🎯 Pipeline Debunked: How to get a grasp on the metric your CMO cares about most

With marketing budgets under heavy scrutiny, CMOs need to be able to clearly show the rest of the C-Suite how their budget is being allocated, the impact it is having on key metrics like pipeline and revenue, and defend why those dollars are necessary to achieve the company's growth targets.

If a CMO can't demonstrate how the marketing programs are able to grow efficiently in a data-driven way, their budget (and programs) are at risk of being cut.

How can you make sure that the work you're doing aligns with the objectives of your CMO? 

Today we’ll look at pipeline: a misunderstood and ambiguous metric, and explore how you can influence it with your work to deliver an impact to your company objectives.

Pipeline: The critical metric that ties sales and marketing together

Pipeline is like the Artificial Intelligence of marketing – we talk about it all the time, but everyone has a slightly different definition in their head and no one quite has it all figured out.

Pipeline is the dollar value of all the open deals that the sales team is actively working to close. This metric matter a lot because it’s the unifying metric that sales and marketing agree on.

“Sometimes we get locked in on marketing specific metrics, like cost per lead. Ultimately a lead doesn't matter if it doesn't convert into pipeline” said Chris Koehler, the CMO at Box during a CMO panel about operating an efficient marketing function.

Pipeline can feel like a big, scary, ambiguous metric sometimes.

But the best way to approach pipeline is by breaking it down into it’s most controllable units.

Weekly Pipeline Goal: 

Let’s say marketing is responsible for booking 500 sales meetings in Q2. How will you know whether you're on track to hit it? Instead of looking at the huge number, it's best to break it down into weekly goals instead. This way, you will have the granularity to see if you're behind and make the course corrections necessary to hit your goals. 

There are 12 weeks in a quarter, therefore marketing is responsible for sourcing 42 meetings per week.

Weekly Program Goal:

Next, you’re going to break that large number down by program. Let's say you’re running an outbound program (BDR), an inbound program (content, events, community), and a paid program (SEM, LinkedIn). You’ll divide those 42 meetings across all channels. The more mature programs will have higher targets, while the newer ones will likely be smaller. This target should be realistic, but also high enough that it acts as a forcing function to get programs operating predictably.

Program Growth Levers:

Having a goal is a start, but next we need to figure out how to reach that goal systematically. If your CMO came to you and asked to double the number of meetings booked next week, would you know what levers were at your disposal to accomplish that?

It’s important to go a level deeper and break down each program into their own levers. There are two growth levers: demand (how many people you're marketing to) and conversion (your ability to turn those people into leads). 

For example, the levers available to outbound = outbound messages x conversion rate. For inbound, it would be traffic x conversion rate. Paid is impressions x conversion rate.

So when asked to increase pipeline, it’s not just about doing more. Improving conversion rates across your marketing assets is another lever you can pull to hit your targets. It’s about tweaking and improving the levers at your disposal at the program level, which will deliver higher results at the pipeline level.

Think Like A CMO: The 5 metrics that matter most

At the end of the day, your CMO wants to work with people who will support the business objectives that they own. So connecting your work to the metrics that your CMO cares most about will ensure that you're speaking the same language when it comes time to report on your impact.

Here are the 5 metrics that CMOs care about most right now:

1. Pipeline: how much future business does our company have?
2. Conversion rate: how efficiently do we turn demand into customers?
3. Net dollar retention: how strong are our retention, expansion, and customer marketing programs?
4. Customer engagement: will customers fight to keep our product when challenged on the value?
5. Annual recurring revenue: what is the financial health of our company at the highest level?

Learn more about how you can tie your work to your company's most important objectives and become indispensable to your CMO.