Marketing and sales teams are usually closely aligned. In this article, we will know more on how to form a sales and marketing SLA that works for your team.

If you have a good relationship between these two, your business will grow. If its the opposite, then that might be an end to scaling.

Many companies are finding it hard to get diversity right. Salespeople report that they dont have enough quality leads, and marketing teams find themselves frustrated when opportunities fail to convert into closed deals.

To make things easier, many companies use SLA agreements. Its a set of rules to help the marketing and sales departments work together.

But the fact is, these initiatives also fail because they are too complicated. Theyre focused on individual goals for each team instead of bonding teams together.

Will it be possible to create a sales and marketing SLA that will work?

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  • Who have more than 10 employees
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  • That has only been in this role for less than 1 year
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How to form a sales and marketing SLA that works

The goal of sales and marketing SLAs is to make sure revenue goals are met.

Packhelp has grown rapidly and is now one of the fastest-growing companies in Europe.

Well show you, step by step, how to create a sales and marketing SLA thats the heart of everything we do.

Lay the ground rules first

Before we get into some more complex calculations, lets start with the basics. We have to know what is an SLA in sales? Remembering a few key things can help keep your employees committed.

Make sure SLA Marketing is symmetrical

People often get sales and marketing SLAs wrong by focusing too much on marketing and sales metrics that dont have anything to do with the agreement. Usually, a sales and marketing SLA will describe how many leads a company needs from its marketing team or what kind of quality those leads need to be.

But the focus on diversity is often lost in translation. There are many metrics that companies track, such as lead demand and conversion rates.

For sales, apart from the actual selling process, its usually neglected. But in order to make SLA symmetrical on both sides of the equation for example for customer satisfaction ratings and account management

The sales process can be defined by numbers: time to first contact, number of follow-ups and the timing between each follow-up. These all determine whether a customer will buy your product or not.

Reverse engineering is the key

If your company gives quotas, start with that and work up the funnel.

Youll need to know some basic metrics, like conversion rates on each step and average deal values. If you dont have that information now, then it should be easy for you to calculate them.

Its also important to show these numbers to the team after you have calculated them. Transparency is key in this process.

When everyone is on the same page, they feel like theyre all working together towards a common goal. They also have to understand metrics and where those come from.

Monitor your sales and marketing SLA daily/weekly

The SLA should be the new heartbeat of your revenue generation activities. Include all members from both marketing and sales in this process, as well as anyone else who might take part. This can become a quick 15-minute stand up meeting scheduled every morning to kick off the day.

Sign the contract

You need to make sales and marketing SLAs (service-level agreements) with your team. They are important and you should spend the time to walk through all of them, including calculations for each person involved in order to get their signatures.

Divide the quota of your sales

One way to calculate this is by dividing the sales quota by revenue streams and customer retention.

If your company is single-stream, you can skip this part. But if it has more than one revenue stream, the profit margins will vary per each individual stream.

The funnel does not work for all of the streams equally.

Using one-size-fits-all values would be too inaccurate, so we need to try and get as specific with our calculations. Dont worry about being more detailed in your work.

For some companies, revenue streams might be different business units. But for others, it could mean customer segments divided by their scale.

If you work for both small and large businesses, its obvious that your sales cycle is different in each segment. Customer retention also matters to some degree an SLA focuses on new customer acquisition rather than retaining customers who are already acquired.

When trying to grow your company, its important not to forget about retaining current customers. You should focus on acquiring new customers and then try to work around retention metrics.

Get to know your funnel metrics

Like most companies, youre probably trying to figure out the best way to generate leads.

Lead generation forms, outbound prospecting, content downloads and demos are just a few of the many ways to generate leads. Companies also need live chat conversations with prospects and incoming email marketing.

You may have been thinking about focusing on your best-performing activities to meet quotas. But the truth is that a good mix of lead types will give you better results. The question now becomes how do I make sure Im getting this balance right? And SLA (service level agreement) provides my answer.

Once you find the right strategy, track its metrics. These are usually:

  • Conversion rates between different stages in a funnel (e.g., MQL to SQL, or Sales Lead to Opportunity)
  • The average order value is the amount of money an individual customer spends with a company on one purchase. The average deal value refers to the total revenue generated by all customers who buy from that same business.
  • Time to close

Well need to measure these metrics separately, so we can compare them later on.

Calculate the lead demand (SLA in marketing)

Usually, the simplified version of your SLA is to calculate how many leads salespeople need. What marketing needs to do with that information? Time for calculations.

Lets use some examples to make it easier to understand.

  • The monthly quota is $500,000.
  • For every three leads, one becomes a customer.
  • SQL to Opportunity CR: 82%
  • Win-rate: 23%
  • AOV: $2,000

To find out how many leads we need to meet a quota, lets start at the top of our funnel and work our way down.

  • To make $500,000 in revenue per year you need to close 250 deals.
  • In order to close 250 deals, you need 1087 opportunities.
  • To create 1087 opportunities with SQL, I would need 1326 queries.
  • In order to generate 1326 SQLs, the company needs 3 900 MQLs.

The first calculation is pretty simple. Without improving marketing metrics, we would need 3900 MQLs to hit the quota.

For every lead, divide the quota by the number of MQLs needed. For example, if you have a $1 million dollar goal and need to get 100 leads in order to hit it, then each lead is worth $10

Make your SLA Set marketing calculations bulletproof

Weve been able to calculate the basics. Now we need to take care of all these complicating factors, but it wont be too hard because theyre really not that complicated.

Take time to think about what you want, and make a decision

If your average closure time is around one month, you need to buy at least a few month’s worth of leads so that the lead demand doesnt affect production.

The exchange rate varies depending on the type of lead youre getting.

It is best to track your progress with the revenue quota of marketing described in point one above. The easiest way would be to repeat this process for every type of lead you have.

Lets say we generate leads through a website form and outbound prospecting. They will come with different conversion rates.

sla

 

This comparison shows that to hit the $500,000 quota, we need 3.9 million website form leads or 2.6 million outbound prospecting leads.

To know how your current marketing strategies are working, you can calculate the total number of website leads and outbound leads that have been generated.

The current lead result is the sum of what was won last year multiplied by $128, plus that which has been on-hold for one year multiplied by $187.

Have a plan with at least 12 months duration.

Ive found that a six-month plan is often better than a yearly one.

In lead generation, its not easy to be that precise. Its normal for there to be +- 10% over- or under-delivery within a month. Remember: constant over delivery will hurt you in the long run.

Its important to give your salespeople a reasonable amount of leads. If you dont, they wont be able to provide good customer service and will lose business.

Adjust your metrics regularly

There are so many factors that can influence the metrics of a sales funnel, and its unavoidable improving your process will change them for instance. You may also see changes in lead conversion rates depending on market trends or even pre-sales activities.

Its important to stay on top of these changes and adjust your SLA accordingly. You should also include improvements as objectives for different teams.

Make sure to update your funnel metrics in your SLA at least once per quarter so you can see if any changes need to be made.

Set up the best sales process

Many companies stop marketing once theyve hired their first few employees, but it is a huge mistake.

If you want your SLA to be the heartbeat of a company, make sure that both sides are clear on expectations. The marketing team needs to know what they can do after generating leads and the salesperson needs to know how their role fits into this process.

This is a little more flexible than the other parts. You have to think about whats influencing your win rate and then set the process around metrics so it can either stay at its current level or increase in mid- and long-term.

This could be:

  • The sooner a salesperson contacts the lead, the higher chance theyll close.
  • It can be difficult to know how many follow-ups are needed, but its usually the case that three is enough in the first two weeks, five should do it within four weeks and seven should work for eight.
  • The sales process is created in steps, but its hard to attach a metric. Its good for everyone involved to understand the details of this process.
  • The result of your process is a win rate.

Its easy to set the rules, but it can be hard if you dont have proper reporting once your SLA is in place.

Make a big deal out of SLA in Marketing

Everyone needs to know what their role is and how they will work together. Sign a contract with everyone involved.

Its important to work together as a team, and that means everyone has to do their part. Though it isnt required, making sure people know what is expected of them makes doing the job easier for all involved.

Conclusion

Its important to set expectations for funnel metric improvement from the beginning and include it in your agreement. Dont try to push people too hard, though.

You can achieve this by going further in the process of learning and perfecting your sales pitch. Generating better quality leads over time is a key part, too.

This step-by-step plan will help you start your diversity initiative from day one. To make it easier, weve included a calculator to get the numbers right.

Need Help Automating Your Sales Prospecting Process?

LeadFuze gives you all the data you need to find ideal leads, including full contact information.

Go through a variety of filters to zero in on the leads you want to reach. This is crazy specific, but you could find all the people that match the following: 

  • A company in the Financial Services or Banking industry
  • Who have more than 10 employees
  • That spend money on Adwords
  • Who use Hubspot
  • Who currently have job openings for marketing help
  • With the role of HR Manager
  • That has only been in this role for less than 1 year
Just to give you an idea. 😀
Editors Note:

Want to help contribute to future articles? Have data-backed and tactical advice to share? I’d love to hear from you!

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Justin McGill
About Author: Justin McGill
Justin McGill is the Founder of LeadFuze - a lead generation platform that discovers new leads for you automatically. Get 25 leads free.