Stage by Stage: Revenue Cycle Analytics Best Practices
In an earlier post, I discussed the methodology behind revenue cycle analytics and explained the importance of defining the stages of your revenue cycle. Here at Marketo, we have defined our own revenue stage model, starting with awareness and moving through marketing and sales to closed business and beyond.
Your company may use only a few revenue stages, or you may model something much more sophisticated. No matter what specific stages you choose, there are three categories of stages:
- Inventory Stages: This stage is a place where leads and accounts can reside until they are ready to move to another stage. There is no time limit on an inventory stage. Common examples include: the prospect pool, where leads are nurtured until sales-ready and active opportunities that are being interacted with but are not committed to a certain time.
- Gate Stages: A gate stage has no time dimension. It serves as a qualification check. For example, your company wants leads from companies with more than $100 million in revenue. When the lead hits the gate stage, if the company has more than $100 million in revenue, the lead moves to the next stage, if not, it moves to the disqualified stage.
- SLA Stages: SLA stands for “service level agreement.” These stages are used when there is a defined maximum time in which a lead needs to be evaluated or processed before moving forward or out of the process. For example, when a lead is determined to be “sales ready,” it could move into a “marketing qualified lead” SLA stage where the appropriate sales representative has 14 days to contact the lead and decide whether to accept the lead, disqualify it or recycle it back for further nurturing. If a lead is in that stage for more than 14 days, it becomes “stale” – which can trigger a process of alerting sales management, or even reassigning the lead to a different sales rep.
A best practice revenue stage model is based on three fundamental principles:
- Sales resources are relatively expensive. To provide the highest value, sales should not engage with prospects until prospects are ready to engage with sales. Sales interactions should start relatively late in the pipeline (once leads are well qualified) and involve lower cost channels, such as marketing, to develop relationships with everyone else.
- Leave no lead behind. Use SLA stages where possible to make sure leads are flowing forward or being recycled back to marketing. Be sure to have relatively few inventory stages (perhaps just one in marketing) so that there are no places where prospective customers can sit idly.
- A prospect’s journey from initial awareness to customer is often non-linear. Sometimes leads that are originally deemed “sales ready” are not. Because no lead should ever remain stagnant in the system, these leads should be recycled back to marketing for nurturing.
Stay tuned for a look into Marketo’s own revenue model. Until then, check out Marketo’s SlideShare for our Revenue Cycle Analytics presentation.