During one quarter, a B2B company I work with was on pace to beat its plan for sales-qualified leads by about 20%. Qualified opportunities were on pace too. Revenue was below goal and slipping further behind as the quarter went on. Average closed deal size had dropped by more than a fifth from the quarter before, mostly because reps were closing the smallest, simplest deals first, and that happened while the mix of deals in the pipeline was getting better.
If a lead plan was built on an assumed deal size, deal size belongs on the same page as the lead plan every month. When leads are ahead and revenue is behind, pull average closed deal size before anyone touches the media plan. In this case the fix sat with sales and packaging. Adding leads would have put more rep time into small deals without closing the revenue gap.
What the dashboard showed
The weekly sales and marketing ops meeting midway through the quarter opened with the revenue operations lead’s chart of revenue to goal. Revenue was under the line and moving away from it. Qualified leads, the share disqualified, how quickly sales worked them and qualified opportunities were all on pace. Revenue operations pointed out that past bad quarters had shown fewer deals and less revenue together. This one was on pace for everything except revenue.
The quarter before had run the other way. Qualified leads finished at 91% of plan, and new revenue finished at 135% of plan, helped by larger deals and a higher win rate. So two quarters in a row, lead attainment and revenue attainment moved in opposite directions. A dashboard that leads with lead attainment would have called the earlier quarter a miss and this one a win.
What sales and marketing each believed
Revenue operations framed it as a problem marketing had to help solve even if marketing hadn’t caused it. Either produce a lot more qualified leads, or find a way to get more revenue from each one. Revenue operations read the cause as sales discipline. The drop in deal size was largest in the channels where reps steer the deal, outbound and paid ads, while organic held steady.
The sales forecast still called the quarter at or above plan. It assumed the larger deals would land in the last two months, as they usually had.
The marketing leader didn’t want to answer with one-off volume tactics, since leads were already about 20% over plan. The demand lead wanted a diagnosis before anyone picked a fix. I asked whether deal size was actually falling or just failing to grow, because a change in how reps sell and a plan that counted on growth that never came call for different fixes.
Closed deal size by channel, next to pipeline mix
Two cuts of the CRM data answered it, and they only made sense read together.
The first was average closed deal size by source channel, this quarter against last. Overall it had fallen by more than a fifth. Organic was roughly flat. Outbound and paid ads showed the largest drops.
The second was the mix of open pipeline, quarter over quarter. The share of pipeline in the smallest deal type had fallen by about nine points, and average deal size in pipeline had risen about 6%.
The first cut on its own suggests the channels had gone bad. The second on its own suggests marketing was having a great quarter. Put side by side, they showed better opportunities going in and smaller deals coming out, with the drop concentrated where reps decide how a deal is scoped. Reps were closing the entry offer because it was the quickest close. The larger opportunities, the ones that covered more of what the company sells, stayed in pipeline or got scoped down.
There are two caveats. The CRM set a default amount on new deals, so pipeline deal size partly reflected an automation and was softer than it looked. And a field that recorded the buyer’s current solution was blank on many deals that quarter, which made the mix story harder to check. The closed side of the comparison was the reliable half.
Why more leads was the wrong answer
Revenue is closed deals times deal size. If deal size falls by a fifth and conversion holds, you need about 25% more closed deals to make the same revenue. Leads were already 20% over plan, and the extra deals they produced were closing at the lower size.
Assumes the rate at which leads turn into closed deals holds steady, as in the case above.
More leads into the same sales motion would have produced more entry-level deals at that lower size and taken rep time away from the larger opportunities. They would also have raised the lead number the next plan was built on.
The meeting agreed to put the effort into sales enablement, to build deal size into marketing’s own plans and to avoid one-off lead volume tactics.
What changed and what happened next
Enablement here meant a handful of specific changes.
- One value tool for reps. The CEO asked me to merge the separate calculators marketing had built into a single sales-facing tool. A rep enters the prospect’s numbers and gets a leave-behind that puts a dollar value on the result, which the buyer can take to whoever holds the budget. I tested it with a few reps. The top-performing rep started using it and asked for a PDF export, which I added. Within a month a prospect asked for exactly those numbers to justify the budget internally.
- A review of recorded sales calls. Discovery was strong. The conversation dropped off at value and at finding the budget holder. That review went to the new head of sales, who had just started.
- Packaging. Product leadership decided to promote a few packaged options on the pricing page while still selling any configuration a buyer wanted.
- Enterprise selling. Soon after the quarter ended, a new hire started with the job of rolling out a value-selling method for larger accounts. Won deals had about 4.5 engaged contacts at the buyer, and lost deals averaged 1.3.
None of it changed the quarter’s deal size. Near the end of the quarter, closed deal size was more than a quarter below where it had been earlier in the year, no deal on the higher-priced options had closed and the sales forecast had been cut. 93% of the quarter’s deals were entry-level. The board didn’t penalize the dip.
The part I’d flag for anyone planning next year is the following quarter’s plan. Its qualified-lead target was set lower than this quarter’s, because it assumed deal size would rise about 20% as larger deals took hold. A month into that quarter, the rise hadn’t shown up. The next lead plan inherited the same assumption that had just failed.
What I’d do differently
I’d put deal size beside the lead plan from the first month. The quarter before showed the same relationship in reverse, with leads under plan and revenue well over it. Nobody read that as a deal size story because the news was good.
I wouldn’t let a plan count on a deal size increase until a leading number moves. Here that number is the share of closed deals above the entry offer, checked monthly. A lower lead target is a bet on that share, and it should be reported as one.
I’d make the amount and product fields required when a lead reaches the qualified stage. Earlier in the year, about a third of one week’s new qualified leads were missing both. The channel cut only works when those fields are filled in.
I’d check the source field before cutting anything by channel. A five-minute look at the deals credited to outbound that quarter found several that had started somewhere else, and if the channel labels are off, deal size by channel points at the wrong team. The note on when marketing and sales report different lead numbers covers how to trace that.
I’d use cohort math for conversion, because earlier in the year the board report counted leads nobody had called yet against the rate. The guide to reporting growth to a board covers that fix.
The monthly lead plan vs revenue check
This is the check I now want in front of the weekly meeting. It has five numbers, each set beside what the plan assumed. Before reading it, look at the share of new deals missing an amount or product. If that share is high, fix the records first.
| Number | How to calculate it | Put it beside |
|---|---|---|
| 1. Qualified lead attainment | Sales-qualified leads created in the month ÷ the plan’s qualified leads for the month | Number 2, same month |
| 2. New revenue attainment | Closed-won new revenue in the month ÷ the plan’s new revenue for the month | Number 1, same month |
| 3. Average closed deal size | Closed-won new revenue ÷ closed-won new deals, for the month and the trailing three months | The deal size the plan assumed, and last quarter’s actual |
| 4. Larger-deal share, closed and pipeline | Closed-won deals above your entry offer (more than one product, a higher tier or more seats) ÷ all closed-won deals. Then the same ratio for pipeline created in the month | Each other. A widening gap means larger deals are going in and smaller ones are coming out |
| 5. Cohort conversion to qualified opportunity | Of the qualified leads created in a given month, the share that became qualified opportunities within your usual qualification window. Report only cohorts old enough to have finished that window | The conversion rate the plan assumed. Don’t divide this month’s opportunities by this month’s leads |
How to read the five numbers
- If number 1 is above 100% and number 2 is below it, look at numbers 3 and 4 before changing the media plan.
- If number 3 falls while the pipeline side of number 4 improves, the deals are coming in and not closing at full size. Look at sales enablement and packaging.
- If number 3 falls and both sides of number 4 fall too, the incoming mix has shifted. Look at targeting and which offers are producing leads.
- If number 5 falls while number 3 holds, trace one cohort of leads through the CRM to find where they stall.
- If number 2 is well above number 1, as in this company’s earlier quarter, check whether a few large deals carried the quarter before cutting the lead target.