Should Marketing Have a Sales Quota?

August 8, 2012 at 7:00 AM

leads

Marketing, do you have a sales quota tied to Lead Generation?  If not, you will soon.  Do you wait for it to come or will you lead on this issue?  Sign up for our Make the Number Tour if you would like to see how your peers are allocating people, money and time in 2013. 

Over the last 12 months we:

  • Surveyed over 10,000 sales representatives
  • Surveyed over 4,500 sales managers
  • Reviewed over 5,000 documents from with some the world’s best B2B sales organizations.

“Why should you care?”   B2B companies are assigning their Marketing teams with lead quotas tied directly to a percentage of the corporate sales goal.

In the past, leads could be generated and then handed off to sales.  Today that is simply not good enough. The line between Marketing and Sales is blurred due to the fact that the buyer today is much more informed before he/she ever engages with a sales rep.  The informed buyer is able to gather information about your products or services through social sites, blogs, referrals, web sites and many other sources before a sales rep is involved.  By the time a buyer does engage with a sales rep they are often over 50% through the buying process. This means that marketing now plays an increasingly important role in the contribution towards the production of new logos.   

“What to do?”  Assign your team a quota.  If you want to prove your worth, then what better way is there other than giving your team quotas at the beginning of the year?  If this is the first time for you, then it is important that you do this accurately.  You will need to get a baseline to determine if you are generating enough leads in order to Make the Number.  We are now in August and you have time to get it right, but you need to start now.

Here is a very practical tool that you can start using immediately. 

Determining Total Deals Required from Demand Generation

marketing quota

Marketing gets a quota and needs to determine how many new deals are required from Demand Generation.  From the above illustration we know the following:

  • Marketing quota for the year
  • The average deal size
  • What percentage of opportunities convert into sales (wins)
  • What percentage of engagements become opportunities
  • What percentage of considerations enter into the engagement phase
  • What percentage of those in the awareness proceed to the consideration phase
  • What percentage of the inquiries enter the awareness phase

By working from the Top Down in this illustration we know:

  • Marketing needs to deliver leads resulting in 168 sales at an average sales price of $113,000 to hit their Marketing Contribution Goal.  (168 x $113,000 ASP = $19MM)
  • To make 168 sales, Lead Generation needs to produce 240,000 inquiries 

If it looks like that number will be a stretch, then a sanity check with the bottoms-up approach would be applied.  By using the bottoms-up approach you get an understanding of how many leads are currently being generated and what the sales contribution would be based upon the current conversion rates.  28 wins would fall way short of the goal. 

“How to bridge the gap?”  Before trying to determine what resources you will need to fill the gaps, I recommend doing the following:

  • Get a clear understanding of the customer’s buying process  
  • Evaluate leads sources to see which ones are driving results
  • Learn what best practice companies are doing to drive traffic and leads
  • Adjust marketing spend to drive results

Get a copy of our Lead Generation Calculator to determine the LDR capacity/headcount needed to support lead generation revenue goals based on average deal size and B2B stage conversion averages.

Before the next budget meeting with the CFO and before the CEO assigns you a quota for 2013 you need to be able to answer the following questions:

  • What are your conversion rates across the different lead management phases?
  • What are your conversion rates across different lead sources?
  • How are your marketing dollars currently being spent?
  • Are there dollars that can be shifted to areas that will generate more leads?
  • How many leads will be needed to hit your Marketing Contribution Goal? (use the Demand Generation Tool and the Lead Generation Calculator)

By being able to answer these questions you will be in a much better position to allocate the proper resources necessary to make the number. 

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Terry Stidham

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Topics: Lead Generation, Demand Generation, Lead Gen, Marketing Resources

Posted by Terry Stidham

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