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Can the number of MQLs be the core metric for a startup?

Just briefly about what we do. We’re an an early-stage company, targeting small and medium companies. We’re in software development market, connecting AI Chatbot Developers with businesses. Our business model is “marketplace”, we charge developers some commission.

We have pretty standard sales funnel, the simplified version looks like this:

Visitors > MQL > SQL > Customers.

There are two issues with what we do:

  1. It takes from a few weeks to a few month to win a deal;
  2. The market is new and we spend lots of time educating the potential customers, in hope one dat they will come back or recommend us.

So, here is the question.

What should we track? It’s too early to track revenue, because of the issues I mentioned. Should it be MQLs, SQLs, the number of meetings?

Answer 12459

Taken individually, visitors, MQLs, SQLs, meetings, etc. aren’t great management metrics in my experience because they readily turn into vanity metrics. As in “Yay, we’ve 1k SQLs per month!” when the sorrier reality is that a handful of higher quality SQLs could earn you the same amount or more with a lot less efforts.

It’s better IMO to optimize in order to get the best bang for your buck: track how much effort you need to pour into acquiring (and retaining) revenue, and look at what you can do to minimize that effort. The key is spotting channels and their associated customer types that break even or better.

You might find that some channels bring in MQLs but result in SQLs that actually are barely worth the effort to qualify or close them. Other channels might bring fewer SQLs that don’t require much effort to close or are juicy enough that it’s well worth it.

Put another way, the key is tracking your CAC, ideally slice and diced by source/channel, and ideally slice and diced further by segmenting customer types (revenue often is a good way to do that; for a SaaS, also mind the potential retention costs).

That’s the theory. In practice it’s not easy to do right, so you’ll want to use proxies in the meanwhile. Time spent on acquiring and closing leads by source/channel for instance, with an eye on revenue and retention costs. It’s not perfect, in that it doesn’t factor time spent on efforts that might feed into multiple channels, but it’s good enough. Whichever proxy you pick, keep in mind that the way to shed light on any of this is to segment, because leads are not all created equal.

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