Key performance indications (KPIs) are essential drivers for any B2B marketing campaign. They help you determine how your business is performing against your set goals. In fact, KPIs can have a direct impact on your overall business goals.
KPIs however, are critical for another reason – they make it easy for CMOs to communicate their organization’s mission and focus to key stakeholders vis-à-vis the company’s marketing efforts.
Every business functions within specific financial limits. These limits determine how much a B2B company can spend on achieving its marketing goals. It is equally important to identify which campaigns are delivering desired results and which campaigns you need to drop or tweak if you want the most from your marketing spend.
One of the most effective ways to track and monitor an organization’s marketing spend are via B2B marketing KPIs.
Often, businesses can lose sight of their big-picture goals. KPIs can help shape overall business objectives by serving as a benchmark on achieving set goals while also helping identity further scope for improvement.
B2B marketers can use KPIs to shape future campaigns, to determine their team’s impact on revenue and to both plan and justify budgets, among other tasks.
Selecting the Right B2B Marketing KPIs
80% of CEOs don’t trust the work done by marketers. For this reason, most CMOs are under immense pressure to establish their credibility and to constantly justify marketing spend to CEOs or their board of directors.
However, with the right set of KPIs a CMO can build credibility, while also effectively display how marketing is impacting the business bottom line.
The volume of data that B2B organizations generate is simply enormous. Which makes the task of selecting the right metrics and indicators all that more challenging. In addition to selecting the right set of B2B marketing KPIs, CMOs also need to ensure that their selected KPIs align closely with the overall business goals.
So, the right B2B marketing KPIs can further your corporate performance and overall business goals. But if you select the wrong KPIs, then you will end up wasting time, effort, and resources on performance indicators that have either little or no positive impact on your business goals.
Top 11 B2B Marketing KPIs Every CMO Should Keep a Track Of
An organization’s business goals determine its own set of KPIs to track. However, here are eleven top KPIs which most CMOs would definitely want to track closely.
Sales is one the most important KPIs for a CMO to track. However, measuring sales by simply focusing on the bottom line is not enough. And if are going to look at sales in the context of measuring revenue generation on a periodic basis – which could be on a weekly, monthly, quarterly, or yearly basis – again it will not give you the correct picture with respect to performance of your immediate and long term business goals.
It is important to remember that revenue and performance are two separate aspects of B2B marketing. Hence they need to be looked at separately.
4 Metrics of Sales that you should track include:
- Volume of sales.
- Customer satisfaction.
- Cost of acquiring a sale.
- Margin accomplished.
2. Number of Leads
The driver for B2B sales are leads – higher the number of leads in your sales pipeline, greater are the opportunities for conversions and sales. However, leads carry different value in terms of conversion. Meaning not all leads will convert. For this reason, you need to qualify your leads accordingly.
Marketing qualified leads (MQL) are leads that meet specific requirements that automatically qualify them to be pursued by marketing. A poignant example of such a lead is a visitor to your B2B business website who is interested in consuming/downloading your content or has filled out a web form on your site.
Sales qualified leads (SQL) are leads that have cleared the engagement process and are ready for conversion.
If you find that the number of MQLs are low, it could be because your marketing content is too generic or the ads that you are running are not specific or unique to what you have to offer. Hence the leads that you are generating might be either low quality or non-qualified leads.
On the other hand, a drop in SQLs could indicate that your sales and marketing objectives are fragmented or poorly aligned with either each other.
3. Cost of Customer Acquisition
The cost of customer acquisition is calculated as the amount a business has to spend in order to convert a customer to make a purchase. Tracking this metric allows B2B organizations to identify how this cost can be further reduced in order to make the conversion a profitable asset for the business.
A simple formula to calculate cost to acquire a customer is done in the following manner:
Total cost to acquire new customers / number of customers acquired for a specific amount of money in a given period of time
So, for example, if you acquired 100 customers in a month for a total marketing expense of $200, your cost of customer acquisition is $20.
4. Conversion Rates
It is important to look at conversion rates if you want to understand the performance or results of your marketing efforts.
Having detailed understanding of your leads to MQL conversion rates as well as detailed data on conversion rate of MQL to SQL allows you to identify problem areas or even to pinpoint a potential pain point in your conversion cycle.
A lack of this data, however, creates ambiguity and can lead to a blame game between your marketing and sales.
5. Cost Per Lead
Focusing on the number of MQLs and SQLs is only a portion of the whole picture. What you want is to understand and see the effectiveness of your marketing campaigns. And for this you need to look at the cost per MQL and SQL.
Now if you find that these costs keep increasing for a given period of time, say for each quarter, then you might have to consider increasing your budget allocation in this area.
If the budget increase brings in the desired results, then it becomes easier for the CMO to explain the budgetary allocation for this purpose to concerned stakeholders. While deciding how much to invest for each SQL, you will have to also consider the lifetime value of the customer.
The marketing sourced customer’s ratio is a critical KPI as it allows measuring of the percentage of new customers who signed up due to the company’s marketing efforts.
Obviously if your marketing efforts are pulling in a substantial percentage of customers then it indicates that you are moving in the right direction with all your marketing efforts.
For a CMO, this is a fantastic ratio to build credibility and to justify the marketing spend. If, however, the marketing sourced customer’s ration is low, then you will need to quickly figure out what’s going wrong and reevaluate the marketing strategy.
Similar to the marketing sourced customer’s ratio is the marketing influenced customer’s ratio.
While marketing sourced customer’s ratio gives you the percentage of customers from marketing specifically, the marketing influenced customer’s ratio, allows you to measure the percentage of customers who made a buying decision because they were influenced by the marketing efforts of the company at various stages of the buyer cycle.
Why is this KPI important for a CMO? Well, for one it allows you to track and display effectively that your marketing efforts are indeed making an impact and in fact are instrumental in helping sales close leads.
7. Customer Lifetime Value
Customer lifetime value is again an important KPI that every CMO should carefully track. By calculating the customer lifetime value of a customer you can measure how much profit a customer brings to your business during the period that they are a customer with your organization.
One of the main reasons why CMOs should track the metric is because moving beyond short term profits (monthly, quarterly etc.), marketing can actually focus on building long-term robust customer relationships.
Of course, as mentioned above, KPIs differ from organization to organization since they are subject to a number of different factors that are detrimental to the marketing success of a particular B2B organization.
Generally, customer lifecycle is the average amount of time a customer stays with your service or offering and can either be measured in months or years – this is subject to the market and business model.
Having said that, the most basic formula to calculate customer lifetime value is the following;
Revenue from customer – cost of acquiring and serving them.
8. Sales Team Response Time
While it is easy to push off sale team response time as a sales KPI, the fact it that both sales and marketing need to track this KPI. The reason for this is simple – organizations are increasingly moving towards aligning their sales and marketing due to multiple overlaps. The most obvious overlap happens during the hand-off stage.
Every point of interaction between prospects and your B2B organization prior to a sale is a critical aspect of your marketing efforts. If, however, sales is slow to respond to customer queries, it not only means a potential sale loss, but does not bode well for your organization’s customer service reputation.
This is something that marketing will have to focus on if you want to keep building on your marketing and brand building efforts.
Consider these few lead response time stats:
- On an average, the first response time of B2B companies to their leads was 42 hours.
- While 37% of companies responded to their leads within an hour, 16% of companies took anywhere between one to 24 hours to respond to leads.
- 24% of companies respond to their leads after 24 hours, while 23% of the companies simply did not bother responding to leads at all!
It is important to note that in a majority of cases, potential leads would have already researched your organization prior to contacting your business. In fact, most would be ready to make a buying decision or are primed for conversion by the time they get in touch you. Furthermore, research from InsideSales.com found that 35% to 50% of sales are obtained by vendors who respond first. (Source)
This just goes to show how important it is to make tracking your sales team response time a critical KPI to boost your marketing efforts.
9. Email Marketing Performance
If you are wondering why you should be tracking email marketing performance, consider these stats:
- 93% of B2B marketers use email as a medium to distribute their content. (Source)
- 80% of business professionals are of the opinion that email marketing helps in boosting customer retention. (Source)
- 59% of marketers consider email marketing as their biggest return on investment (ROI) option. (Source)
Given how email marketing is a critical B2B marketing strategy, CMOs need to make this an important KPI to track. Some of the critical metrics to track in order to gauge the performance of your email marketing efforts include the following:
- Open rate.
- Rate of deliver.
- Click-through rate.
- Unsubscribe rate.
- Rate of conversions.
- Number of shares or forwards.
10. Website Traffic
Visitors to your B2B business site are all potential leads who can be converted into customers. Tracking your website traffic provides you with insight into a number of areas including:
- Who your visitors are?
- Where they are coming from – or how did they land on your site.
- What they want from your business.
If you know the answers to all three questions, it becomes easier to craft messages and customize your marketing to address their pain points or pique their interest enough to not only ensure better brand engagement experience, but also to drive sales.
Continuing with the above point of tracking your website traffic, you also need to measure your website traffic to website lead ratio. This again can provide you with insight into critical areas such as:
- The quality of visitors to your website – are they your target audience or general public with little or no interest in what you have to offer.
- If you know your website’s conversion rate, then it provides insight into how well your marketing aligns with the expectations of your target audience.
11. Social Media Reach and Social Engagement
Social media has a definite role to play in B2B marketing. In fact, 75% of B2B buyers and 84% of C-level or vice-president level executives use social media to make purchasing decisions.
However, unlike B2C marketing, where social focuses on brand engagement, in B2B marketing, the goal is to interact with buyers on social in a way that pushes them to engage with a company to find a solution to their problem.
Tracking social KPIs such as reach, exposure, volume, comments among others, can help marketing identify specific areas of focus which in turn makes it easy to allocate time and resources in a manner that can bring in desired results.
While each of the above KPIs are important to business performance and bottom line and as such they should be tracked by CMOs, it is equally important to optimize how the data will be presented to the board and other stakeholders.
Consider the following:
- While presenting your KPIs prioritize insights and clearly highlight their impact on the business bottom line.
- It is best to couple the figures and percentages with data insights and strategies that can boost the approach you have taken or want to take.
- Provide a run-down of strategies that were most effective and how they helped move the business towards its overall performance and revenue goals.
- While talking about strategies that did not deliver on intended goals, make sure you also highlight lessons learnt and the changes that you plan to make as a consequence of those failures to achieve the organization’s business goals.
While the pressure of answering to a board and concerned stakeholders can be immense for any CMO, by tracking and monitoring key metrics and KPIs, you can give your marketing performance a boost and help it align with your company’s overall business goals.