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Beware of the MQL Trap

By Rick LaFond | February 16, 2022 | 0 Comments

MarketingCustomer Acquisition and RetentionMarketing Leadership and StrategyMarketing Operations

Marketing-qualified lead (MQL) volume has become a nearly ubiquitous metric within B2B CMOs’ dashboards. Marketing leaders often use number of MQLs passed to sales as their most important indicator of demand generation success. If MQL volume is your most important demand generation metric, you’re likely stunting your team’s ability to measure and optimize demand generation performance.

3 Reasons Why an Overreliance on MQL Measurement Can Hurt Your Marketing Team:

Reason #1: A focus on MQL measurement limits your ability to communicate marketing’s contribution to revenue.

B2B marketing leaders commonly face an ongoing battle with organizational stakeholders to shift the perception of marketing. Marketing seeks to be seen as a strategic contributor of commercial growth rather than a sales support function. While MQL generation is a leading indicator of commercial growth, it is not a true measure of commercial growth. Businesses typically don’t report lead metrics to boards of directors and investors; they report revenue outcomes to these audiences.

By merely communicating how many times you provided your sales team with a lead for reps to convert, you risk positioning marketing as the sales team’s trusty sidekick—not as a strategic commercial growth leader. Marketing leaders should communicate their contribution to business outcomes in the language of dollars, not the language of leads.

Reason #2: By pushing your marketing team to focus on MQL generation, you’re likely promoting bad behaviors.

When you hold employees accountable for certain metric targets, they’re going to adjust their behaviors to reach those targets. In the case of demand generation, if you tell your marketers that MQL generation is their most important metric, they are going to prioritize behaviors that facilitate the generation of MQLs. However, as noted in reason #1, marketing’s primary objective shouldn’t be lead generation, it should be revenue generation.

The behaviors that support lead generation don’t always directly support revenue generation—particularly revenue generation that maximizes profit.

For example, a marketing team that prioritizes lead generation over revenue generation might invest in a digital ad campaign. This campaign has very wide targeting parameters. The intent of the campaign is to drive registration for a webinar co-facilitated by an industry influencer. The campaign might enable this team to collect a high volume of leads. However, there’s a good chance that a significant portion of those leads don’t match the characteristics of a good-fit customer. Many of those leads also likely don’t have any intent to purchase a solution in the team’s category. Because this marketing team is under pressure to reach high MQL targets, it chooses to deem many of these low-fit, non-sales-ready leads as “qualified”. Thus, the team passes poor-quality leads to sales.

On the other hand, a team that prioritizes revenue generation would specifically target prospects with a high propensity to buy. It would also promote a webinar on a topic that directly appeals to prospects that match its ideal customer profile. Because this marketing team isn’t under as much pressure to keep MQL volume up, it might even choose to delay deeming each lead as “qualified” until after the lead has demonstrated more behaviors positively correlated with high buying intent. When this marketing team ultimately passes leads to sales, those leads are more likely to convert. Those leads are also more likely to make a bigger purchase and close in a faster sales cycle.

Reason #3: An overemphasis on MQL generation begets short-sited marketing investments.

Building on reason #2, by prioritizing behaviors that drive MQL generation, you limit marketing’s ability to engage in other activities that can drive long-term revenue growth. For example, time and monetary investments in brand, content marketing and organic social media can significantly improve your organization’s ability to boost brand awareness, create demand for your solutions and drive customer advocacy (all leading to long-term commercial growth). However, if your team is constantly under pressure to hit quarterly MQL targets, these types of long-term investments are very likely to take a back seat to whatever activities enable you to quickly wrangle up as many leads as are necessary to reach your target.

What Should B2B Marketing Leaders Do Instead?

B2B marketing leaders should continue to track MQLs. Use MQL volume as one of many indicators of operational performance. That said, prioritize other metrics that are more closely connected to revenue outcomes. Examples include:

  • Marketing contribution to revenue: percentage of deals sourced by marketing (measured in units and dollar amounts).
  • Conversion rates of MQLs: percentage of MQLs that convert across each of the later stages of the revenue lifecycle, including closed deals.
  • Cost per acquisition: determined by dividing all the costs spent on acquiring more customers (marketing expenses) by the number of customers acquired in a set period.

Furthermore, marketing leaders should continually work with key business leaders, especially sales leaders, to align around shared business objectives, as well as to reach agreement on marketing’s role in achieving those objectives. Be prepared to present a business case as to why marketing’s contribution should expand beyond generating high quantities of leads. From there, you can identify the appropriate mix of tactical, operational and strategic metrics to sufficiently measure marketing’s value.

Avoid searching for a single metric that quantifies marketing’s value in one number (especially if that number is MQLs). Instead, use a combination of metrics that enable you to tell a complete story of marketing’s contributions to the business.

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