Chapter 3: How to improve MQL:SQO

Driving marketing qualified leads - or MQLs as they’re otherwise known - for sales teams to follow up on is a core goal of any B2B marketing team.

These are essentially leads that marketing have identified as having interest or intent to buy a product based on marketing efforts. A list of people that marketing believes could become customers in the future. 

This might sound simple, however there’s a fair amount that can go wrong in this process. 

For example, how you define what constitutes an ‘MQL’ and when they’re ready to be passed over to a sales team has been a long term thorn in the side of marketing and sales relationships. 

Sales will always want more MQLs to follow up on, but they’ll also want those MQLs to be of high quality and likelihood to convert.

Getting the balance between volume and MQL quality is crucial if you want your leads to progress to sales qualified opportunities, or SQOs.

Check out how we did it below.

1. Alignment in qualification

1. a. Improving MQL quality

Before you can improve on MQL:SQO rates, you need to align on what good MQLs and SQOs look like.

This is the most common place where misalignment between teams happens because there are so many different ways to categorise MQLs and SQOs, which can then impact how these are represented later down the funnel.

For example, one of the biggest factors for a high quality MQL is intent. But what marketers use to signal intent across businesses can be very different. 

In some orgs, an MQL is someone who has downloaded a piece of content on a company’s website, entering their email address at a gate. 

However, we have discovered at Cognism that this doesn’t result in high quality MQLs as downloading content most often doesn’t equal intent. 

Someone downloading an eBook on the current state of cold calling doesn’t necessarily mean they’re in-market to buy contact data or sales intelligence software. 

Instead, we define intent based on those who come inbound to us, asking to speak to our sales team or requesting a product demo. As we believe this is the only form of true intent that we can rely on.

Another way you could more reliably identify high intent website visitors is on the pages they’re visiting on your website. 

For example it would be fair to assume that a prospect is evaluating solution options including yours if they’re spending time on your pricing page. 

You can imagine how passing MQLs based on content downloads, versus MQLs from inbound requests or pricing page visitors can make a big difference on the MQL:SQO rate further down the line. 

Once teams have aligned on the characteristics of what a good MQL looks like, there’s much less chance of friction between sales and marketing teams as marketing is bringing in accounts that sales are happy to talk to.

And sales should find those MQLs convert to SQOs at a much higher rate too.

1. b. Improving SQO quality

The pressure isn’t all on marketing when it comes to bringing high quality accounts into the pipeline. Sales have also got to be properly qualifying inbound leads or MQLs passed from marketing.

At Cognism, if a lead isn’t routed directly to an account executive, they’ll speak to a marketing development representative who will run a discovery call and either qualify someone in or out. 

This could be based on open discussions surrounding pricing, who they are looking to target, or which regions they are looking to target. If they are qualified, they’ll then go through an AE who will run a full demo and a separate qualification process.

Liam Bartholomew, VP of Marketing at Cognism, explains:

“If reps on discovery calls are harshly disqualifying leads, they may be preventing opportunities getting through to AEs when they may well have become a customer down the line.”

“Or they could be under qualifying, and putting too many SQOs through to AEs, wasting precious time on accounts that were very unlikely to ever become customers."

Putting too many low quality SQOs through to AEs could results in:

• AEs being distracted from speaking to accounts that are more likely to close.
• Increasing the length of time it takes to get an AE in contact with a champion.
• Inflates the pipeline making it hard to judge where teams are versus target for true qualified pipeline.

Ultimately both teams need strong definitions preventing back and forth on who should and does get put through the sales process.

It can be very tempting to put as many people through as possible as it looks good to hit or exceed MQL or SQO targets. But by getting tighter on qualification at the start, can vastly improve the conversion rates later down the line. 

Liam adds:

“If you’re more liberal it will swing the other way, which can just lead to a lot of waste of resources for not a lot of reward.”

2. How to prevent lead leakage

One way to improve MQL:SQO is by preventing certain leads from being lost throughout the funnel. 

For example there may be a qualified lead that has high intent to buy, but they never result in a conversion because they fall between the cracks of an inefficient handover.

Identifying and fixing any weak spots can help not only provide prospective customers a better experience, but also improve the bottom line.

2. a. Identifying lead leakage

Our operations team at Cognism have a process for mapping out each of the stages and steps from MQLs through to SQOs. Trying to identify sticking points where leads drop out to uncover why they’re not going further. 

Here, individual reports for each conversion point are tracked over time to see if there have been any changes or if people are being qualified out at an increased rate, and why they might be being qualified out.

Simon Heckhuis, Marketing Operations Manager at Cognism, explains:

“What are the steps between MQL and SQOs? Someone fills in a form, and then what? Where could someone fall down? Where are the points where people might be mis-qualified out?” 

“Once you’ve mapped out the steps you need to add in the data to see why they’re not progressing through.”

“During qualification calls for example, we need to check that people are being qualified in or out with a reason.”

This process requires alignment with the sales team to get the detail required to piece together what happened.

2. b. Fixing lead leakage

Once we have the journey mapped and all the data points telling us a story - we can break it down by segment, by country and by inbound method (e.g. was it a PLG motion, inbound demo form etc as each will have different conversion rates).

This is where you can begin to test optimisations, tweaking perimeters at each stage. 

Liam said:

“Everything starts with a hypothesis on how the tweak will impact a metric and ultimately revenue positively.”

Simon and the ops team will highlight issues or inefficiencies discovered during analysis stages and speak to both marketing and sales leadership to find solutions.

For example, Simon found that the enterprise segment was not converting at the rate it was supposed to, especially in the US.

He found that the reps following up on these leads were based in the UK, not the US, which created clear time zone issues and negatively impacted conversion rates. Switching that over was a simple fix that brought those conversion rates back up to a normal level.

Similarly, routing A+ MQLs directly to AEs and skipping that extra discovery step reduced drop-offs.

Simon adds:

“Sometimes fixing one problem will create another - but it’s about finding the balance that works for your organisation.” 

“If you are letting less MQLs through but they’re converting at a higher rate, as long as revenue isn’t going down that’s a win because it gives people their time back.” 

As well as this, Cognism makes sure to prevent any lost opportunities. If a deal is lost as a result of bad timing, the marketing team runs a nurture programme to re-engage leads and restart a conversation after 3 months.

2. c. Reducing repeatable tasks with automation

The final part of this optimisation process is to find repeatable tasks that can be automated to take it off teams plates. 

Simon explains why:

“I want to try to reduce human error as much as possible, and one good way to do this is to remove as many repeatable or manual processes away from those doing the jobs.”

“You want sales reps to be able to focus on having sales conversations - not worrying about when to follow up. Where we can, we want to automate so there’s less grey areas.”

This normally revolves around follow-ups and creating automated sequences. 

For example, after each call, each rep determines how the call went in Outreach based on a selection of different outcomes. This triggers certain actions, and leads will be added to different cadences based on these outcomes.

As well as this, if an email bounces, the lead will be moved to a call-only cadence.

3. How to improve the marketing and ops feedback loop

Feedback is a crucial part of any change management process - and is especially true in the case of optimising the marketing and sales funnels as all too often these teams are siloed. 

Working in the dark away from one another, leading to huge inefficiencies and often tension between departments. 

For this feedback process to work, it can’t be one way - it needs to be a loop between all three departments. 

Marketing and sales need to bring problems and ideas to ops, and ops need to bring the same to sales and marketing teams.

3. a. Providing a ‘numbers only’ view

Often, Simon lets the numbers speak for themselves. He will put the data in front of sales and marketing teams and show them the evidence for why he believes there are optimisations to be made.

He said:

“I will bring them some ideas, saying something like ‘here is what I’m seeing in the numbers, and this is what I think we could do to improve those numbers’ and that's what starts a productive conversation.”

This offers sales and marketing teams an opportunity to share their ideas and feedback on whether ideas are realistic for them to carry out.

3. b. Look out for lag times

Just as important as the idea sharing is the expectation setting on results. 

Simon explains:

“It’s also important that timelines are well communicated to teams. You need to give the funnel time to adjust to changes and allow time for conversions to happen.”

“When I first started we would be producing weekly decks on conversion rates and discussing them in meetings - which does help to identify if anything is really wrong.”

“But from a making small tweaks perspective, it doesn’t tell you a lot. For example, some weeks there will be bank holidays which will impact the funnel.”

“And if you’re reviewing after only four working days, you could be making changes based on unrealistic data. You need to give more time to see the real impact.”

It takes around 2 months for an enterprise MQL to become an SQO, while it only takes around a week for an SMB to become an SQO, so you have to incorporate those lag times before you see a change in SQO rates.

For example, if reps are over-qualifying and pushing people away from coming through to AEs, so you tweak how you qualify leads, you’ll have to wait to see the impact of those results.

4. Incentive plans

The second you have people involved in a process, you have to consider how they’re motivated to behave and the possible outcomes that could have on metrics and, ultimately, revenue.

For example if you incentivise SDRs by targeting them on meetings booked, then they might book as many meetings as possible regardless of their quality and likelihood to convert. 

Whereas if you incentivise them based on meetings attended, they are more likely to consider how good a fit the prospect is because they want this person to see value in the product and want to attend the demo call.

Therefore the way incentive plans are set up and how each person’s success is measured can have a big impact on final revenue numbers.

4. a. Be clear around what incentive should drive what behaviour

Before designing any incentive plans, it’s important to think about what we want to impact, what might be inadvertently impacted, how the metrics could be ‘tricked’ or siderailed.

Simon shares:

“We look a lot at conversion rates at Cognism, therefore some of our sales team earn commission based on conversion rates.”

This approach allows for seasonality changes, such as during the Christmas period when things are quiet, or in high season when things are busy.

Simon explains:

“They might not be able to generate the same number of SQOs as there are less inbounds during Christmas time.”

“Or there are times of the year when we have lots of inbounds - but we want our reps to follow up with these leads in the same way.”

By benchmarking them and rewarding them on conversion rates, it incentivises consistency in the quality of the follow ups.

4. b. Think about how the system could be cheated

Of course with this model there are some other considerations, such as:

• Workload - ensuring reps are not under or over worked during seasonality changes.
• If reps are incentivised on conversions, we need to be cautious that they’re not being pushy with their sales approach to force conversions.
• How leads are allocated, some reps might try to avoid certain accounts if they don’t believe they will convert as they don’t want to harm their conversion rates.

Simon explains:

“No matter what the incentive plans are, there will be frictions.”

E.g. If you want to improve MQL:SQO, you could ‘trick’ the numbers by just allowing more people through to SQO rather than going through the usual qualification perimeters.

Simon adds:

“Obviously we want them to qualify properly to avoid wasted time so we need to find incentive programmes that allow both things to happen.”

4. c. Measure and correct

Tied into the feedback loop mentioned earlier, this next step is crucial. Once a change has been implemented, it needs to be measured to find out if it’s having the desired impact. 

This means monitoring the change for long enough to get an objective view on the outcomes and reporting back to all three teams. 

If the outcomes are not as expected then either the change needs to be reversed or tweaked again to get to the right outcome. 

As Liam explains: 

“You might decide to incentivise reps on revenue, in which case you’ll get tighter qualifications at the beginning of the funnel.  However, MDRs might be too far removed from this result.”

“Similarly, incentivising on SQO rates can cause friction between the reps booking leads and the AEs working them, because they have different definitions of what constitutes a SQO, meaning the AE then becomes in control of the MDRs commission.”

You might try a combination of different incentives to ensure reps are booking meetings but remaining selective with qualification.