Is MQL Reporting Poisoning Your Pipeline?

How Transitioning from MQLs to Pipeline Metrics Transforms B2B Sales

Conventional wisdom relies on MQLs (Marketing-Qualified Leads) to measure B2B marketing’s impact on the bottom line, but that leads to too many challenges. It’s time for a shift, not just in tracking, but also in mindset.

While MQLs are good for summarizing directional growth in high-level reports targeting the C-suite or the members of the boards, it’s quickly becoming just another vanity metric hiding significant operational and decision-making nuances. Nuances which are vital to unpack in our current market landscape, where efficiency and sustainability are more important than ever.

MQLs' inability to distinguish between key lead traits — such as marketing source, intent signals, and buying stage — doesn’t just dilute your marketing channels’ insights, but also affects the sales team's operational efficiency, morale, and hiring plans.

And as serious questions arise about the true drivers of marketing and sales efficiency, a pivotal shift toward metrics that contribute to a faster and more accurate sales cycle is key. What metric can truly align marketing and sales once and for all? 

Pipeline is the antidote — a superior metric that offers clearer insights into lead acquisition, channels ROI, sales efficiency; and even broader GTM team morale.

In this post, we’ll show you our heuristic to define pipeline, show you how your GTM team can prioritize it over MQLs, and why it’s key to foster cross-functional alignment between marketing and sales orgs.

The Inefficacy and Hidden Costs of MQLs

Before we get into the jist of it, let’s put down some definitions:

• Lead: a prospect that has had some interaction with your website or product. This can be just repeated website visits, interaction with your social posts, or content (e.g. downloaded a report, played with your ROI calculator, or reading a blog post).

• Marketing-Qualified Lead (MQL): a prospect that, given some intent signals gathered by the marketing team around your lead scoring (e.g. their company size, location, and industry match your score; plus, they did some significant interaction on your site), has the potential to be passed onto sales.

• Opportunity or Sales-Qualified Lead (SQL): a prospect that, given the intent signals gathered by marketing and the information collected by the sales team on the first meeting, is being marked as an opportunity on the CRM; and will be nurtured by both marketing and sales as it can turn into a customer. Opportunities can have various stages depending on your sales cycle. Also, multiple meetings or email interactions might be required for prospects to pass across each stage. For example:

  • Stage 1 Opportunity (Demo/Handraiser): a prospect that has made it clear that they want to speak to a member of the sales team and learn more about the product. This is a more specific MQL type with higher intent.

  • Stage 2 Opportunity (Requirements): the SDR collects the requirements from the prospect to craft the best proposal that matches their needs and budget.

  • Stage 3 Opportunity (Pricing): the SDR pitches the product and pricing package to the prospect, tailored to their requirements.

  • Stage 4 Opportunity (Negotiation): the prospect and the company negotiate the offer, involving more decision-makers on both sides until the deal is closed or not.

• Pipeline: the value of all the opportunities across all stages logged into the CRM in a given period.

So why is MQLs poison for marketing and sales teams alike?

Put simply, MQLs don’t differentiate between passive (e.g. whitepaper download or webinar attendees) and active leads (e.g. demo requests and hand-raisers), representing different stages of the buying lifecycle and very different levels of intent, blending conversion rates and different sources. 

This reporting mechanism impacts significantly the insights gathered by marketing teams, who feed their lookalike audiences and targeting algos contradicting intent signals; which will return lower conversion rates and shrinking ROI on channel performance. In the medium term, this can also lead to misleading channel optimization and/or budget allocation decisions.

The poisonous MQL reporting has serious repercussions on also the sales team, which similarly is not able to distinguish between leads with high or low opportunity potential. When you are just given MQLs, it becomes harder to distinguish between hand-raisers — prospects who actively want to see your product in action with a demo — and broader “sales meetings”. Hence, SDRs will scramble to find time to hop on a call with both, reducing their efficiency. In the medium term, this problem leads to critical friction and trust issues with marketing, ultimately dragging down the whole GTM and stifling growth altogether.

On an ops level, this can even lead to the false belief that, given the growing number of MQLs, more SDRs need to be hired to evaluate them, or more marketing budget needs to be deployed to compensate for the low MQL-to-opportunity conversion rate; significantly impacting hiring, CAPEX, and burn rate.

Moreover, MQL reporting and optimization usually come with cumbersome lead scoring and routing processes, which can further detract focus from sales efficiency by delaying lead activation and contributing to higher friction between marketing and sales. At HyperGrowth, we’ve seen this firsthand, when one of our clients was requiring more than 24 hours to ingest, score, and route leads to the sales team.

Startups should worry about speed and contacting the right people at the right time, but the focus on MQLs can make this whole workflow a nightmare. 

Benefits of Prioritizing Pipeline over MQLs

However, with fewer, higher-quality opportunities, and no more minutiae of sifting through low-intent leads, response rate and sales efficiency go up, and the need to expand your GTM team decreases. This is what happens when both sales and marketing focus on the value of the opportunities generated, also known as pipeline.

Ultimately, the definition of pipeline can vary between companies; above, we’ve considered it as a stage 1-2 opportunity beyond the first demo; a conversation that the sales team can confidently add to their CRM as an opportunity with the potential to be turned into a deal.

A heuristic to define pipeline is to identify the “leads that move beyond an initial conversation”. To be effective, that rate should be between 40-60%, as the human capital required to take the first 30-minute call is paid an average of ~$80-100 an hour.

All these reasons make it paramount to define lead lifecycle metrics — as we did above — and accurately map the customer journey from initial contact down to conversion. 

Optimizing for pipeline metrics rather than MQLs gets leads scored and assigned more quickly, giving the right priority to activating hand-raisers. When time-to-score is low, it reflects the team is focusing on quality vs. quantity of leads. 

By repurposing our clients’ ops to focus more on pipeline, we’ve not only cut down the lead scoring, routing, and activation from 24 hours to 20 minutes, but we’ve also seen:

• More predictable conversion rates for both marketing and sales.

• Handed-off leads have an agreed-upon threshold to move to pipeline, and then to revenue.

• Which turns into significant cultural alignment and morale improvement on the GTM org.

When focusing on pipeline metrics, lead scoring serves also as a leading indicator, which aligns marketing and sales on what good and great leads look like. This overall leaner deal flow and opportunity activation, a more efficient budget allocation, and ultimately the opportunity to reinvest cost savings into meaningful distribution efforts like brand, product marketing, and compounding top-of-funnel activities.

Want to shift from MQL to pipeline reporting, and rethink your lead scoring and hand-off accordingly? We can help!

Closing Thoughts — Redefining the Marketing-Sales Relationship

As B2B marketers, our goal is to feed the sales team with valuable opportunities and empower them to make an impact on the organization's bottom line.

Ultimately, the main customer of B2B marketers is the sales team. Pipeline is what the sales team defines and cares more about; and what the marketing team should commit to delivering. 

MQLs distort that because it puts more work on the sales team’s plate instead of giving them value. Also, when focusing on MQLs, marketing's role in supporting sales is underscored, which creates dynamics of arrogance, frustration, and lower morale.

But with a focus on pipeline, marketing, and sales are finally aligned on the same definition of success. Marketing can optimize their budget, targeting, and lookalike for it brings to sales and its tangible impact on the company’s growth. Your sales team can focus on nurturing only higher-quality opportunities with the potential to convert.

How do you shift from MQL to pipeline?

1. Define all your lead lifecycle stages based on your sales cycle and customer journey. Combine qualitative and quantitative definitions, and strive to align sales and marketing.

2. Set shared goals across sales and marketing to focus on pipeline generation.

3. Optimize conversion events, lead scoring, and hand-off process for pipeline generation.

How does that look in practice?

We’ve put together a simple report where you can compare different campaigns and their impact on pipeline.

In the medium-to-long term, this alignment will have a significant impact not just in terms of net revenue growth, but also in terms of conversion rates, ROI, and team size; contributing to a much leaner and sustainable growth trajectory.