Developing an SLA between Sales and Marketing

One of the best ways to build collaboration between sales and marketing is to establish a formal SLA between the two organizations.  The SLA can cover a wide range of business processes and reporting metrics, but the most important aspect will be establishing quantifiable goals for lead generation. In some cases, the SLA might define the total number of leads to be sourced by marketing. In other cases, the SLA might outline a target dollar value of pipeline to be maintained. 

Sales and Marketing SLAs should not be unidirectional.  Sales is the customer in the relationship and therefore views themselves as the primary beneficiary of the SLA.  However, a well-crafted SLA provides marketing with benefits and the opportunity to define what it needs from sales to be successful.  For example, marketing may ask sales to follow up with all leads within a certain time frame and to provide detailed feedback on prospects that were disqualified.

SLA Benefits for Sales

SLAs help sales by ensuring that marketing has:

  • Shared accountability for delivering sales pipeline and revenue targets
  • Clear and quantifiable goals for leads and/or pipeline value
  • Agreed upon criteria for what constitutes a qualified lead
  • Responsibility for reporting out performance against the SLA to the executive team

SLA Benefits for Marketing

SLAs help marketing by ensuring that sales provides:

  • Commitment to follow up on leads within a certain timeframe and for a certain duration
  • Next action to be taken by marketing on the lead after the initial conversation
  • Feedback loop to marketing with specific data fields captured during the discovery call

The details of the SLA will vary depending upon the organizational design of the teams.  Specifically, the placement of the Sales Development Representatives in either sales or marketing has a big impact on aspects of the SLA such as qualification criteria and response time.

1)Quantity of Leads

There are several ways to quantify marketing’s contribution to the sales pipeline.  Many SaaS companies will use the number of new leads sourced by the marketing department as the key metric. 

Lead Count

The SLA could specify:

1) A total overall target for the number of leads generated

2) Lead targets for different sales territories or product lines

Lead Quantity Interval

The interval for tracking the leads is another key point to negotiate.  For example, suppose marketing is responsible for delivering 100 leads per quarter.  Is it acceptable for 80 of the leads be booked in the third month of the quarter?  Sales may need a more even distribution of leads per month.  A monthly target of 30-35 may be a better approach.

For example, the SLA could be:

  • 100 leads per quarter in total (across all regions and product lines)
  • 25 leads per quarter for each of our four sales territories (US East, South, Central, and West)
  • 40 leads per quarter for product A, 30 leads for product B, and 30 leads for product C

2) Pipeline Value

Some SaaS companies may negotiate an SLA that specifies the dollar value of pipeline to be maintained.  Pipeline value is a better metric to track than the number of leads, because it is more correlated with bookings.  Sales teams are not goaled or compensated on the number of deals they close (which correlates with lead count).  Sales quotas are based upon the dollar value of opportunities won (which correlates with pipeline value).

Although pipeline value is more useful to sales, it creates challenges for marketing as a metric to use for setting quotas, goals, and compensation.  An accurate estimate of the dollar value of a deal may not be known when the opportunity is handed off from marketing to sales.  Furthermore, deal sizes are typically a moving target.  The value of the deal may go up and down as it moves through the sales cycle and the customer negotiates pricing.

Total Pipeline versus Quarterly Pipeline

There are several ways to measure sales pipeline.  Some SLAs may specify a target for the overall pipeline for the next 12 months.  Alternatively, there may be specific targets for each of the upcoming quarters (current quarter, next quarter, two quarters from now). 

Total Pipeline versus Marketing-Sourced Pipeline

Another consideration is whether the SLA should specify the total dollar value of pipeline or just the amount sourced by marketing.  If the marketing team is only sourcing a fraction of the overall leads then the total pipeline metric may not be appropriate.

SLAs for pipeline could be written in various different ways including:

  • Total Pipeline Target – 4X target in total sales pipeline (from all lead sources over the next 12 months)
  • Quarterly Targets – 4X target in current quarter pipeline, 3X target in next quarter pipeline, and 3X target for the following quarter

Alternatives, that specify just marketing’s contribution might include:

  • $1M in pipeline each quarter
  • $1M in next quarter pipeline

3) Qualifying Criteria

Sales teams don’t just want leads, they want well qualified leads.  Reps want to focus their time and energy on the accounts that are most likely to convert into opportunities.  However, exactly who performs the qualification and how it is performed typically presents a challenge. Most sales teams don’t trust marketing to perform the more complex aspects of the qualification.  As a result, there is usually a two-step process in which marketing performs some basic qualification based upon clearly defined criteria and then hands over the “Marketing Qualified Lead” (MQL) to sales who then performs the more complex aspect of the qualification to arrive at a “Sales Qualified Lead” (SQL).

The marketing qualification usually involves three elements:

1) Firmographics – Marketing should ensure that both the company is a good fit for their solution.  Firmographic criteria may be established for MQLs such as revenue range, employee count, or industry sector.  For example, tech vendors whose Average Selling Price (ASP) is above $100K may qualify out smaller businesses with revenue less than $50M as they may not be able to afford the price point of the product.

2) Buyer Persona – Most sales reps also want to focus on prospects who have authority to make a purchase or influence the decision.  As a result, part of the MQL criteria may be that leads should only be with people in certain departments, with certain titles, or with a certain level of seniority.  For example, some sales teams may not want to speak with individual contributors that have analyst or project manager titles.  Instead, they may prefer to speak only with Director, VP, or C-Level executives.

3) Behavioral intelligence – The actions taken by the lead are usually part of the qualification as well.  A prospect that visits the pricing or implementation pages on the website is better qualified than someone who viewed the news or careers section.  A prospect that has clicked on the links of three recent emails is better qualified than someone who just opened one.

Marketing organizations typically score leads and those which exceed a certain threshold are passed off to the SDRs while the remainder move into a nurturing program led by marketing.

If the SDR function is part of the marketing team there is typically a few more criteria needed to handoff to sales.  For example, the SDRs may confirm that the prospect has a few of the BANT criteria such as “need” and “timing.”  SDRs may also need to qualify out prospects that do not have product fit.  For example, if the solution only works with Amazon Web Services, then the SDRs may be asked to qualify out customers running on Google, Oracle, Alibaba, or Microsoft clouds.

4) Response Timing

Marketing wants to ensure that the sales team is following up with the leads generated in a timely manner.  The follow up actions will vary depending upon the organizational structure and point of demarcation between sales and marketing. 

SDRs are Part of the Marketing Organization

If the SDRs are part of the marketing organization then the response SLA is typically straightforward.  SDRs will schedule a meeting on the sales representative’s calendar with the prospect.  All the sales rep is required to do is attend the call and take the post-call actions in the CRM system.  There may also be an SLA for sales-initiated cancellation or changes to calls.  For example, if the sales rep cannot attend the call at the originally scheduled time then they may be required to either 1) find a substitute to lead the call or 2) contact the prospect to reschedule.

SDRS are Part of the Sales Organization

If the SDRs are part of the sales organization then a more sophisticated response SLA will need to be defined.  Marketing will need a commitment from the SDRs that leads will be acted upon within a certain timeframe using a certain number of attempts over a certain duration. 

Timing

The SLA from the SDRs back to marketing may vary depending upon the type of lead.  For example, a “hot” inbound lead that fills out a demo request form may have an SLA of a one-hour response time for the initial outreach.  Alternatively, a “warm” lead that recently attended a webinar may have a 1-week response SLA for the initial outreach.

Duration and Attempts

Marketing will want SDRs to follow up with leads more than once to ensure that they can make contact with the prospect.  There may be a clause in the SLA that specifies the number of times that the SDRs must attempt to reach a prospect via phone, email, or social channels over a certain period. For example, sales may have an SLA to follow up with webinar attendee leads at least 5 times over the next 15 business days.

5) Next Action

Once the preliminary conversation with the lead occurs the sales team should provide marketing with instructions on the next action to take.  The sales team may wish to own the relationship with the lead going forward and either:

1) Move it into the sales pipeline as a qualified opportunity

2) Continue to nurture the lead until the prospect is ready to move into a sales cycle

Alternatively, sales may want to hand the lead back to marketing for nurturing.  The marketing team will then add the lead into a regular cadence of digital marketing programs and monitor the prospect’s level of engagement.

Another option is to disqualify the lead in which case no further action will be taken by either sales or marketing in the near term.

6) Feedback Data

It is critical that a feedback loop exists from sales back to marketing following the handoff.  Marketing needs to learn from sales what they liked or did not like about the prospect so that the quality of the leads can be improved in the future. 

Marketing should specify the types of data it wants to receive as feedback.  If the lead is disqualified, then sales should provide a rationale for why.  Examples might include:

  • No budget or approved project
  • No authority or executive sponsor
  • No urgency or near-term timing for purchase
  • Poor product fit for customer requirements

Marketing might also want the sales team to share additional data gathered during the discovery call to profile opportunities in the pipeline.  Examples of additional data marketing might request include:

  • Technographics – Details about the cloud platforms, ERP, CRM, or HR applications that the solution will need to interface with
  • Competition – Also being considered for the opportunity such as tech mega-vendors, custom development, niche vendors
  • Consulting Partners – Systems integrators, Big Four, VARs, BPO firms that are assisting the customer
  • Compelling Event – Driving the customer’s need such as new product launch, international expansion, merger or acquisition

Ideally all of the data will be captured in custom fields in the CRM application so that the leads and pipeline opportunities can be analyzed for trends to better design future marketing programs.

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