You Can’t Really Move The Needle On Revenue Unless You Know These Numbers Cold
Ask any CEO or business leader if they want more leads and the answer is going to be a resounding "yes!" But ask them to give some of the marketing metrics behind their lead generation efforts and the answer is almost always going to be "I’ll have to get back to you on that."
That has to change. If you have a "C" or "V" in your title, or if you have anything to do with marketing or sales, you have to get intimate with your funnel, your funnel metrics and all of the data that goes into helping you understand the health of your revenue funnel.
With the click of an app button on my smartphone I can tell you we’ve generated 17,865 visitors to our website as of yesterday morning (when I wrote this article). I know that’s down from last month and up from a year ago last June. I also know how many leads these visitors produced — exactly 290, also as of yesterday morning. This is the ultimate top of the funnel, and if you don’t know those numbers in this way, you’re not really using inbound marketing to its fullest potential.
I wrote about this back in February, so if you want to read more about the inbound marketing and inbound sales funnel, click here to get additional information.
But for today, let’s get a lot closer to the rest of your revenue funnel. You need to know all these numbers cold and, in particular, the conversion ratios for each stage of your funnel. What gets measured gets done, and what gets measured gets improved. You can have a dramatic impact on revenue generation if you look at your funnel on a weekly basis and work to improve the conversion numbers.
Inbound Marketing Metrics You Need To Track
Website Visitors – The total number of people coming to your site. This is the ultimate top of your inbound funnel.
Inbound Marketing Leads – Assuming you’re not offering iPads, iPhones or trips to the Bahamas, anyone who fills out any conversion form on your website represents a lead. If your content strategy and site architecture are designed properly you’ll have a variety of offers (we call them the "trio of offers") on your site.
Right now your site gets visitors at all stages of the buyer journey. The best way to know where visitors are in their journey is to offer educational content strategically designed to uncover exactly where they are in their journey.
Typically, site-wide conversion rates are between 1% and 3%, but strategically designed websites that understand the buyer journey and are mapped to the journey properly produce site-wide conversion rates up to 10%. We have client sites right now that produce at 8.4%, 11.2% and 6.5%. These are far above industry averages, and they're numbers you and your team should aspire to duplicate.
Marketing-Qualified Leads – To help us all with funnel vocabulary, you might have heard the term marketing-qualified lead (MQL). This basically is the same as the lead description we’re using above. Anyone who converts on any form on your website is considered an MQL.
Sales-Qualified Leads – But not all MQLs are sales-qualified leads. A sales-qualified lead (SQL) is a lead that is already at the bottom of the funnel, meaning they WANT to talk to a salesperson. Typically, only about 10% of all MQLs are SQLs. So, as you get more acquainted with the funnel at your company, keep this ratio in mind.
In the Square 2 Marketing scenario above, 300 MQLs typically produce about 30 SQLs per month.
Sales Opportunities – But not all sales-qualified leads are going to be sales opportunities. Basically, an SQL is only partially qualified. The prospect thinks they’re right for you but since you haven’t talked to them yet, you have no idea if the prospect is qualified for you.
To make sure you’re spending your time with the best opportunities, you need to have an inbound sales qualification process that makes it easy to know which sales-qualified leads are actually sales opportunities. There are a variety of techniques to be applied here. We use "pain, power, fit" and attempt to score prospects based on how acute their pain is, how good a fit the prospect is with what they need and what we do, and finally, if we’re talking to power or not. Any qualification mechanisms work here.
This point in the funnel is where marketing turns the experience over to sales and sales has to be flawless at continuing the inbound experience. The ratio of sales-qualified leads to sales opportunities is going to vary by company. In our experience, and based on the data we’ve collected from our clients, about 20% of SQLs are actually sales opportunities. So, of the 30 SQLs, you’re looking at six sales opportunities.
Agreements Or Proposals – If you’re qualifying your prospects correctly you should be taking almost every single sales opportunity to the agreement phase. Our research shows that about 90% of sales ops get agreements. Now those six sales opportunities become five agreements, roughly.
New Customers, Clients And Revenue – If your sales process is tight and the experience you’ve crafted for your prospects through your sales process is remarkable, and you’ve truly guided them, advised them and helped them make a safe purchase decision, you should be closing 90% of the agreements you send out. In our case, this produces four new clients per month, and that's the exact pace we need to hit our revenue-growth goals.
Two Bonus Inbound Marketing Metrics
Here are two other numbers directly related to your funnel that you want to know cold: full funnel close rate and sales cycle duration. To calculate the full funnel close rate, take your total website visitors for the month and the number of new customers you got from your funnel, and divide the little number by the big number. In our case that’s a .022% close rate on all website visitors. That might sound low, but it’s actually not. You can now use that number to predict new customers from website visitor numbers on a monthly basis.
The last number is the length of your sales cycle. Look at the time stamp on the very first visit from the last new customer to close. How long did it take from the time they first visited your site to the time they signed your agreement? In our case, it’s 34 days on average.
Now, work on improving these key funnel ratios each month so that your overall revenue generation model gets better month over month. That’s the power of inbound marketing. Stay tuned for tomorrow’s blog article as I’ll provide one upgrade for each stage of the funnel to improve the conversion rates.
Learn more about the critical inbound marketing metrics you should be tracking by downloading the free guide.
Square 2 Marketing – Inbound Results Start With ME!