The following post provides a framework for how SaaS marketers should think about metrics across the funnel.
The best way to think about marketing metrics is by mapping metrics to each stage of the marketing funnel.
The first step is to get your name out there in the world. If people don’t know about you, nobody is going to buy your product.
Generally speaking, this stage is least important from a metrics standpoint as it’s furthest from the business metrics that matter ($$). It’s also a trap stage. Too many marketers spend their time reporting on awareness metrics. Instead, they should focus more on down-funnel metrics like MQLs and Pipeline.
The next step is to get someone to take action and track those interactions. This means getting someone to give their email in exchange for something like an e-book, event, newsletter, quiz, etc.
Marketers need to turn the interest around the company into getting a prospect to think about using the product. This stage typically starts with a free trial sign up or demo request, which kickoff the sales conversation.
Marketing Qualified Leads (MQLs)
MQLs are leads that the marketing team (in partnership with sales) has defined as worthy of a sales conversation. These leads are sent over to the sales team for further qualification. Depending on your business model, you’ll have different definitions and sources of these MQLs, but here’s how to think about MQLs:
Importantly, there are often rules layered on top of MQLs to make sure they meet the sales team’s qualifications. These rules are usually based on firmographic and demographic details like geography, industry, company size, title of the prospect and more. The behavioral criteria combined with these rules determine the definition of an MQL.
The next step from an MQL or outbound sales conversation is to set up a meeting. There’s oftentimes an intro meeting and then a proper demo meeting, but every company has their own unique sales process. Regardless, it’s important for you to track the number of meetings that are happening each month.
Now, the sales team will determine whether a prospect is really interested in buying the product. If the buyer meets the requirements, then they will become a Sales Qualified Lead (SQL) or Opportunity. Every organization has their own rules, but it generally means that the SQL wants to make a purchasing decision in the near future.
It’s important for marketing teams to track the number of these opportunities. But more importantly, the overall dollar value of these opportunities. This is called Pipeline.
Pipeline is the most important metric for SaaS marketing teams. Pipeline assigns a dollar value to marketing activities which brings the metric closer to the ultimate goal: revenue. Pipeline shows how marketing is making an impact on business objectives and supporting the sales team. Pipeline is the metric that the board will want to hear about.
In the evaluation stage, the sales team takes over and the marketing team plays a supporting role.
There’s no major marketing metrics to track during this stage. Advanced marketing teams start to track campaign engagement (ex.are they attending our prospect dinner?) and what resources the prospect is engaging with to support the sales rep.
The prospect agrees to become a customer. Yay!
Marketing teams need to support the product and CX team in making sure the customers are happy and they will renew their subscription.
In the early stages of a company, marketing teams are focused more on driving more new logo business. But as the customer base expands the team’s focus transitions to retention/upsell revenue.
Marketing teams need to amplify happy customers and their stories. There’s no single way to measure customer advocacy, so companies will often take a variety of inputs to create a customer advocacy score.
Metrics to include in customer advocacy score:
One of the most important ways to understand the business is through the different rates across the funnel. The number of people who move between each step that we just walked through above.
Touchpoint > Demo > Meeting > SQL > Closed Won
Web Visit to Demo: the rate that people who visit your website request a demo
MQL to Meeting: the rate at which people who request a demo book a meeting
MQL to SQL: the rate sales accepts leads from marketing
Close Rate: the rate sales closes opportunities
MQL to Closed: the percentage of MQLs that close
Once you understand the funnel rates, you can predictably scale the entire go-to-market engine. You’re able to understand how much revenue you can drive as you add more prospects into the funnel.
Here’s what the metrics and their stages look like in a simple model from Interest to Purchase.
As you start to analyze your funnel, here’s a few things to keep in mind:
Look at your data by different segments. At Lattice, we analyzed our segments by company size. The performance of segments can vary widely. SMB sales cycles are very different from ENT sales. As a result, it’s important that you measure everything by segment to really understand what’s going on in the business.
Track how groups move through the funnel, rather than in aggregate. For example, the MQLs that came in during March. How many of those MQLs turned into SQLs and Deals? This will give you a sense of how your funnel rates are changing over time.
When you take a snapshot of your overall funnel, remember that many of the prospects are still moving through the funnel. Make sure you take snapshots of a mature funnel and understand how long it takes each segment to move through the funnel.