You wouldn’t drive all the way to work only looking in your car’s rear-view mirror. But when you get to work you drive your business the same way. Looking back at historical data to make crucial decisions. Most marketing and sales leaders use historical CRM and marketing automation data, like how many leads were created, sales meetings completed or deals closed last week/month/quarter. While these metrics have their importance, as leading indicators, you shouldn’t drive your business only using a rear-view mirror. Best-in-class, high-growth businesses are using forward looking metrics to understand their complete lead-to-revenue funnel. The following four categories contain the most important forward looking questions you need to answer.
As an aside, if you’re only looking at the metrics for your particular department, and not the entire lead-to-revenue funnel, then it might be worth reading my previous post on sales and marketing alignment first.
1. Planning & goals
- Is revenue on track to hit future goals?
To answer this you need to calculate if you are on track to hit your targets based on your current funnel momentum. So if you keep going, at your current pace, will you hit your future revenue goals or is there a gap you need to fill?
- Are your goals realistic?
Are your goals achievable and realistic? Possibly too high or surprisingly too low? And should they be adjusted?
- If you are not on track, what changes do you need to make?
What do you need to do now to hit future goals? Can you identify exactly where in the marketing and sales funnel the problem is occurring? Why is it occurring and what can you do about it?
- Are you communicating the right information to management & the board?
Does your leadership know what to expect from the revenue funnel in the future? Sales and marketing leaders need to keep the CEO informed and the CEO needs to keep the board and investors informed.
2. Marketing strategy & demand generation
- Are you generating the right quantity and quality of leads today to hit future revenue targets?
Are you reverse engineering your funnel, from revenue back to leads, to determine the exact number you need based on your current conversion rates? Do you need to improve conversion rates (quality) or increase the number of leads (quantity) and bringing them in at the right time to hit targets?
- Which channels, programmes or campaigns are making the greatest impact?
Can you identify what is having the greatest positive impact so you can invest more in this area?
- Which channels, programmes or campaigns are making the least impact?
Can you identify what is having the least impact so you can divert spend to the high performing activities?
3. Sales effort
- Are leads being followed up with the correct sales activities?
When sales receive or create the adequate quantity and quality of leads are they being followed up correctly? Are they being contacting in time? Are they being contacted enough times with appropriate contact methods? Can you measure quality and quantity of touches and time to first touch or first contact? Are they taking too long or not enough effort?
- Can you measure performance at each funnel stage per sales rep?
Not every sales rep has the same level of performance. How do they compare across different stages of the funnel, who is performing the best/worst and why?
- Where do you focus your efforts to grow your revenue faster?
Every business has multiple levers and dials that can be pulled and turned to make a positive impact on revenue. Can you easily identify which ones to focus on to maximise results?
4. Return on investment (ROI)
- What is the total ROI of our joint sales and marketing efforts?
There are multiple ways to measure ROI, such as customer acquisition cost to lifetime value (CAC:LTV), but are you getting the best return from your sales and marketing costs and is your ROI getting better or worse?
- What activities generate the greatest return?
Similar to looking at the best revenue generating campaigns, are you monitoring the actual return and factoring in the costs of sales and marketing time and efforts?
- What should you spend in the future on sales and marketing investments?
Should you spend more on sales and marketing activities and/or headcount to hit future goals?
As you look to drive your business forward, with a fully aligned sales and marketing team, I’m sure you agree these forward-looking questions need to be answered to give you the best possible chance of success. Many businesses have gaps in their business intelligence when it comes to forward-looking metrics. All too often the data is in outdated spreadsheets or static, rigid reports spread across too many dashboards.
As I’ve helped multiple clients manage the entire lead-to-funnel process and answer the above questions, you can be reassured it is possible. By using the Revenue Funnel Science framework you too can correctly measure, forecast and optimise your sales and marketing funnel to hit or exceed your future revenue targets.