- If you're building out your SaaS business
and you start to hone in on your sales funnel,
there are three metrics that I would look at
consistently to figure out
if what you're doing is working or not.
In this episode I'm gonna walk you through
those three metrics intro.
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What's up everybody!
Welcome to Unstoppable, I'm TK.
On this channel, I help start up founders like you
navigate to the path to product market fit,
navigate to that next stage of growth
with an unstoppable strategy.
I bring in video every single Sunday,
and every single Wednesday.
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be sure you to hit the subscribe button and that bell icon
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with the TK energy.
By the way, if you are building out
a go to market engine for your SaaS business,
if you're building a SaaS sales funnel,
I have a special training I run every single week.
It's a training that will teach you
how to build an unstoppable sales
and marketing machine for your SaaS business.
I'll be sure to link to it below at the end of this video,
I'll give you some more details about it as well.
Now let's start digging into these metrics.
If you're building out your sales funnel,
you'll eventually take on the role of this diagnostician.
You have all the plates spinning.
You've got like a lead magnet,
which we call a manifesto because it's different.
You've got your core nurture sequences,
maybe you're doing inbound or outbound or running ads.
You have all these things that are running
and you kind of have to become a diagnostician
to understand if what you're doing is working.
If it's getting better and better over time.
And if it's actually yielding to profitable revenue.
Now I did a prior video that talks about
your LTV to CAC ratio.
It's one of the big metrics
that investors look at when evaluating
the effectiveness of your go to market engine.
If you haven't checked it out,
I'll link to it below,
it's called LTV to CAC ratio video,
but that's kind of like an end result thing.
It tells you like, okay,
based on everything that I've done, did it work or not.
What I like to look at are certain metrics
that tell you what's going on right now.
So then you can become that diagnostician
and improve your sales and marketing engine,
as you are building it.
Knowing everything that I know
about building go to market machines
and my SaaS experience from my Tout App journey
and my Marketo journey,
both very different scale SaaS businesses
and also happens to be MarTech sales tech companies.
Here are the three metrics that I would look at
to diagnose your sales funnel.
If you're excited to dig in, smash that like button
and let's go to number one.
The first metric that I would look at
is your revenue per lead.
If you can plot your revenue per lead
on a quarter by quarter basis,
you can start to understand if the changes you made
actually led to a better go to market engine
or a worse go to market engine.
If the leads that you're generating,
even specific channels or specific campaigns,
are good quality leads are bad quality leads
cause ultimately, this ratio of your revenue per lead
will help you understand
if you're generating leads that are of quality or not.
Now normally for the other two metrics,
I'm gonna give you some benchmarks
on what's good versus bad,
but the revenue per lead it's like, just depends.
It depends on what your average deal sizes are,
depends on what your LTV is.
So you'll be the gauge of that.
But what's an interesting thing to look at
is actually the relative measure.
Say you started bringing on a new channel,
you started reaching your customers in a new channel
and started getting leads from new channel.
You can start to understand if the revenue per lead,
how that stacks up with other channels
or say you started a new strategy,
you can start to stack up on,
if that strategy is working better
than prior strategies that you've tried
based on this one core metric.
The second metric to look at
is your lead to opportunity conversion number.
So some people look at this as your MQL to SQL,
your marketing qualified leads to your sales qualified lead.
Some people don't even have a sales process
or marketing process like that yet.
So I just like to put it in simple terms,
how many of your leads
are actually becoming real opportunities?
How many of your leads are actually converting
to a real qualified opportunity saying, hey,
there's a real deal to be had here.
And the benchmark for this is roughly 13%,
roughly 13% converts from lead
to an opportunity on a regular basis.
So that's a good benchmark.
You can research other benchmarks as well.
What's more important is you start measuring this
and you start to understand
whether the leads are actually converting
to an opportunity or not.
Why is this important?
It's important because it'll help you diagnose
whether leads are getting followed up with.
It will help you diagnose whether the leads
are getting followed up with,
but they end up being dot opportunities.
It'll help you understand if maybe
the definition or an opportunity is wrong
and you're converting them too early.
Those are the first two metrics.
Now let me pause you for a second
before I go to the third one.
There's this is other crazy stat that I came across
while I was researching all of this
and really getting my ducks in a row.
And that crazy stat is only 27%
of B2B leads are sales ready?
What that means is if someone comes across
your lead magnet or in our case,
we help people build unstoppable sales funnels,
we don't do lead magnets, we call them manifestos
and there's a very clear difference between the two.
And in one over the next episodes,
I'm gonna be explaining what that difference is.
27% of the B2B leads are sales ready.
What that means is they might download,
they might fill out their email
and download this checklist or this guide
or whatever you're getting in exchange for the lead,
but only 27% are ready to buy.
Now what happens, a lot of times,
if you don't have a proper nurture sequence in play,
if you don't have a proper sales process
and sales funnel in play,
if you're not educating the buyer,
if you just jumped straight into a sales conversation,
well, that lead will turn into an opportunity,
but that opportunity will not go anywhere
because you're not recognizing kind of a fact of life
and that's only 27% are gonna to be buying right now
or are going to be trusting you enough to buy right now.
With that said, this just highlights the fact that
you can't just have a lead magnet and a nurture sequence,
and just have salespeople pummeling over those leads,
you need to be thoughtful about how you build out
your go to market machine.
This is why I run a 45 minute training
on how to build out an unstoppable
sales and marketing machine for your SaaS business.
So you can check that out.
I'll tell you more about it at the end of this video.
Now let's go on to metric number three,
the third metric to look at
is your opportunity closed won to one percentage.
So once the lead becomes an opportunity,
what percentage of those opportunities
are actually converting to revenue?
Now you probably track this,
but it's important to look at it really, really closely.
It's important to track why you lost a deal
and look at the percentage
on what percentage of deals lost by reason.
At a high level, the benchmark,
and this is kind of crazy
where a 20% success rate is considered good.
Your opportunity closed won rate
should be at about 20% or more.
If it's an inbound hot lead, it should be at 50%.
I've seen it 50 to 60%.
If it's an outbound lead and you're warming them up,
then it's probably going to be at about 20%.
Only 20% will end up converting to revenue.
But either way you need to start tracking very clearly
on what the loss codes are when you don't win,
you need to start looking at your win rates
and you can follow those win rates to start to understand
what are the type of people that actually do better.
You can also start to understand
where in the sales process you tend to get stuck.
Is it a competitive thing?
Is it a feature thing?
Is it a sales process thing?
Is it that you're just getting in touch with them too early
and you're not following up enough?
It could be any one of those things.
So to recap, if you're diagnosing your sales funnel
for your SaaS business, the first thing I would look at
is your revenue per lead.
The second thing I would look at
is your lead to opportunity conversion rate.
And the third thing I would look at
is your opportunity close rate, right?
How often are you winning deals?
And if you aren't, why are you losing them?
What percent of them are, are the losses?
And how do you diagnose from there?
You start looking at these three metrics over
and over and over and over again,
you'll start to come into what your sweet spot is.
You'll start to understand where your core ICP is.
You'll start to understand what the right messaging is.
You'll start to understand
what the right lead magnet or manifesto is.
You will start to understand
how to nurture them in the right way,
how long it takes and nurture them
before they're sales ready,
you'll start to figure out all these pieces
and you'll kind of have the beginning parts
of a go to market machine.
Now I go back to the stat
that I shared in the middle of this video,
only 27% of B2B leads are sales ready,
means someone might get to know you.
They might become a lead, they might come in your database,
they might download your manifesto,
but they will probably not be ready to buy right away.
It may take some time to really build that relationship.
And this is where most marketers,
most salespeople and even most founders
who are building their own
go-to-market machines for the first time go wrong.
They kind of go for a bargain,
like, are you ready to buy or not?
And the guy kind of give up.
They don't teach them, they and build a relationship,
they don't build a trust
and it's hard to do that at scale as well.
It's harder to do that
when you don't have a massive marketing and sales team.
This is why I created the framework
of an unstoppable sales funnel
and also a sales funnel pulls in
only the essential pieces
of building a go to market machine.
And it actually helps you do that in a very thoughtful way,
so you nurture and build the trust.
You teach them and over time
they start to become real opportunities
that close at a much higher rate.
So if you're interested
in actually learning how to build an unstoppable
sales and marketing machine,
I invite you to my 45 minute training.
It's completely free.
You can follow the link below,
or you can go to tkkader.com/saas-training.
You go to tkkader.com/slash/SaaS-training,
you get a 45 minute training
on actually how to build an unstopable
sales and marketing machine,
and actually build an unstoppable sales funnel.
If you got value from this video,
please be sure smash that like button.
If you're new to the community,
I drop a video like this,
where I take very complicated concepts
and break it down into the most essential pieces
and tell you all about them.
So be sure hit the subscribe button and that bell icon.
If you're friends with a group of SaaS founders
or marketers that would get value from this video,
please share it with them,
it will mean the world to me and my team.
And lastly, remember everyone needs a strategy
for their life and their business,
but when you are with us,
yours is going to be unstoppable.
I'm TK and I'll see you in the next video.
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