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Setting Marketing-Sourced Targets: Key Factors

February 28, 2019

When setting goals for marketing-sourced pipeline and revenue, b-to-b marketing leaders must consider primary, secondary and supporting factors about their operating environment

To set reasonable expectations for success, marketers must understand key performance drivers. This is especially important when setting targets for marketing-sourced pipeline and revenue, as marketing functions often struggle and arrive at misaligned and unattainable expectations. In this issue of SiriusPerspectives, we describe the factors necessary to develop reasonable targets for marketing-sourced pipeline and revenue.

Primary Factors

Conventional wisdom suggests that the percentages of pipeline and revenue uniquely sourced by marketing are primarily a reflection of the quality of marketing execution. This mistaken thinking assumes that better marketing functions simply source a greater proportion of pipeline and revenue. SiriusDecisions’ research shows something different: Key elements of how an organization defines and intends to reach its core audiences play a far greater role than the effectiveness of marketing execution. Here are the most consequential factors in determining sourcing targets:

Target organization size. At organizations that predominantly target larger accounts, marketing typically achieves a lower percentage of marketing-sourced pipeline and revenue than at organizations targeting smaller accounts. Large accounts typically represent greater revenue potential. To capitalize on the market opportunity represented by selling to large accounts, organizations usually have a higher ratio of sales reps to accounts. A dedicated sales focus means that reps are expected to maintain direct contact with their assigned accounts. This leaves less room for marketing to initiate contact and capture sourcing credit. In situations where individual account managers are assigned to large volumes of accounts (as is typical in small and medium-sized segments), a sales rep is less likely to have recently made contact with each account. In this scenario, marketing has more leeway to generate active demand for teleprospecting and sales teams when prioritizing these accounts.

Customer vs. prospect mix. The percentage of marketing-sourced revenue and pipeline tend to be lower at organizations that focus on selling more product to existing customers vs. organizations that place a greater focus on identifying net new buyers. Typically, selling organizations use account management functions to maintain and grow business with existing clients. Account managers are normally required to be in regular contact with their clients. Therefore, sales is far more likely than marketing to be credited with sourced pipeline or revenue. The opposite is true at selling organizations that place a heavier focus on net new business, where marketing is more likely to have opportunities to finding potential accounts that are not currently being worked by sales.

Average deal size. As the average revenue of a deal or transaction increases, marketing-sourced pipeline and revenue numbers decrease. Like target organization size, average deal size provides an indication of the type of sales coverage likely to be applied to an account. High transaction values make it more likely that a small number of accounts are managed by a single sales rep, and that lower ratio of accounts per rep limits marketing’s ability to earn sourced pipeline and revenue credit. Smaller deal sizes may work as a mitigating factor, potentially increasing marketing-sourced credit among organizations targeting larger enterprises with smaller transactions. In these cases, marketing-led efforts become a more efficient way of reaching new buyers.

Secondary Factors

These factors relate to an organization’s go-to-market approach and significantly affect sourcing levels:

Teleprospecting structure. Some organizations place teleprospecting functions within marketing, while others place it within sales. In some cases, teleprospecting groups exist within both functions. Others lack a teleprospecting function altogether. When teleprospecting sits in the sales function, marketing-sourced pipeline numbers are lower than in equivalent organizations that place it within marketing. Much of this variation is definitional – there is no evidence that placing teleprospecting in one function or the other makes teleprospecting more effective. However, its placement in either the sales or marketing functions affects where sourcing credit is assigned.

Direct/indirect. Organizations that rely heavily on channel partners to close business experience lower volumes of marketing-sourced pipeline than those that primarily use a direct sales force. Lower marketing-sourced numbers in channel-heavy environments are largely the result of the obstructed process visibility of channel operations. In direct-selling environments, organizations should consider the degree to which sourcing is the responsibility of the supplier vs. the partner. Where partners carry heavy sourcing responsibility, marketing-sourced revenue and pipeline is typically lower than in direct environments. However, this is mitigated in environments where the supplier’s marketing function is expected to be the primary source of partner opportunities.

Supporting Factors

Although go-to-market factors have the greatest effect on sourcing levels, supporting operational factors exert a meaningful influence. These factors are entirely within an organization’s control and must be considered before sourcing targets are set:

Internal definitions. SiriusDecisions’ research shows that b-to-b organizations vary significantly in how their business rules govern the assignment of sourcing credit. Marketing-sourced percentages are lower at organizations that have restrictive requirements for considering pipeline as marketing sourced (e.g. marketing can’t source at an existing customer account or can’t source at an account where a sales rep has independently prospected during the last 18 months). The inverse is also true. Organizations see higher proportions of marketing-sourced pipeline and revenue when they have looser sourcing rules (e.g. any opportunity that emerges at an account where marketing has passed a lead to sales is considered marketing sourced).

Process consistency. Despite organizations’ best efforts to settle on firm definitions for how to apply sourcing credit, organizations that struggle with lead management process consistency experience lower-than-normal rates of marketing-sourced pipeline and revenue. Process inconsistency universally is detrimental to marketing-sourced numbers because organizations typically consider opportunities that are not identified as marketing sourced to be sales sourced. Process breakdowns normally result in undercounting marketing-sourced pipeline and revenue, putting the onus for improving supporting processes on the marketing function.

The Sirius Decision

Successful organizations prioritize market segments that represent the greatest growth opportunities and then customize go-to-market approaches accordingly. Some segments may be composed of large accounts with large average selling prices. Other segments may require acquiring small businesses as clients. The factors inherent in different go-to-market approaches result in sourcing levels that vary widely from segment to segment. The only way to create a useful view of marketing-sourced targets is look at each segment individually, building overall targets from the bottom up. While the expected percentage of marketing-sourced revenue may vary, organizations must come to grips with the various ways marketing intends to make a positive impact on the business.