Pipeline Generation

Live from Schenectady, New York, it's SaaS Talk with the Metrics Brothers, Growth and CAC.

I'm Growth, most often known as Ray Reich. I'm the founder and CEO of RevOps Squared.

And I'm CAC, also known as Dave Kellogg, independent consultant, EIR at Balderton Capital, and author of Kelblog.

And together we're the Metrics Brothers, Growth and CAC.

Today's episode is the second in our new podcast, SaaS Talk. In episode 1, we talked about expansion ARR and the expansion CAC ratio. What's on the menu for today, Ray?

Well, I hope you're hungry because our subject for today is pipeline generation, Dave.

Glad you picked a small topic there, Ray, that we can easily cover in 20 minutes. You, you do know there are like entire marketing podcasts, not just episodes, but entire podcasts. focused on pipeline generation.

Yeah, but those podcasts don't include CAC and Growth, so let's get to it, Dave. And to your point, we have a lot to cover. Off the top of your head, what do you want to comment on the topic of pipeline generation? The Metrics Brothers is proudly sponsored by Benchmarkit, the B2B AI and software industry's largest, broadest, and most contextualized benchmarking index. Dave CAC Kellogg and Ray Growth Wright Have put the Metrics Brothers podcast on hiatus for remainder of 2026. All episodes we have ever recorded are still available on your favorite podcasting app. You can reach Dave at Kellogg and Ray on LinkedIn at Ray Reich. Thank you so much for listening to the Metrics Brothers podcast.

Well, lack of it is the number one cause of death for CMOs.

And I would add to CROs also who hire AEs faster than pipeline generation capacity supports. But that raises the question, who owns pipeline?

CMOs?

CROs? Who?

So generally, Ray, I think of 4 pipeline sources. Back in the day at Salesforce, we called them Horsemen. Uh, not, not a great term anymore. And now there's probably 5, not 4. Plus, not a great metaphor, the apocalypse. But hey, we talk about 4 pipeline sources, and that's the way I remember principally. And they are, in order, marketing, also known as inbound marketing, inbound SDRs, often known as SDR outbound sales, sometimes called sales outbound, and partners. In PLG companies, you might add a 5th called trials, and they would say, for example, generate PQLs, product qualified leads, as opposed to marketing, which would generate MQLs.

How about the one that combines everyone together, account-based programs? Is that an independent Source, or do you bundle that with marketing or sales or something?

Traditionally, I'd probably put it under marketing, but that reflects my bias. I believe that account-based marketing— my definition of it is a kind of unified team of SDRs and marketers and sales focused on trying to crack key accounts. So I might actually make it a 6th pipeline source. It would depend on the tracking system. But yeah, I don't have a good answer for that. And either it's going to show up as marketing, or probably better yet, we should measure it separately. Or I should say measure, to say it the Ray way, measure it separately to make sure it gets credit for what it does.

It's a good one.

By the way, Ray, this does beg the question of pipeline source mix. If there are 4 or 5 or 6, depending on how you count pipeline sources, let's talk about what the mix should be of pipeline generation across them.

Well, we're going to talk about some of our latest research and exactly what that mix looks like. But I don't think there is any pipeline generation standard, Dave. In fact, I'll see some companies kind of at the early stage take a marketing-first philosophy. And I think that's actually the best approach 'cause you're gonna have founder-led sales at the very beginning. Then you're gonna bring in that VP of sales or a couple AEs and they need pipeline. But here's the mistake I see so many companies make. They don't go marketing first to build awareness and some top-of-funnel demand. And they hire an AE or 2, or an AE and an SDR, and they say, go build your pipeline. And that just isn't the best, most efficient source of pipeline to me. So what do you think about that before we talk about the actual mix?

So 2 things. One, that's what I call the pipeline chicken versus egg problem. And you and I probably have a slightly different view there. A lot of people say, you know, what comes first, the pipeline or the egg? And I think you're taking the point of view the pipeline comes first, right? What comes first, the pipeline or the reps? and you're saying, hey, get the pipeline and then put the reps on to prosecute it. In my experience, sometimes the reps can come first, meaning that there's a floating bar between marketing and sales, and a hungry rep will take more opt-ins than they need. A rep that's full will reject them. And because of this floating bar, there's this loose coupling between pipeline generation and reps. So, so my actual answer is plan holistically and don't have either come first. Let's plan to generate the demand that feeds the reps. and hire them in parallel, which does beg the question, besides marketing pipeline, I want to talk about partners. Talk to me about partners as an opportunity source, Ray.

Well, if you don't mind, before I double-click on partners, because I think that's an overlooked thing, and I think bottom line, companies should look at a partner ecosystem strategy sooner rather than later. But do you mind if I talk a little bit about kind of where I see in the latest research where the mix is coming from?

Yeah, let's do it. Let's do the mix.

Cool. So inbound marketing, that traditional thing. So we conducted research recently with Lean Data and Clearbit, and we broke it down into cohorts. Is it, you know, 1 to 10%, 11 to 20%, 21 to 30%? The number one represented cohort for inbound marketing leads was generating between 11 and 20%. But what's interesting is when you looked at it at a median, 35% of qualified pipeline was coming from inbound marketing. So that's data point 1. Next, outbound SDRs. We see so many companies counting heavily on outbound SDRs because they generate such a significant portion. And if you look at the most represented cohort of B2B SaaS companies, its SDRs generate between 21% and 30% of pipeline, the median being 25%. Now we got the— what about AEs? Are AEs a source of qualified pipeline? In that same research with Lean Data and Clearbit, the most represented cohort of companies was outbound AEs generate between 11% and 20% of pipeline. 50% is at median. And then partners, partners, it was really interesting. The most represented cohort was less than 10%, Dave, with the median being 5%. So using those 4 kind of Segments you talked about, that's how it breaks down today.

Got it. So, so there's a couple of dueling taxonomies here which we can work through, but that data largely but not entirely jives with my rule of thumb. So first, the first thing I see is that it does validate my point of view that people start partners too late, uh, which is why they're so low as a percent in the mix. I think that's sad because partner-generated opportunities often close faster and close at a higher rate, right, than other pipeline sources. So never forget that if you can get a network of partners going for you, they're going to bring you high opportunity, high-quality opportunities that close quickly. The other thing I'd say looking at this mix is, look, look, off the cuff, I'll tell you my rule of thumb, Ray. And remember, you're speaking to an old marketing guy. I'd go 65-10-10-15, meaning 65 from marketing/inbound, 10 from SDR outbound, 10 from AE outbound and 15 from partners. And this is excluding the possibility of either ABM going on, which is probably, I think we can agree, a 5th pipeline source, or PLG, which is definitely in this case a 6th pipeline source. But I'll tell you, the 65-10-10-15 mix, I like it. It doesn't work for all companies, but I always start with salespeople are like airplanes. They make money when they're in the air and they're in the air when they're selling. So I like to feed them heavily. And I think marketing can do that. I've worked at companies that's up to 95% marketing inbound generated pipeline. I think the 10% quota for AEs is higher in an ABM model, right? Where they really need to have generated their own opportunities and target accounts. I think the 10% for SDR outbound is potentially low. A lot of people are bigger fans of outbound than I am. I feel like outbound, the conversion rates can be low, right? They can be a nice mix. They might have bigger deals, but you're kind of dragging somebody to a meeting.

Yeah.

And maybe they show up, maybe they don't. And then finally, the 15 on partners, as mentioned. I just think partners are a great source.

Dave, you just said something, and we're going to be talking about pipeline measurements on the next episode of SaaS Talk. But it's so astute what you just said, because in the latest research, we see that no marketing organizations get above 60%. 50% is the top decile. So that's the reality of 3 different research projects. But what companies don't do is they don't measure the cycle time and the close rate for each source of pipeline. In fact, only 18% of customers that we researched are measuring conversion rate by source. And I think if they did, Dave, they would say, how do we generate 65% of our pipeline via marketing? And it comes inbound. In fact, what do you think about inbound versus outbound? Do you think that's a traditional way companies are still thinking about it?

So look, I'd say 2 things. One, remember the data you get from the survey does reflect how companies count things. And that does reflect internal politics, which reflects on inbound, outbound, all-bound, right? That whole notion of who gets credit. And I'll pick outbound as an example. If the outbound people are working on leads that didn't immediately convert into opportunities, but they were all found by marketing or all found by partners, you tell me who should get credit for finding that opti. Is it the outbound SDR who converts it into an opportunity, which is obviously a very good thing? Or if we're trying to assign credit, was it the inbound marketing program or the partner referral that led that person to us in the first place? So this, to me, you're asking companies about their mix in a world where the mix is measured subjectively. I think we both agree that 65— I think we agree that salespeople are like airplanes. Let's keep them in the air. So unless it's an ABM model, right, where they have targeted accounts and they're supposed to go find opties in those accounts, Let's feed them as much as we can. That says to me inbound feeds people. Outbound is important. I mean, the way I look at this, Ray, is either we pick our customers or they pick us. Inbound is they pick us, outbound is we pick them. In certain startups, if it's early, you want to cluster your customers in a certain industry or you want to get thought leaders because if you win those accounts, you'll win the rest of them. That's a great case for outbound. To me, ultimately, who's picking? Is it us or them? And, and most of the startups I work with, we start in a phase where it's they pick us. We do a lot of horizontal outbound, and then we quickly say, hey, we want to double down on this industry or double down on this set of accounts, in which case, well, that's outbound.

Well, I'm trying to decide which way I go here, but you mentioned all bounds, and honestly, I've never actually implemented an all-bound strategy where that's how we measure it. So for the listening audience who's like me, maybe not quite as astute as you, can you talk about what all-bound is and the value of an all-bound strategy?

Sure. I may have a unique perspective on all-bound, but to me it's a kind of a de-escalator. I don't know how else to say it. But if we're going to say credit goes either to inbound, like marketing found this and they downloaded a white paper and we handed them off to a BDR for processing, if that's inbound and outbound is a BDR found it and made it an opti, what about those crossover cases? And the problem with pure outbound, especially from a marketing perspective, is we got robbed or partners got robbed. Like somehow we found that person, they, you know, they saw 2 ads, they came to a webinar, they visited us at the trade show booth, but they weren't ready to buy right then. And then a BDR comes along 6 months later and heats them up. First, that's fantastic for the company, right? That's exactly what we want to have happen. But if we say, oh, that was outbound, And let's credit outbound only and say, well, marketing didn't do anything, right? Just imagine you have a bunch of those, which hopefully you will, then marketing feels like it's ripped off from credit. So where I've seen this kind of, I don't know, conflict escalation happen, people use allbound to de-escalate it. Because allbound basically is a word that reflects the fact that it's not just outbound. It's not like we handed somebody a list of names that we bought and said, go open these up. We're handing them lists of people who've engaged with us in some way already. That's the all part of it. And then we're giving it to an outbound person to convert it into an opportunity. So I like allbound, and really I view allbound as a way of thinking, Ray, where we just think, you know, kind of recognizes the fact that enterprise software, it's not one touch to an optee, it's 15 touches.

You know, I'm going to double-click on that because I think allbound is a great lead-in to this concept of the dark funnel with community-led growth and event-led growth and media-led growth. Right? It's gonna be really hard to attribute. Oh, wait a minute, somebody listened to 5 of our podcasts and came to this event I sponsored, and they actually maybe listened to one of our YouTube channels. That's called a dark funnel. Or one of your AEs is out there posting on LinkedIn and she's really prolific, and people say, I really like what Sue's been saying, I'm gonna reach out to them through a direct come to the contact us form. So I don't know if you— a lot of your clients or portfolio companies have talked about dark funnel, But I think that's one of the most important sources of pipeline, social media, events, community, that no one's talking about today, Dave.

Yeah, the good news, Ray, is I think people are starting to talk more about it, and I think it needs to get talked about. So to me, dark funnel is basically traffic that comes to us with or without referral information for technical reasons, or direct traffic, or bookmarked, or basically direct, meaning typed directly into a browser because I knew about you from reading a billboard or talking to a friend or listening to a podcast. And, you know, I'll just tell you a funny story, right? Back when I started marketing, the whole funnel was dark. We didn't have CRM, we didn't have all this tracking. So we had a very simple way of shedding some light on the dark funnel. We said, how did you hear about us? And it was a standard kind of top 3 to top 5 lead qualification question. And now full circle, people are increasingly doing that again. So if I pick off a lead, I've got them on a landing page. In theory, I know where they came from, I know how they got there. But it's very interesting to also ask them, and people are increasingly doing this, how did you hear about us again? Which, which I think is just a great way to put light on the dark funnel.

Okay, let's open Pandora's box, and that's not a music streaming channel, and that is attribution, because you've been talking a lot about measurement. So how important is attribution?

So look, Ray, I have a contrarian viewpoint on attribution. I, I think that I'm just going to break startups into 2 phases. There's a validate the business model phase early on where we're trying to figure out if this dog hunts. Like, how much does it cost us to generate an opportunity and how much can we sell these things for? Right? Because if it costs us $10K to generate an opportunity and the average sales price is $2K, you know, we've got a problem. And I don't care who gets credit or blame. The company has a problem. It's not a viable business model. Reverse those numbers. Say it costs $2K to generate an opportunity and their average sales price is $10K. Well, that dog hunts. We're in a situation where we can build a business on that potentially. So to me, what drives me crazy is when companies are still kind of validating the business model, still figuring out if the dog hunts, that they get all wrapped around the axle on attribution. To me, attribution is when you're much bigger and you're trying to optimize this channel spend, optimize the investment across pipeline sources. That's where attribution starts to matter.

Well, it's one of my probably hot buttons. I think attribution is such a waste of time. And let me give you one data point of why I say that. I'm going back to the research we conducted with Lean Data. 18% of B2B SaaS companies— and this is a population of 490— said they don't measure cost per dollar of pipeline generated, right? And only 34% even measured cost per qualified lead. So my, my perspective is, if you're not looking at how efficient it is to generate pipeline that closes, then why in the hell do you care about the source of the lead?

Yeah, well, great point. I mean, first things first, it's actually fairly easy, right, to just say how much do we spend on either all marketing or on demand generation last quarter, and how many optees did we get for it? Um, if you're not measuring that, go measure that first because it tells you if the business model is viable if you're an early-stage startup. And second, because after that you can start worrying about attribution. You know, my favorite cost to measure first, what I call the unit cost, cost per MQL, cost per opti, cost per deal. And sometimes I'll split it to cost of stage 1 versus stage 2 opti. But let's just go back to the simpler one. Cost per MQL, cost per opti, cost per deal. We should be measuring those. In my mind, it's a variable cost, right? That's another— well, it depends on what you're doing. But if we're trying to debug the business model, it should be an average cost. If we're trying to figure out the marketing budget, it should be an incremental cost. I.e., if I need 10 more of them, what's it going to cost me? Well, and then I want to look at a marginal or incremental cost, right? Because I don't need a new product marketing person. I don't need a new PR agency to get 10 more opties. I just need, in effect, the demand gen cost. So I agree with you where you're coming from. I would add the nuance that we're talking average cost or incremental cost. And then look, then we get to attribution, but you, I think, you know, my favorite quote on attribution, right? No.

What is that?

That coffee cup they sell on the internet, marketing attribution is fake news. We literally made it up. I think every CMO should buy that cup and bring it to their board meeting and bring it to their quarterly business review.

I'm pretty shocked on a Dave Kellogg podcast we used the word fake news, but that's a whole other theme. A question here. You've been a head of marketing many times. Sales always says more pipeline, more qualified pipeline, go generate more pipeline, and you're kind of saying, Well, I need more dollars to generate more qualified pipeline. How do you go about justifying the budget that's centered around pipeline growth?

Yeah, I mean, I think this is one of those things where I think the first principle is work closely with the VP of Sales or the CRO, but, but the two of you need to work together. You need to kind of come with a joint proposal that says, here's what we want the funnel to look like. And again, I'm going to use hops, so kind of MQL to stage 1, stage 1 to stage 2, stage 2 to close. And given that funnel and this set of rates, and this set of costs, here's how much money we need. And by the way, this pipeline mix, because we're not going to get 100% of the pipeline from marketing, we're going to get 60%. And by the way, are we investing enough to get the other 40%? And I tend to be a belt and suspenders person there, Ray. Like my rule of thumb, especially when starting new pipeline sources, is to not build a model that generates 100% of the pipeline you need, is to build a model that generates 110% or 120% of the pipeline you need in case the new partners channel doesn't kick in, right? Or in case the outbound initiative doesn't work. We don't want to be naked, right? We don't want to have cut the inbound machine to fund initiatives that haven't kicked in yet. But, but anyway, step 1, get alignment with the head of sales. Step 2, get agreement on an inverted funnel model, get the data on those conversion rates and costs, and then go together and say, this is what it's going to take. This is how much money we need for sales to hit the target. It's not sales versus marketing. It's sales and marketing together saying, this is what we need to be successful.

So going back to something we started this podcast, and we got to wrap up. I mean, I can't believe we actually committed to each other, we're gonna do a 20-minute podcast. But who owns that pipeline number, all the conversion rates? And if we don't hit that pipeline number, who's on the line for that?

So this is hard because different functions own different pieces, right? You might have a head of alliances who owns the partners piece, you may have a head of outbound who works in sales who owns the outbound piece. You may have a VP of sales who owns the rep-generated piece. I mean, ultimately, to me, the org structure doesn't lend itself to a single source of accountability here. What I like to say is, I like to say the CMO is the quarterback of the pipeline. Their job is to forecast it, the whole thing, from all sources, to talk to the respective owners to say holistically across all the sources, here's how much pipeline we think we're going to generate. Here's what we think our starting next quarter coverage is going to be. If it's too high, fine. If it's too low, here's what we're gonna do about it. So, and I think it's very important for a CMO to step up into that role, 'cause at most companies they own a majority of the pipeline. Second, they have budget and skills so that if there is a gap, they can close it. So, so to me, it's not the owner of the whole pipeline, but it sure is the quarterback. I'm overseeing it. I generate 60% myself, maybe 70, but I'm watching the whole thing. I'm accountable for forecasting it. And I'm accountable for making sure there's enough of it when we start a time period.

I love that. I do think— I agree, the chief marketing officer is the quarterback, the program lead for pipeline, but every functional head that has pipeline responsibilities, she or he needs to own their contribution. And not only their contribution, but also understand the conversion rates. Because one of the things that I find, if an AE team says we own 10% of pipeline development. They also need to understand what that conversion rate is and what the pipeline coverage ratio is for each of those primary channels, because that's going to change what your pipeline goals are for the next quarter, Dave.

Yeah, my favorite kind of pipeline is pipeline that closes, so you have to look at the conversion rates.

Totally agree. Well, unfortunately, our 20 minutes already up, Dave, so anything you'd like to leave our audience with on pipeline generation?

Uh, that's it for me, Ray.

Well, that's it for today's episode. So thank you, Dave, for being my co-host.

And don't drive like my brother.

Vroom vroom. And to our audience, if you like the conversations that Dave and I are having, we'd love for you to go ahead and subscribe to the SaaS Talk on your favorite podcasting app. Go ahead and give us that 5-star rating because that amplifies the reach here for a new podcast. And once again, thank you for your last 20 minutes. Goodbye, everyone.

The Metrics Brothers AI, SaaS, and More is a production of The Metrics Brothers Growth and CAC and a member of the Benchmarkit Podcast Network. By accessing this podcast, you acknowledge that The Metrics Brothers make no warranty, guarantee, or representation as to the accuracy or sufficiency of the information provided or the humor content of the jokes told.

Ahem, Ray.

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