How do you balance demand gen targets against sales quotas and company-wide revenue goals?

I always think about demand generation's contribution to company revenue. For example, I think about marketing contributing to inbound, new logo pipeline + ARR by segment. Marketing should contribute more to an SMB segment (80%+), and less for an Enterprise or Strategic segment (~30%). All marketing demand generation goals from SQL up to MQL and lead should be derived directly from the revenue goal. Ideally, that revenue goal is built from a shared model across finance, RevOps, sales and marketing, so everyone's aligned on who's contributing what and the key assumptions to get there. For example, if marketing's responsible for 50% of a $1M target, that's $500K in ARR. Assume you need a pipeline coverage ratio of 4x, so you need to generate $2M in pipeline. Using your average deal size of $25, that means you need to generate 80 opportunities. Your Lead, MQL and SAL targets should tie to get to that 80 opportunity target.

Sales quota is a slightly different story as most of the time finance plans have some kind of % quota attainment built in, which accounts for ramp, attrition and promotions - so I'd be careful about signing up for a marketing target that scales with the number of quota carriers, UNLESS your marketing budget or resourcing scales along with that.

When it comes down to it, revenue goals are what demand generation targets should be based off.

When it comes to sales quotas, it's important to keep tabs on them because it signals the health of the sales organization which demand generation should always have a pulse on.

When there is a territory or AE that is struggling to hit quota, demand generation can use this to start a conversation and see where they need support. Depending on how the team is structured, you'll often find trends. For example, if territories are split based off region - maybe the struggling West Coast reps are working with a particular industry (like healthcare) which may have a much smaller average deal size compared to the other East Coast region that's main industry is finance.

Or maybe an AE in Texas comes up against the oil and gas industry constantly, but marketing don't have that within our demand generation strategy - should we? Maybe! Maybe not, but there usually is always some way to help support - fund a oil and gas face-to-face event, run a industry specific webinar. It may be off strategy, so it could be labeled as a low lift experiment to test a new industry with the bonus being that is also support the AE. It's snippets like that which are super important to learn from sales conversations because they drive a true partnership between the two areas of the org.

I look at historical conversion rates or make an educated assumption on conversion rates, and then I look at my demand generation budget and back into the expected performance from that budget. I then compare that to the total sales or business Target for the year. I socialize that percentage as the marketing generated revenue number. If the company wants me to contribute a higher percentage to the total revenue then I need more budget. And that's really clear based on the model