Estimate Lead Velocity by Source
Understanding lead funnel dynamics is a big part of performing B2B marketing. Two fundamental metrics explaining funnel dynamics are – Lead Velocity (how fast the lead is moving between stages) and Lead Conversion (what fraction of leads is progressing to next stages).
These two metrics are interconnected – typically leads with higher velocities tend to have higher conversions.
To derive the related analytics, one should use cohort analysis technique. This involves tracking a group (of leads) across time to analyze their past or future transitions. The methodologies to be used for the two metrics are as follows:
Lead Velocity: Identify the new Wins in a specific period and look backwards to find when the corresponding Leads were created and when they became Opportunities.
Lead Conversion: Identify the new leads created in a period and look forwards to find how many of them became Opportunities and later became Wins
Let us look at each one in more detail.
As mentioned earlier, the approach to estimate Lead Velocity is to select a cohort of new wins and look backwards to look at time durations. Ideally you will select one full quarter’s cohort of new wins (ideally the last full quarter). This is because wins vary across the quarter with more wins occurring towards the end of the quarter. We want to consider all the wins to get complete picture.
The best source to get lead velocity data is “Lead Conversion” reports (generally available in CRMs like Salesforce). Create such lead conversion report with the criterion “closed-won date of Last Quarter”. The report should contain the following three fields as minimum:
- Lead Creation date
- Opportunity creation date
- Closed-won date
In the report, only include the new leads created and filter out “reopened” leads (because they will skew the results). Also, as the sample size permits, only consider the records having all the three dates mentioned above.
Use the above report to distill a final report as shown below. (You can add other dimensions like Lead Source Detail or Campaign as you prefer.)
In the above report, the lead sources shown are for discussions only – you may have different set of lead sources. Also, the metric “Lead to Opportunity” is in Marketing’s domain, while “Opportunity to Win” is (mostly) in Sales’ domain. “Lead to Win” duration is the sum of the first two.
You will see a wide variation in lead velocities across different Lead Sources, with sources such as “Website Inbound” and “Partner Referrals” with much shorter durations (i.e. higher velocities) than sources like “Events/Tradeshows” and “List Purchase”.
One major use of Lead Velocity results is to educate Sales department as well as company executives on the time it takes for a lead to become Opportunity and later to Win. This will (hopefully) alleviate demand from Sales for more leads and shift its focus to generating more higher quality leads.
In the next blog, we will discuss Lead Conversion.