Sales and Marketing Alignment: Where the Handoff Breaks Down

The Handoff Shell Game is a pattern at the marketing-to-sales handoff. Deals are demoted back into a lead stage, and the time deals spend in a handoff stage deviates markedly from the target value, the first SLA value of that stage. Demotions and time spent are a reason to ask about causes; they do not prove the friction.

The pipeline grows at the front and little arrives at the back

Marketing reports more leads handed over than in the previous quarter. Sales reports that too few of them turn into meetings and proposals. Both statements can be true at once.

For the leadership team this becomes a question that no meeting settles. Is marketing delivering leads that do not fit? Or is sales leaving good leads untouched? Each side has its own count and its own explanation.

The usual pipeline report shows how many leads and deals are open. The pipeline report does not show how many deals have already been handed back once, or how long leads stay at the handoff.

The report and the measurement describe the same pipeline, but not the same thing. The report shows a stock. The measurement shows how many deals were demoted and how long leads stay in a handoff stage.

Funnel Economics calls this situation the Handoff Shell Game. In a shell game, something is moved around until the observer loses track of where it is. At the handoff, the things in question are deals: demoted, or staying in a handoff stage markedly longer than its target value allows. Whoever counts only the stock does not see how long it has been there or how often it was handed back.

The name describes what happens to the number. The name does not accuse either team of intent.

Sales and marketing alignment therefore starts with a shared report at the handoff.

Why do marketing and sales count differently?

A sales process consists of stages: measurable steps from first contact to close. Stages make sure that “a deal in progress” means the same thing to everyone involved.

The main reason for this structure is accountability at the handoff. Without shared definitions, marketing hands over leads by its own standard. Sales considers the same leads not ready yet.

Four classes of stages lie before the opportunity: lead, MQL, SQL and SAL. Three of them – MQL, SQL and SAL – are handoffs. Two sales roles work at them. The SDR (sales development representative) accepts leads and books meetings. The AE (account executive) takes over qualified leads. A conspicuous dwell time raises a different question in each handoff stage.

The table and the readings in this article follow an example with the sequence MQL, SAL, SQL. In which order a company runs these stages is its own decision. Which role works at a handoff stage depends on the stage’s position in the sequence, not on its name: where the order differs, the roles move with it.

The questions in the table say which team is meant at a handoff stage. They are not a finding: they are asked only once something has been measured at that stage. What a company calls the stages is its own decision. Leads in these stages are demand that is not yet an opportunity.

Two things stand out at the handoff. A deal is demoted: it moves from the AE back into a lead stage, for instance because, in the AE’s view, it was not sufficiently qualified. Or the time spent in a handoff stage deviates markedly from its target value.

Demotions and a long time spent as MQL can point to the same thing: the two sides of the handoff apply different standards. Whether that is so is a question about causes and not yet the finding. As long as nobody counts the cases, one assessment stands against another.

How does the Handoff Shell Game show up in the data?

Two measurements belong to the Handoff Shell Game, in this order: the demotions, and the time spent per handoff stage against its target value. The share by health band is not one of them; it follows further down, with its caveat.

The demotions

Every stage change is recorded individually. Whether a step is a demotion is decided by the order of stages your company has set. If a deal moves back to a stage that comes earlier in that order, that is a demotion. The first entry into the funnel is not a demotion.

Every step back in that order counts as a demotion, including one between two opportunity stages. The Handoff Shell Game reads the demotions at the handoff: the steps back into a lead stage.

Demotions at the handoff are a recorded event, not a state. They show how often a deal passes the interface between SDR and AE backwards; friction and differing views of the two roles can lie behind it.

Demotions are read against your own history: per period, with the case count per period.

How long do leads stay in a handoff stage?

The yardstick for time spent is the stage’s target value. Every open stage carries two SLA values (service level agreement), a target value and an upper limit, which the organisation enters itself. The target value is the first SLA value.

BPV, the deviation from the SLA per stage, measures, per stage, by what percentage the actual time opportunities spend in the stage deviates from the stage’s SLA. The comparison is with the target value, not with the upper limit.

First it is checked whether the stored SLA value separates at all; only then is the deviation read. Lead stages carry SLA values too; whether they are filled is configuration of the organisation.

What the share by health band says, and what it does not

The two SLA values also produce SLA Health. SLA Health classifies each open opportunity as HEALTHY, DELAYED or STALLED. SLA Health compares the opportunity's total age in the funnel with the two SLA values the organisation sets per stage and opportunity type.

An opportunity type is a kind of business, for example new business or expansion of the installed base. HEALTHY runs up to the first SLA value of the stage, DELAYED up to the second, and STALLED lies beyond it.

The classification also applies to leads at the handoff, before they become an opportunity. A stage the organisation’s configuration does not map gets no band: its deals count as unassigned and belong to neither HEALTHY, DELAYED nor STALLED.

Per handoff stage one can count the deals that passed through it during the period and are DELAYED or STALLED at its end. This share combines two points in time. The deal passed through the stage at some point in the period; the band applies at its end, to the stage the deal stands in then.

The share says how high the total age of these deals is at the end of the period. It says nothing about the handoff itself: the band rests on total age, not on the time spent in this stage. Whoever quotes the share quotes this caveat with it. SLA Health looks at the total age of a lead, BPV at the average time spent in one stage.

How the classification enters the expected value

At the handoff, the count is in leads and days first, not in euros. A lead without an amount is expected before the opportunity and is not a data hygiene problem.

SLA Health measures total age in the funnel. Time spent at the handoff therefore still counts once the lead has become an opportunity.

For the opportunity, the classification enters the expected value. rEFV, the risk-adjusted revenue expectation, weights bEFV by SLA Health, with measured factors per band.

EVL, the distance between bEFV and rEFV, is the distance between the expected value without that weighting and rEFV. EVL is the distance between two expected values, expressed in euros, not a lost amount.

Demotions are an event. Time spent is measured by BPV against the stage’s target value. Neither accuses anybody.

A shared SLA at the interface makes the dispute testable

The starting point is a single agreement: SLA values at the interface that apply to both sides and that both sides can see. For the leadership team that means one shared report at the handoff.

Four steps lead there:

1. Name the handoff stages together: which of your stage names belong to MQL, SAL and SQL.
2. Set the two SLA values for each handoff stage and opportunity type and check them against your own win history.
3. Use one report for marketing and sales, with the demotions and the time spent per handoff stage.
4. Discuss the finding per stage: a stage stands out when demotions have risen against prior periods or time spent lies markedly above target.

Both are a reason to ask about causes, not proof about the handoff itself.

Funnel Economics does not prescribe SLA values. The organisation enters the SLA values itself.

What marketing reads from the report

Marketing sees from the report how many deals come back and how long the leads it hands over stay as MQL. If the time spent as MQL deviates markedly from the target value, that is first a statement about duration and the stored target value. After that the question can be whether the inflow matches the SDRs’ acceptance criteria and by which criteria a lead counts as ready for handover.

Quantity is a different finding. If the inflow of new leads falls over several periods, supply is missing at the source of the funnel. That is a question of quantity, not a question of the handoff.

What sales reads from the report

Sales sees from the report how long accepted leads stay. If the time spent as SAL deviates markedly from the target value, it may be that the SDRs accept the inflow but do not get meetings booked. At SQL it may be that the AEs take over qualified leads but do not turn them into pipeline with an amount. First, though, it is a statement about duration and the stored target value.

Both questions concern a step in the process, not a person. The analysis looks at the dynamics between stages and between departments.

Who keeps the report

The handoff analysis and the demotion analysis belong to the operational diagnostics for the CRO (chief revenue officer) and the RevOps team (revenue operations). How the role works with these measurements is described on the page Funnel Economics for RevOps.

How the Handoff Shell Game differs from related findings

The table separates the Handoff Shell Game from three related findings.

Funnel Calcification, the over-ageing of the whole pipeline, measures the share of open pipeline value in the health bands DELAYED and STALLED against its own history. It does so per opportunity type. The Handoff Shell Game looks at the handoff stages at the top of the funnel: how many deals are demoted and how long leads stay there.

The comparison with market benchmarks lays an external value over your own rate. That rate is a conversion rate at a gate of the lead funnel, such as the SQL gate, with the steps named. A market value is a benchmark with a source and a date, not a measurement of your organisation.