be generated to ensure that the corporate bookings goals are met. Some CMOs go further and use conversion rates by time cohorts (e.g. 30 days, 90 days, 180 days) but these are the core inputs that most B2B CMOs generally use. And by using assumptions for these three inputs, CMOs estimate their pipeline plans for every go-to-market segment (e.g. account size and industry, product line) and sales territory. The latter can add a fair bit of complexity to the marketing pipeline plan, if you have a complex go-to-market structure. These pipeline plans are often maintained in spreadsheets by a team of analysts.So apart from being manually time intensive, what’s wrong with this approach?
Key Pipeline Planning Challenges
Quite simply, the marketing pipeline plans are often based on incorrect input assumptions. We would challenge any CMO to compare their assumptions for conversion rates, opportunity sizes and sales cycles with their actual historical data (assuming it’s available) for each go-to-market segment. Most will find a fair degree of variance between actuals and assumptions. In short, your marketing pipeline plan is likely to be based on assumptions which are more often wrong than right. That’s a scary thought if your entire marketing motions are also designed to deliver on that plan. And this is partly why many CMOs are not confident that their marketing efforts will definitively result in the revenue outcomes that are expected of them. In short, they are flying blind! So is there a better way?
A Better Approach to Pipeline Planning
Well yes! At Fortella, we have cracked this problem by enabling CMOs to not only track and forecast ‘qualified pipeline’ as their core KPIs but also enable them to analyze actual conversion rates, opportunity sizes and sales cycles for every go-to-market segment and sales territory. CMOs can use these actual KPIs (e.g. for previous 8 or 4 quarters) for pipeline planning. They can also examine their conversion rates by time cohorts. And finally they can measure the open marketing pipeline from previous quarters to give them more headroom for hitting their plans. How’s that for turning you into a more confident pipeline marketer! So whether you have already completed your marketing pipeline for 2021, or are in the middle of planning, talk to us. Let us help you build an marketing pipeline plan so you can execute with confidence. Contact us to learn more. Or share your thoughts on how you you do your pipeline planning.
