Understanding the Lead Cohort

The lead cohort is perhaps the most popular and talked about cohort for marketing and sales. Surprisingly, it may not be the most critical depending on how revenue is actually generated. The lead cohort is one of five key cohorts.

Lead cohorts at the most basic level are the leads that come in during a given time frame. Months are good timeframes for analysis. Once the cohort is established, the cohort can be analyzed as far down the funnel as possible. Since this is a cohort measurement, you will want to measure the cohort and its disposition at the end of the month, then at some frequency after that until the cohort is fully processed. Depending on your business cycle, this could take from 1 to 12 months until all the leads in the cohort have reached either a final resolution or are no longer being worked.

In addition to looking at the cohort from a time perspective, drilling down by region, sources and calls to action can also provide insight into the best performing channels. Theoretically, a cohort model should be able to provide the ability to look at how leads in a particular month, from a particular paid source, from a specific campaign, and keyword group performed.

How far can a cohort model look down the pipeline? Theoretically, a lead cohort should be able to go all the way down to a deal giving the marketing team the best indication of which lead sources drive the best leads. However, as leads flow through a typical B2B sales process, significant noise gets introduced into the system impacting the quality of the cohort report.

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As leads enter the system, the first introduction of noise into reporting comes from the scoring algorithms, assuming you are using one. No matter how good an algorithm, it is going to start to distort the cohort since it won’t catch all the bad leads and it will catch some good leads. The good news is that the algorithm is constant and machine based. There are no finicky humans operating it.

At this point, you can measure the lead to marketing qualified lead ratio.  This is important to monitor since it provides an indication of how many actual hot leads are being created.

Now the leads are passed to the BDR team, it is time to measure the number of leads that end up in meetings, or demonstrations or other down funnel events.  Like the prior stage, noise gets introduced into the process.  Not all leads will get routed to the BDRs depending on their worldwide coverage. BDR compensation will drive how aggressively they follow up with your leads.  With too many leads and too low a quota for meetings, for example, the BDR team can cherry pick what leads to pursue. The opposite is true for too high a quota and not enough leads.  In this case, your leads could have little impact on the BDRs reaching their numbers and they spend their time chasing sources that actually help them.

Training of the BDR team is also going to drive conversion, along with how long it takes them to process leads and what their touch process is.

At this point cohort quality is still good, however, it is the next stage where quality starts to take a dip. At this point, meetings, evaluations, or other pre-opportunity events start to yield actual opportunities.  As a marketer, we want opportunity creation as one of the key goals of progress for our efforts.  However, noise starts to get introduced into the system in a much bigger way at this point:

  • in Salesforce, leads must actually be attached to opportunities for full funnel tracking.  If the leads are not actually attached, attribution goes away.
  • sales leadership can drive opportunity creation simply by pushing for more “pipe”. These sales pushes can drive up opportunities creation, but also distort lead success
  • complex deals often have multiple people associated with them.  If marketing delivers 100 names that are all associated with one deal, that is very different than delivering 100 names associated with 100 deals.

Once opportunities are created, the next stage of funnel analysis for the lead cohort is whether a deal was actually closed.  Measuring lead to deal close rate by cohort is problematic for all the reasons above plus:

  • deals tend to close the last month of weeks of quarter causing a hockey stick and making lead to deal closure stats inaccurate except at the end of the quarter
  • good leads generating good opportunities are subject to sales execution and competitive pressure to close
  • product market fit are key components of any closed/won deal

Lead cohort is one of the most important cohorts to marketers. Measuring short term results like conversion to meetings, trials or evaluations provides good short term measurement of the cohort. The further down the sales cycle leads are measured, the more noise is introduced into the system making the final lead to deal numbers less reliable.

Next, we look at the pre-opportunity cohort.

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