To create the simplest version of an SLA, you need to know three things. 1, the average conversion rate from lead to opportunity. 2, the average conversion rate from opportunity to closed sale. And 3, the average value of a sale. With these three pieces of information, you can calculate how many qualified leads marketing needs to send to sales in order for your company to meet its revenue goal. Here's Mark Roberge, who was the founding member of Hubspot zone sales team, but has since left us to become a senior lecturer at Harvard Business School. >> At first, when we started this Hubspot, we did a pretty good job. We knew that when we gave 100 leads a month to a mid market salesperson, that they connected with half of them, did 30 discovery calls, converted to 15 demonstrations and closed five customers for roughly $800 of monthly recurring revenue, like clockwork, right? So you look at that across 10 or 12 reps and that's easy math to say, listen, we've got 10 sales people, each of them needs 100 marketing qualified leads each month. So you need to deliver 1,000 leads per month for that team. And that's like top 5 or 10%, that's pretty good. Now, in that context, sales does not get off the hook. If marketing is going to step up and be that accountable to their deliverable, then sales needs to have the same level accountability. And essentially what we created was a pretty simple dashboard that was called, the don't be on a dashboard, [LAUGH] right? So really simple. It's like anytime a lead wasn't called within 24 hours, boom, your name showed up with the number of leads that fall into that category. Anytime a lead that had been in the cycle for two weeks that wasn't called five times then, boom, that would show up on the dashboard. So you really just codifying and programming in all the expectations of behavior that you expected of your salespeople to work those leads with the right amount of rigor and the right amount of expertise to get a certain conversion amount against it. >> Notice how Mark used those conversion rates to calculate how many qualified leads marketing needed to produce, in this case, it was 1,000. Then marketing promised to deliver that many leads each month and sales promised to contact those leads within a certain time frame, in this case, 24 hours. If these were the numbers for your company, your SLA would look like this. Every month, marketing will deliver 1,000 qualified leads to sales, and sales will contact each of those leads within 24 hours of receiving it. That's the most basic form of an SLA. And it's a great starting point. Mark calls it top 5%, but it can still be improved upon. >> Obviously, not all leads, even MQLs, are created equal. And what happened was when we measured the marketing team and they got behind on that SLA in a given month, they start to tweak the calls to actions that they went after, right? So as example, we counted a VP of marketing that came to the site from a mid market company and download eBook. We counted that as an MQL, that's a great lead. VP marketing, mid market company comes and downloads an eBook, right? Now, you got him VP of marketing that comes to the website and request a demo, that's a great lead too. Now, which one do you think closed to the higher rate? Clearly the demo request, it was about three times higher. And which is easier for marketing to get to convert on the site? An eBook, right? It's a lot easier to get a visitor to come to a website and download an eBook than it is to request a demo. So even in our top 5% SLA approach around MQLs and marketing generated leads, there was clearly misalignment. And as the months went on and marketing fell behind on their SLA, all the calls to actions changed to eBook downloads and the sales team was like, where are the demo requests, right? So we went back to the drawing board and thought about it and essentially what we did was, we took a segment of leads and calculated what percent of them converted to a customer and how much those customers spent on our software, right? So we knew when a mid market VP download an eBook, 1% of the time that converted to a customer and they bought $100,000 worth of software. And we also knew that when a VP level executive at the mid market company requested a demo that converted at 3% and they also purchase $100,000 worth of software. So if you multiply those two numbers together, you get a lead value at the time of conversion. You know that an eBook download on average is worth $1,000 to the company and a demo request from a VP is worth $3,000. And now, it was no longer get 1000 MQLs, it was generate $300,000 of lead value. And if you need to get there through 1,000 demo requests or 3,000 eBook downloads, I don't care, do it either way. And we gave the correct credit to marketing, forgetting that higher value lead. So there was a profound moment that we were able to put marketing on a revenue quota, just like sales and have that level of accountability. >> Now, that sounds really Matthey, but it isn't as complicated as it seems. If you have your leads organized into a two by three matrix, then you already have your hand raisers separated out. If you look at your past sales data, you'll almost certainly find that hand raisers closed at a higher rate than other sales ready leads. So when it comes to your SLA, you may want to count hand raisers differently from the way you count other sales ready leads. In Mark's example, the close rate for hand raisers was three times as high as other sales ready leads, so they were counted as being three times as valuable. If you can calculate the close rates for each of the six buckets in your lead qualification matrix, do it and funnel that information back into your SLA requirements. The result might look something like this, every month, marketing will deliver $100,000 in lead value to sales, and sales will contact every marketing qualified lead within 24 hours of receiving it. That's how you focus your team's on pipeline creation. If you can get your SLA to that point, you'll give your marketing team a lot more flexibility in the number of leads they need to send a sales and sales will be able to enjoy a steady stream of higher quality leads and discover what it really means to sell efficiently at a higher velocity. [MUSIC]
