If you were to ask one of our Inbound Marketing Managers, “what is the most common challenge you face when working with a client?” the answer you will find is “marketing and sales alignment.”
What does this mean? Well, if you ask anyone from your company’s sales team, they will tell you the leads are just not good enough. And, if you ask someone from the marketing team, they will say the sales teams aren’t active enough (calling leads marketing is generating). It creates a critical challenge having these two teams function as two separate departments of the business.
This disconnect is something we see in most companies. According to the 2018 State of Inbound report, “fewer than half of marketers would describe their respective companies' sales and marketing teams as generally aligned." That's a problem. It is not always as drastic as finger point arguments, but it does result in a disconnect that can reduce sales.
So how do you overcome these issues?
What Is A Marketing Service Level Agreement (SLA)?
HubSpot defines a Service Level Agreement (SLA) as “a contract that establishes a set of deliverables that one party has agreed to provide another. This agreement can exist between a business and its customers, or one department that delivers a recurring service to another department within that business.”
So what does that mean?
This means you have representatives from your marketing team and sales team to agree on what is expected of each party. We use this opportunity to define what each team is looking for:
- What makes a “lead” a “marketing qualified lead”?
- What makes a “sales qualified lead”?
- How soon does the sales team reach out to a lead?
- How many touches before a lead is dropped?
- How many MQLs does the sales team expect?
- What is our goal MQL-Customer conversion rate?
- How many leads do sales need per month?
This will set expectations for both teams to work together. If there is a breakdown, you have a document to reference that holds everyone accountable.
What Makes Up a Marketing Service Level Agreement (SLA)?
Each SLA can vary based on what the purpose is. For most agreements, they will share the same blueprint.
- Summary of Agreement: Review how success is measured and what the responsibilities of each team member are.
- Goals of Both Parties: When creating an SLA for sales and marketing teams, it is essential that both teams set their goals. You will want to have a team revenue goal, but both marketing and sales should have their own goals to help contribute to the shared revenue goal. For example, you may want to set a goal for marketing (traffic, leads, marketing qualified leads) to provide for the sales teams to close. Only relying on sales goals creates the disconnect.
- What's Needed by Both Parties: Review what each team needs from the other. The biggest issue is the lack of communication. If you can organize weekly or biweekly meetings to review performance, this is an opportunity to create the structure.
- What to Determine for Both Parties: Who is responsible for making sure goals and deliverables are met? Who needs to talk to whom? Every team member needs to know who covers each issue and what the responsibilities are.
- If Goals Are Not Met: Not always the easiest conversation, but it is important. Typically, if goals aren’t met it could be a flaw in the process. This is where you define how you measure individual success and process analysis. Maybe the MQL qualifications need to be changed, or they need to be contacted sooner. This is where you make your pivots.
- Conditions of Cancellation: What circumstances would you need the SLA terminated? If the process is consistently not working and you do not have buy-in from the team, is it time to start again?
How Do You Create a Marketing Service Level Agreement (SLA)?
Creating an excellent service level agreement starts with getting team representatives together to define what each team is looking for.
To create your own SLA you will need to look at the previous 12-months of sales that are broken out into four quarters. Over this time period:
- How many qualified leads were produced?
- How many leads turned into sales opportunities?
- How many of these sales opportunities were closed into customers?
- What was the total value of the sales?
These numbers will allow you to calculate critical numbers for an SLA such as lead-to-opportunity conversion rate, opportunity-to-close conversion rate, and average deal value. With this information, you can see if there are any trends over a 12-month period (many industries have a peak season that will fluctuate with the numbers).
Calculating Your SLA
Using your revenue goal for the year, you can find what your marketing and sales teams need to provide each month to meet your goal. If you know what revenue you need to produce for a month you divide that number by the average value of each sale from before.
This gives you the number of closed deals your sales team will have to provide for the month.
Based on your conversion rate from opportunities to deals closed, you know how many opportunities the marketing team will need to provide to sales.
You also know what your conversion rate from qualified leads to sales opportunities is and your marketing team has an idea of what they will responsible for each month to be successful.
Calculating your SLA will show:
- Total leads and opportunities provided by marketing.
- Total deals closed and revenue by sales.
Once you create an SLA, you need to enforce it to be successful. It does not matter what the marketing team says they will do if nobody is checking their performance.
You want to create a “Judicial Branch” that reviews every lead that is not followed up within the agreed upon timeframe.
This group will decide if they were unqualified or a good fit. If they are a good fit, they will assign them to the correct sales team.
This team will identify trends in the process. Are you getting a high number of unqualified leads? Are we seeing a high number of dropped prospects from sales?
This branch can use smarketing meetings to hold the teams accountable and make changes if necessary.
Who is on this branch?
This needs to be a group of unbiased people. Having the VP of Sales or the VP of Marketing leading this branch is going to create problems. Having them involved is important, but you need someone looking out for the best interest of the entire company like the COO or even the CEO if possible.
Marketing & Sales Velocity
For the marketing and sales teams meet the new criteria it is critical they maintain velocity. Reviewing your marketing assets and sales timelines can be essential to increasing your velocity.
For the marketing team, review all the assets you are using. What is working? What needs work? See the chart below to find how well your assets are performing.
If an item like blog posts create more leads per hour than other items like trade shows or infographics then you can identify what it would take to increase time or volume to build on existing assets or create new opportunities.
Sales velocity does not need to be as creative. You already know all the information, you just need to understand how to use it.
Use this information to anticipate what your teams need to do to maintain velocity and keep up with the standards set by the SLA.
Marketing Service Level Agreement Impact
Creating an SLA is one of the first steps for digitalJ2 when working with a client. It is a critical tool for us when working with complex sales processes.
When we get on the same page, and everyone buys into the process, the results consistently improve as expectations are defined.
Sales teams are not the bad guys! Marketing teams are not the bad guys! Get both departments on the same page and agree on what they need to do for each other, and the results will follow.
If you and your team struggle with this or aren’t sure if your team has friction, take advantage of digitalJ2’s free marketing and sales alignment assessment. With a few questions, we’ll be able to help you narrow down the issue and create a reasonable and measurable action plan to fix the gaps.