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If you're still relying on the old school sales funnel, focused on top of the funnel metrics like MQLs, SQLs, etc. you're going to want to tune in to this episode of Closing Time. Welcome back to Closing Time, the show for Go to Market Leaders. I'm excited to continue my discussion this week with Chris Walker, who's the CEO of Refine Labs. And Chris, this week I want to drill into what I'm calling the new sales funnel, because I think a lot of us have been brought up on the SiriusDecisions’ funnel. And we talked about this a little bit without talking about the funnel in our last episode, but it was about 2006 when SiriusDecisions came up with this funnel. You know, MQL, SQL, sales opportunities, etc. and many of us are still building our whole go to market motion around this. Talk to us why it's broken. Yeah. The SiriusDecision’s Demand Waterfall was originally published in 2002, which was when the MQL, SAL type of thing came around and then it was revised in 2012. And a lot of B2B companies, specifically Salesforce automation systems or CRM systems, are built around running this type of demand waterfall model. When they think about the lead and the contact object and the opportunity object. And so the infrastructure around it is actually built to support this model as well. And a lot of companies want to change something about it, but haven't been able to figure out how within their system. So sometimes it's been recommended that you don't track leads anymore, you only track opportunities, which I think is not the right way to do it. But that's what's being recommended by some vendors right now. And when you think about the like the sales funnel overall, here are some of the things to be aware of. The first one is that this singular funnel assumes that the conversion rate across all quote unquote MQLs is similar. And it's not it's actually very dramatically different when you drill into it based on the intent that the buyer has, which is clearly signaled in how they enter your sales funnel. It also assumes that all opportunities that are created are equal and win at the same rate and have the same ACV and things like that, which is entirely not true, opportunity win rates can range from, on a stage two opportunity can range from 3.7% is the lowest I've seen up to more than 50%, depending on the source and the intent of the buyer. And so the entire model breaks down because it's built around how do we put more volume at the top, assuming that all the conversion rates will stay the similar throughout? And therefore, if we put an extra 50,000 in, we'll win an extra 500 deals next year or whatever the spreadsheet says that people model in every year, that never works out. And so what I'm suggesting here is that we need an entirely new framework to think about whether you want to call it an MQL or an SQL or things like that. We've created different terminology because we believe our thinking is different. But the core thing to look at is that a singular funnel is not going to get the job done anymore. Another thing to think about is whether the funnel should be lead based or lead based or account based. But the idea of a singular funnel is the core issue. And so what we've sort of think and I'll make the last point, is that in the MQL demand waterfall, there is no distinction between demand capture and demand creation. It's a lead generation machine is what it is. And so we need a new go to market framework that distinguishes demand creation, demand capture and demand conversion. We need a new go to market framework that's built around accounts, not leads. We need a new go to market framework that allows the marketing, SDR, sales team, and the rest of the company to integrate and work together versus in an assembly line. And we need to look at not one singular funnel, but we need to look at multiple different funnels based on aggregated buying intent. So we've recommended that companies breakout from one funnel to somewhere between three and six, depending on how mature and sophisticated they are. Those would include what we call PIPE, a declared intent conversion on your website, someone saying, Hey, I want to buy now, which is the highest level of intent and therefore has the largest predictability of sales win rates and sales velocity. You could have another one, which would be account based marketing or intent data, where we go outbound based on my signals or otherwise, you could have events which companies use to capture demand, how we get power, people coming to our events, and then we're converting them into pipeline, product lead. And there's a couple other ones to consider there. And the reason to break these out is because the win rates and the ACVs and the sales velocities amongst these will be very different. And when you know that, then you can optimize for the go to market motions that have the highest sales velocity and the lowest cost of acquisition. Another thing to consider is that what I just laid out is just a methodology to measure demand conversion and demand capture. And we need to think as business leaders and people trying to grow businesses, what are we doing to make the market bigger? What are we doing to create demand in the market so that more people are buying things? The market is bigger and we collect a bigger share of that because we market the category and are viewed as the category leader. The metrics inside of companies do not incentivize that behavior. There are very few. Every company out there that glorifies the ones that do do it, and they do it well and they grow really big businesses. But the rest of the people that watch them do it and say, that's great, aren't able to do it themselves, and so do I have this entirely figured out? No. But I believe I painted a very clear picture of why the current state is totally inadequate and needs to change. Yeah, that's it's good stuff. So I want to drill into that a bit because, you know, people have structured their entire teams around this, right? But I can definitely guarantee you I've seen the same thing in the past several years that all MQLs, all SQLs are not created the same. There are some channels where the intent levels are higher and there are some others, like maybe contents syndication where they might look great on the top of the funnel, but they never convert on the bottom of the funnel. And I think a lot of marketers don't know that because they're not measuring it in the first place. And you probably run into that a lot in your business. But I think it was last week on LinkedIn, you posted about what you call HIRO. H.I.R.O, which is a high intent revenue opportunity, right. As potentially a replacement for a new focus, a new KPI. Can you talk about what that is? And then also talk us through how would a company go about making that transition? You actually have some impressive case studies on companies that have done so. I'll keep it real simple for you, HIRO pipeline is nothing more than redefining what most people call qualified pipeline using actual performance metrics. And so right now, what do companies consider qualified pipeline? It's different for every company. First off, one company might say it's when they hit stage two pipeline, one other one might be when we booked our first meeting with the SDR, another one might be when they went through BANT qualification. And we say that they're qualified and none of these subjective qualification models have anything to do with down funnel sales performance. And so what we've decided to do and furthermore to that, because they don't have a correlation or a deep connection to downstream sales performance, it allows a ton of bad behavior because people in the company, especially ones that are compensated against those metrics, can figure out ways to game them. And so people that are compensated on MQLs can get a bunch of you run content syndication, get a bunch of shitty $50 MQLs that never convert, go and like go to your trade show booth and then ask the other seven booths around you to exchange the leads that you got so you can have more MQLs. Marketing and SDR teams will give away gift cards so they can get more quote unquote SQLs and then the SQLs to get the gift cards sit on the meeting. And then right after they get the gift card, they immediately move to closed/lost and ghost your AE. And that's incentivized inside of the company. What we're doing with HIRO pipeline is basically saying that for each pipeline source, declared intent pipe, low intent lead gen, product, events, outbound, ABM, that the deal must advance to a stage that has a historical win rate greater than 25%. And we use the win rate metric to determine when it's qualified, not BANT. And so all that does as we as we've shifted the goal in marketing, as you shift it further downstream, it eliminates a lot of bad behavior that marketers do to appease vanity metrics, vanity or top of funnel metrics. And so what better way to get alignment with your sales team than have your marketing team scored on a metric that is directly aligned with revenue? And if win rates go down, they don't they the pipe, the number of the amount of pipeline that they generate goes down as well. And if the win rate starts going up, then the amount of pipeline that gets generate is going to keep going up. And so I think that this having a new view would enable CMO's, sales leaders, rev ops professionals, everyone inside of the marketing and sales team to be able to look at metrics in an objective way and make better decisions off of it. Yeah, for sure. I mean, we've seen a marked difference between or recalling our, you know, high intent channel versus our low intent ones. And you know, ultimately the one the channels where people are raising their hand and saying, hey, I'm ready to buy, I'm ready to talk to somebody, are going to close, you know, maybe 20% or greater. Right. Who would have thought? Yeah. And so one of the things I'd heard you talk about is advocating for, you know, potentially you don't need SDRs in that scenario. If somebody is raising their hand and the immediate objection that I had to that when I heard that Chris was speed to lead is super important. I know Jay Baer has talked a lot about this in his research, that people will often respond to and buy from the fastest to respond even if they're more expensive. And, if you eliminate SDRs, do you eliminate your speed to lead? Let's talk through it. There's a couple of different reasons that companies use SDRs in this part of the process. The main one, in my opinion, is that there is a high volume of low quality stuff. All MQLs get treated the same for the most part. They all go into one funnel. The conversion rate to a closed one deal is way less than 1%, and so you need a low cost inexpensive resource to book those meetings because you can't waste your sales professional’s time that's making $200,000 a year just searching for a needle in the haystack to close one deal out of a thousand that they call. So that's why the SDR was instituted. If you fix the quality inside of that funnel and you say, okay, now we're converting a lead to a customer at 8% instead of at 0.1%, which is 80 times greater, and a very common metric that we see between a low intent conversion and a declared intent conversion, then perhaps your sales team would be pumped to talk to a deal that they win, you know, one out of every 5 to 7 conversations. So that's one thing. The next thing is that we need to stop optimizing for speed to lead and start optimizing for speed to meeting booked. And it's a big difference because the companies that optimize speed to lead, I fill out forms all the time for our customers sometimes and I secret shop them and I see what they're doing and what is the most common thing. I fill out the form. Yeah, they hit their SLA and they get back to me in 4 minutes. But the response is not personalized. There's no calendar link. I have to respond back and forth with an SDR seven times to book a meeting. And by the time I actually get to that step, I'm so frustrated that I don't even book it or that you've lost my attention. I've moved on to the next thing. And so if you change the metric from speed to lead, speed to response, to speed to meeting booked, it might also change the behavior of what you do, which is another thing of why metrics drive different behaviors. And so I think that we need if you separated the different funnels and you had declared intent, you had low intent lead gen, you had AMB outbound, you had events, perhaps she would have a different sales process and a different resource allocation across those things based on the buyer intent that's being happening. And so by changing the metric, it's very interesting across all things in B2B, and like your personal life, everywhere, you change what your goal is or how you're measuring success of something, it immediately changes the way that you approach the problem or the task. And so I think those are some of the reasons why. And then what would be an appropriate use of an outbound SDR? To trigger outbound sales to target accounts based on intent data that justify having a $100,000 person in addition to the sales rep, go outbound based on the deal opportunity or overall account lifetime value. And so and then directing those people to the right place, which would then lead you to think that, hey, we, we need way less of these people. That's a tough conversation for people to have internally. But gosh, a lot of people are talking to me about it right now. One of the most common things I hear is, hey, we don't think that we're getting the right ROI on our SDR team. And I'm like, You probably aren’t. You would if you had five, but you have 25 and that's part of the issue here. Interesting. So, Chris, I know we're running out of time, but I would love it if you could do a good job of kind of summarizing the move to new KPIs. Maybe it's a HIRO KPI or something else for business. What are the steps they can take? It seems like the first thing is changing the goal. The first step is changing your mindset. Okay? Changing your mindset about what marketing is supposed to do, about how we evaluate KPIs, about what is the overall goal, about whether we're running an assembly line or an integrated revenue team, whether we're targeting leads or accounts. We need to rethink the mindset first, because if you don't, you're going to start to change the metrics you're going to go through one month, you're going to back out and panic and say, Gosh, we're doing something different than everybody else and it's not working after three weeks, we're going to bail out because you haven't fixed the mindset really and you're going to go back to doing the same shit you were doing before. So fix your mindset then change the metrics based on what makes sense, based on the new world, the new mindset that you have. What are the goals that need to change here? What are we trying to do? We're trying to optimize to have a part of the process for demand creation, demand capture and demand conversion. We want our sales team talking to companies and buyers that are in market to buy right now. We want to have the right resource and structure, the right buying process based on the level of intent a buyer has. There's so many different things. And then what are the right metrics to change for that? I think using HIRO pipeline is one, but we have a bunch of different both marketing and holistic go to market metrics that could be used in concert together about how to do it. And then lastly, once you change the metrics, if you do it the right way, it immediately will do one of two things. It'll immediately show you that some of the things that you're doing don't work right now. And I know that to be true because I do it over and over with companies when we go through a manual data analysis. And what do I hear every time? Oh, we thought that was happening, but we never looked at the data that way to actually show it. This makes a lot of sense. It will immediately show some of the things that aren't working and it will force your marketing team, your agency partners, or anyone else involved to do different stuff or they're not going to hit the metric. And so by changing the metric, it immediately forces changes in tactical execution by changing the goal, that is the process. Is it easy? Absolutely not. Is it simple? Yes, it is. Got it. Well, Chris, I mean, that's why I was so excited to talk to you today because, I mean, this is beyond your opinion, right? It's based on the work that you've done with like hundreds of companies and in a scientific approach. And so the data speaks volumes for sure. And the case studies speak volumes. So thanks a ton for your insights today. I really enjoyed the discussion. Absolutely. Yeah, some people think it's my opinion, but it's actually built around the experience of seeing more CRM instances and more CRM data that I think anyone in the world has over the past four years. I’ve seen more B2B, SaaS, Salesforce. This is over 100 of them. I've looked at the data, we've calculated a bunch of metrics and still a lot of people don't believe what I'm saying, which is why we're taking the next step about not making it, about making it a true science, collecting this data in a scientific way, running statistics on it, aggregating that at a large scale and creating insights that are undeniable. And so and I'm not biased to any of the outcomes. The data tells a story. The data tells you what the conclusions are. So I'm excited to do that. I think there's far too much guessing and opinions and thinking about what we did at our last company that now we're going to repeat again at this company. I think there's a lot of that going on in go to market and I think we need a lot more science and data. Thanks for having me. Yeah. Hey, Chris. Yeah, thanks for joining the show. Thanks for the insights. And I guess we'll see you on LinkedIn. We will see you soon, Chip. Thanks. And thanks to all of you for joining us on this episode of Closing Time. Had a super great discussion with Chris and we’ll hope you tune into the next episode where you'll see other luminaries from the go to market world.