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The Slow, Necessary Death of the MQL

By Todd Berkowitz | February 01, 2017 | 3 Comments

Marketing MetricsDemand and Lead Generation

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A lot of research notes and blog posts have been written over the years about the impending death of a particular technology or methodology or approach. And to paraphrase Mark Twain (or what was attributed to him), the rumors of these deaths have been greatly exaggerated. But when it comes to the marketing-qualified lead (or MQL for short), I don’t feel like I’m going that far out on a limb in predicting that it’s headed for an unpleasant demise and ultimate death.

It may kick around in some form for a while and a lot of tech companies (let alone other more recent adopters) won’t get the memo and will keep using it for a while. But as a practical matter, the MQL had its day in the sun and now it’s time to move on to something else. It had a nice run, but it has long outlived its usefulness.

Let me share a story from my own career that may drive this point home. After I finished up my MBA program, I took a job running marketing for a hot startup. They hired me largely because product marketing wasn’t really working and that was my background, but I talked my way into running all of marketing. I reported into the head of sales and I would get quarterly bonuses based upon bringing in a specific number of leads. I simply switched some of our massive PPC budget (which I thought was hugely inefficient) into some other programs that drove leads and I consistently blew past my number.

Those leads weren’t turning into closed deals and my boss got replaced because he wasn’t hitting the growth numbers. My new boss decided he wanted to focus on qualified leads and forced me to use an early marketing automation platform (we couldn’t afford Eloqua) that did some lead scoring. So now I had to find leads that were better from a demographic, firmographic and engagement standpoint. So I did a series of webinars that I promoted through various associations to industries and titles that we were targeting, got massive attendance and drove further engagement through a single e-mail nurture after the call. I easily hit my MQL goals, but these didn’t covert into new deals either. Ultimately, we were selling a product that nice-to-have and required lots of education and buy-in from many places, even for a small entry-level deal. All of the top of the funnel activity wasn’t going to change that in the short run.

I continued to see this happen in other companies, but by that point, everyone had become adherents to specific demand gen models and became obsessed with benchmarks. But unless you were in the right market or had a really good setup with free trials or freemium products, basic math always proved to be a serious issue. You’d have a specific MQL target, but if the company needed more deals, you’d just divide that by the MQL to close deal rate and add that to the existing MQL target and get a larger one. To the average outsider, this seemed insane because common logic would indicate a point of diminishing return. The first 1,000 leads typically converted at a much higher rate (all the way through the funnel) than the next 1,000 leads. And the next 1,000 converted at a rate lower than the previous 1,000. And because the conversion rates declined, you’d have to keep upping the MQL target.  When I got to Gartner, I called this the MQL trap and I wrote several notes over the next three years around the topic. When I first suggested this to clients, I got a lot of support for the idea, but most didn’t feel like they were in the position to change anything.

By 2016, something profound had happened. More and more clients talked about how they were moving away from MQLs and looking more at opportunities and revenue. Some of this was due to predictive lead scoring , and some of it was probably because of ABM, where you think about accounts, rather than leads. But some of it was simply because CMOs and demand generation leaders had convinced sales and executive leadership that revenue is a far more important metric than leads. And so when clients asked me about how they increase their MQLs by 30% YOY, they were much more receptive to hearing why they were barking up the wrong tree.

That doesn’t mean the MQL is going to go down quietly. Plenty of providers are still stuck in the old mindset. And we are already in 2017 and plenty of demand gen leaders have committed to MQL numbers. But I believe that 2017 will be the swan song for the MQL. As I highlighted in my 2017 predictions note, MQL will be a pejorative term for many tech providers this year.

If you are a demand gen or marketing leader (or a BU leader or executive who manages them) and the metrics haven’t been set for 2017, I’d think long and hard about some other more important metrics. If you are doing ABM, you can always look to Engagio’s Marketing Qualified Account (MQA) approach or something akin to it. Or you can tie to company or product-line sales metrics like revenue, pipeline, opportunities, deal size, retention etc; At the end of the day, if you blow out your MQL numbers but the company misses on those downstream numbers, you aren’t going to get a huge bonus or promotion. So why not hitch your wagon to the only numbers that truly matter to the company?

For those of you worried about how to measure marketing’s contribution absent MQLs, there are good tools to measure attribution. And if an account closes and they came in through an inbound or outbound marketing channel, they read content that marketing created or someone from marketing helped to enable a rep or SDR as part of the process, you should be able to get some credit.

The MQL was always a crutch anyway. And it’s time for the crutch to be thrown away or beaten to a unrecognizable state like the printer in Office Space. Rather than resisting this, you should embrace it. Mourn all you want for the MQL, but don’t shed too many tears. After all, the MQL was never really a true friend.

 

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3 Comments

  • Great article, I couldn’t agree more. There is a huge shift going on where marketing aligns with sales to pursue revenue not just leads. As you so rightly say it is all has to be driven by the internal performance metrics

  • This is very true. When I mentioned at recent marketing networking event that we’d stopped tracking MQLs the reaction I got was disbelief and amazement. But also a touch of envy. Measuring MQLs was a trap and false measure of success. Revenue and account metrics are much more relevant in B2B. I’m glad to see the death of the MQL.

  • Lynn James says:

    There is a mix to be had here between volume and value. That mix depends on where your sales cycles sit in regard to size of target customer and complexity of sale.
    I subscribe to the view that mql has its place in volume and that rev should be more the focus as size and complexity come into play