CMOs who say “just get me more leads” are so 2009. Every B2B marketer in 2016 wants to tie paid search goals to completed sales. This is a positive development for paid search. The more directly paid search campaigns are tied to company revenue and closed deals, the more valuable paid search becomes. However, measuring closed deals brings with it a number of complexities. Paramount among those complexities is identifying what levers are available to a paid search manager to drive closed sales and address performance swings.

“Close Me Some Deals!”

Let’s take an example of a B2B technology company that tracks closed deals, sales qualified leads (SQLs for short), and leads (conversion form fills). In this hypothetical example, closed deals have decreased 30% from Q2 to Q3. That’s definitely cause for concern, and the key issue is identifying the source of the performance drop.  Is it a problem with front-end marketing or is the company’s sales team dropping the ball?  Or could it be a combination of the two?

The Root of the Problem

When Metric Theory analyzes performance decreases or increases in cases like this, we leverage decision trees to work our way down to the root cause.  A decision tree is a way of looking at different levels of marketing and sales performance and digging into the metrics to determine exactly where changes are taking place.

Adam_image_1

Round 1: Close Rate vs. SQL Volume

If closed deals took a hit, there were either fewer Sales Qualified Leads (SQLs), a lower close rate on our SQLs (% of SQLs that turned into deals), or both. A lower close rate points to the sales team; marketing programs like PPC have little to no control over what happens to leads that have already been qualified. Marketing’s job is to produce those SQLs, and deliver them to the sales team

Round 2: Lead Volume vs. Lead to SQL Rate

If the issue is not a lower close rate, but instead a smaller number of SQLs compared to last quarter, then we need to continue digging. A decrease in SQLs could be caused by one of two culprits:

  1. Decline in Total Leads: If this is the case, then you should determine what caused lead volume to drop. Did total clicks decline? Did your conversion rate drop?
  2. Decline in Lead to SQL Conversion Rate: In this scenario, we should evaluate the following:
    1. Did the sales team change the way in which they follow up with leads or the way they qualify leads? We have seen cases where sales teams previously considered a 50+ employee company to be a qualified lead, but then changed this threshold to 200+ employees.
    2. Did our PPC campaigns see a major change in lead distribution? For example, did the percentage of leads from our display campaigns, which are typically lower quality than search leads, increase from 20% to 50%? This would cause a decline in SQL volume despite steady total lead volume.

The Culprit: Lead Volume

If the lead-to-SQL rate also stayed steady, then the problem lies with lead volume. At this point, there is likely an issue with the front-end PPC marketing. This does not mean that the PPC manager or team is doing a bad job, but it does mean it’s time to dig into the metrics and find out what’s happening.

There are any number of areas to look into: did a key competitor double their budget and start taking away significant Impression Share? Is it seasonality with Q3 always performing poorly? Were previously strong campaigns or keywords turned off?

Regardless, account managers will want to narrow in on the problem and find appropriate solutions:

Conversion rate decrease: assess quality of traffic, landing pages, qualifying ad copy.

Click volume decrease: assess average position, CTR on our ads, did we lower budgets?

Communicate, Communicate, Communicate

For PPC Account Managers at agencies, make sure to walk through this process with your clients. That communication is vital. ‘This is on the sales team, not us’, ‘we’re doing our job’, etc. can sound like excuses. Make sure to walk clients through the steps of diagnosing what is causing the drop in closed sales. Finally, decision trees don’t need to be so negative! When you see paid search driving an increase in closed deals, it’s similarly valuable to understand what is driving those improvements.