In my recent blog on channel conversion rate, I mentioned conversion was only the initial piece of the puzzle. To get the full picture of how effective your acquisition channels are, you also need to look at win rate, velocity, and pipeline created vs. cost.
So in this fourth blog in the Marketo Institute series, we’re going to look at the next two channel pipeline metrics: win rate and velocity.
The Happy Marketing-to-Sales Handoff
You can’t measure the effectiveness of a channel just based on conversion rate. A lot of marketers fall in to the pit trap of stopping their metrics right before the marketing-to-sales handoff. Without closed loop visibility from sales back to marketing, you often hear conversations like these:
Marketing: “Here are some high converting leads!”
(3 months later)
Sales: “Those leads were garbage.”
Marketing: (With eyes rolling and arms crossed) “Learn to close…”
Like bickering siblings, let’s stop the finger pointing and work together to solve the problem. Just because a channel converts well, doesn’t mean it’s effective. We need to look at the sales end of the funnel to really understand channel quality (regardless of whether sales can close). First let’s take a look at win rate (#Winning!)
This image shows win rate across all channels (all Marketo customers).
Looking at this image, you can see the various channels, here’s a quick breakdown of what they mean:
- Client and Customer Service is your existing customer base, so think of things like product upsell and additional support.
- Event, Inbound, and Other Paid are your marketing acquisition channels.
- Channel, Partner, and Referral are your friends and family.
- Prospecting and Sales are from your direct sales teams.
The win rate is based off closed won/total closed, not total pipeline. Example: Out of a handful of leads, two became opportunities, and of those two opportunities, one closed won and one closed lost. So, the win rate is 50%.
We see from the data that marketing and sales-sourced leads are about the same and are both lower than leads coming from your existing customers and partners (to be expected). This sets a good benchmark to compare your marketing channels to other channels. For example, if leads coming from an event have high conversion and win rate—and it’s as high as your inbound channels, then you’ll probably want to attend the same event next year, right? Well, to be sure, we need to look at velocity to get the bigger picture.
The Need for Speed
This image shows velocity across all channels (all Marketo customers). The channel categories are the same as the last chart.
Velocity is based off of the average number of days to close. Think of this as your sales cycle time.While win rate was relatively close across channels, velocity definitely varies from one channel to another. We see that existing customers and advocates naturally have the highest velocity (as this relates to trust). But what’s interesting is that several marketing channels are just as good at delivering high velocity leads.
So now that we’ve added another dimension, let’s continue from the last example. Is that high performing event still worth attending? Well, it depends on your objectives. If you’re looking to close those deals as fast as possible, then events might not be a good channel. However, if you’re in it for the long-run, and you have the resources and patience to nurture those leads for well over a year, then events may be a good choice.
What We’ve Learned
Now that you have a more complete picture with conversion rate, win rate, and velocity, you can start gauging the health of your acquisition channels. Here are a few common patterns you might see in your own data that align with this Marketo Customer Data:
- The Bad Apple: If you just look at conversion rate alone, some channels such as Sales Prospecting look average, and there’s no harm in continuing it. However, if you factor in win rate and velocity, you might see that Sales Prospecting has low win rate and high sales cycle. If that’s the case, you may want to reconsider sales-sourced leads and shift to a higher marketing-sourced model.
- The Hidden Gem: The opposite is true for certain channels that have low conversion rate but an incredibly high win rate and low velocity. You could be overlooking these channels due to lackluster conversion, or maybe your lead scoring system is too stringent (causing a low conversion rate). Consider opening up the funnel on these hidden gems to see if win rate or velocity drops; if it doesn’t, keep going until sales can’t handle any more leads.
- Content Is King: If conversion rate hasn’t convinced you yet, you should be a believer now. Inbound has the highest conversion rate, highest win rate, and fastest velocity of all marketing channels! The power of educational infographics, articles, and videos are more important than ever in this digital marketing era. The fact that you’re reading this blog should be proof enough.
But we aren’t done yet. Now that we understand conversion rate, win rate, and velocity, we’re still missing one piece of the puzzle—the final and arguably most important piece. Stay tuned for the next blog as we dive into…THE GOLDEN RATIO!
Notice something in the data that stood out to you? Got follow up questions for me? Let me know what’s on your mind in the comments section below.