Leads. Where are the leads? I need more leads!
Does that plea ring a bell?
As B2B marketers, this call is all too familiar. It resonates because leads are the fuel behind our marketing and sales engine. They drive company growth, elevate market positioning, and ensure we have sustainable revenue streams.
But with so much noise and data to consider, how can you ensure that you are tracking the right lead generation metrics? As busy executives, we need to measure what matters. It’s about tracking metrics that align with our objectives, buyer personas, sales processes, and company goals and then incorporating them into a comprehensive dashboard for our sales and marketing teams.
So, what are the essential metrics to track? When we start this process with our clients at Marsden Marketing, we typically advise tracking and incorporating these metrics into their dashboards for lead generation success.
Quality of leads fast surpasses quantity of leads in determining lead generation success. So, how can you ensure the quality of leads? It starts with alignment between marketing and sales that is cemented on a solid service-level agreement.
Here’s why. B2B leads are often not sales-ready when first generated. They must be nurtured and engaged before throwing them over the fence to sales. After all, the quality of leads is what directly influences sales outcomes.
Leads that are engaged, as determined by lead scoring, allow for better use of resources, ensuring that sales efforts are directed towards the highest potential for conversion. This streamlines the sales process and also enhances the effectiveness of marketing strategies.
I need more convincing. Consider this stat from Salesforce’s latest report: sales reps spend 66% of their time on non-selling activities, including the pursuit of leads that are unlikely to convert. In the wise words of Kimberly “Sweet Brown” Wilkins, “Ain't nobody got time for that.”
The focus needs to be on generating the right leads that are interested and ready to engage because better-quality leads equal lower acquisition costs. Read: Shame on you for poor-quality leads.
Lead conversion rate is a metric that measures the percentage of leads that convert into customers. It shows that your efforts are resulting in measurable outcomes and allows you to determine which strategies are the most cost-effective based on data and not intuition.
Understanding your lead conversion rate is essential for making informed decisions. Whether that is where to allocate resources for maximum impact, what channels are performing well, or optimizing nurturing strategies — more than likely, it’s all the above.
Measuring lead conversion rates also provides benchmarks for your business’s performance. It allows you to set realistic goals based on historical data compared to industry averages.
Examining which leads convert and how quickly gives you more insights into your prospects and is invaluable for refining buyer personas and personalizing marketing messages to resonate better in the marketplace. Read How To Connect With Your B2B Audience.
Lead conversion rate is not just about tracking. It’s also about gaining a deep understanding of the effectiveness of your marketing and sales efforts. Use it as a data-driven guide for better decision-making, leading to improvements in business performance and revenue growth.
Cost matters. Every dollar counts. But every company should determine their cost tolerance per channel because there are different parameters to factor in. For instance, if your average customer lifetime revenue is high, you’ll be more willing to have a higher CPL.
If your sales are complex and take longer to close, higher CPLs may also be acceptable. And lower CPLs are not necessarily the best if they result in lower-quality leads that don’t convert to customers.
By pairing CPL data with lead value data, you can assess the correlation between CPL and lead quality. And here’s the kicker: your CPL for each channel will be different.
Just because one channel costs less does not mean you should put your entire marketing budget into it. Marketers are often tempted to focus their investment on limited channels rather than spreading their budget too thin. But, Gartner found this isn’t the best strategy and a broader multichannel marketing mix is necessary to build a pipeline.
Here’s what to do instead.
Use your buyer persona research to determine what channels your prospects use. Remember that they won’t all be in the same place, so you need to use different channels.
Look at industry benchmarks but set your own based on historical data. Take a holistic approach to determining your optimal CPL that considers your sales cycle, lead quality, customer lifetime value, and marketing channel performance.
Ensure your marketing strategies are aligned with your overall goals, such as market expansion, brand awareness, and new segments. This will ensure that your marketing investments are not only cost-effective but also aligned with your broader business objectives.
While CPL focuses on your lead generation efforts, CAC encompasses the entire process of turning those leads into customers. CPC is critical for optimizing your various marketing strategies and budget allocations. It’s also helpful in understanding marketing and sales efficiency and can help guide decisions related to:
Measuring CAC lets you understand the total cost of turning leads into paying customers. It helps ensure the business is profitable and is a valuable way to measure the effectiveness of your customer acquisition strategy.
Savvy marketers will look at the ratio of Customer Lifetime Value to CAC to understand a customer’s true value and marketing’s impact. As we consider revenue generation overall, read here to see why CAC is an important component in RevOps.
We all want to increase revenue, and new sales are a key component. Sales velocity measures how quickly leads move through the pipeline and convert into revenue. It ultimately impacts how fast your revenue grows.
By closing deals quicker, companies can scale faster. So why should marketers keep an eye on this metric?
Because optimizing sales velocity requires improving the lead qualification process and ensuring that marketing efforts are generating high-quality leads that are more likely to convert quickly.
Lead scoring and qualification again play a role. As does leveraging customer testimonials and social proof. Additionally, analyzing sales velocity helps identify where leads are getting stuck in the funnel. Marketing can create targeted content to address those areas of prospect concern and accelerate the buyer journey.
Sales velocity is calculated by multiplying the number of opportunities in the pipeline by the average deal value and the win rate, then dividing this total by the length of the sales cycle (not the easiest to measure). It’s not a perfect metric, but it combines key metrics from marketing and sales into one calculation.
From marketing hand-off to sales, you can gauge the effectiveness of your efforts to turn all opportunities into revenue.
While sales velocity is a composite metric that measures the rate at which a business generates revenue from its entire sales pipeline, lead to customer conversion rate measures the time elapsed from when an individual lead first enters the sales pipeline to when they make a purchase.
The significance of tracking leads to customer conversion time lies in its ability to highlight inefficiencies or bottlenecks in the sales process. Longer conversion times indicate potential issues in how leads are nurtured, followed up on, or handed off between teams.
By analyzing this metric, you can better optimize the buyer’s journey by identifying areas to reduce friction and areas to improve conversion rates at specific stages of the sales funnel.
Knowing which activities drive the most value makes it easier to allocate and invest budgets in high-performing channels while reducing spend on those with lower returns. It allows you to be agile and adapt to changing market conditions.
In theory, you are allocating resources effectively by understanding which marketing channels and campaigns are driving the most valuable leads. It sounds simple, right? But the challenge is in determining what attribution model to adopt.
The three most discussed lead attribution frameworks are:
There are other models (W-Shaped, Full Path, and Algorithmic Attributions), but they are more complicated. To determine the best attribution model for your organization, you need to ensure the model aligns with your company’s marketing objectives, customer journey complexities, and, very importantly, what data analytics capabilities you have.
No attribution model is perfect, and your approach may evolve as your strategies change. Be flexible, test different models, and see which provides the most actionable insights.
Understanding the rate at which leads drop out of the sales funnel or disengage before converting is what lead churn measures. It offers insights into the health and effectiveness of the marketing funnel, focusing on prospects who have shown interest but have yet to make a purchase.
Your marketing channels work hard to turn prospects into customers. You want to be aware of the point at which they disengage. You can address specific issues, fine-tune your strategies, and improve lead retention and conversion rates by pinpointing where leads are churning.
It could be your marketing messages need refinement, or your lead quality is poor, or, hopefully not, that leads aren’t being followed up with in a timely manner.
By identifying which channels and campaigns have the highest lead churn rates, more informed decisions can be made about where to allocate the marketing budget. Redirecting resources away from underperforming channels to those with better lead retention and conversion rates can significantly improve marketing ROI.
This metric is different from the well-established customer churn rate. Given that the churn rate measures existing customers ending their relationship with you, it’s one we are confident all executives have an eye on.
Lost customers equate to lost revenue, and acquiring new customers can cost five times more than retaining existing customers. Understanding both is crucial for a complete view of a business’s performance, from attracting and converting leads to retaining customers long-term.
It’s metric number nine, and this one almost seems like a “duh.” But these metrics promote marketing and sales alignment on what constitutes a qualified lead. And we all know it starts with vocabulary.
By agreeing on the criteria that define MQLs and SQLs, both teams can work toward the shared goal of driving revenue growth. Marketing is accountable for delivering a sufficient volume of high-quality leads, and sales is responsible for converting the leads into customers.
It’s important to put that agreement to paper and develop a formal SLA that has been determined collaboratively and not top-down. The SLA should define roles and expectations (for instance, how quickly sales will follow up on a lead) and establish measurable goals and standards.
Why is alignment important? Because it is more money in everyone’s pocket. Gartner found that aligned teams are three times more likely to exceed new customer acquisition targets. And, according to Forrester research, highly aligned companies grow 19% faster and are 15% more profitable.
These are fundamental metrics and key to driving strategic marketing effectiveness, sales efficiency, and overall business growth.
This is the king of metrics and the hardest one of all. All executives are competing for budgets, and without the ability to show how expenditures contribute to the bottom line, budgets and jobs might be slashed.
Proving a positive ROI showcases the direct link between marketing activities and revenue generation. Demonstrating a strong ROI enhances credibility, and credibility is crucial for ensuring marketing is considered a strategic partner in driving business growth and not viewed as a cost center.
Above, we outlined various data-driven metrics that contribute to ROI and even pointed out some marketing attribution models. But here are two additional ways that ROI can be effectively demonstrated.
Producing ROI requires setting clear goals, employing sophisticated analytics, optimizing based on data, and communicating effectively.
These metrics aren’t just numbers on a dashboard. They represent the heart of our marketing strategies, the pulse of our sales efforts, and the blueprint for sustainable growth.
It sounds mushy, but it’s true.
While it’s tempting to try to track every metric, it’s important to measure what matters. Our marketing world continues to change at a fast rate, but if we are grounded in data, our path will be clearer.
Refining your marketing dashboard is an ongoing process. It requires:
These metrics should be a guide. But stay creative and innovative. B2B marketing continues to evolve, and so should our strategies and tools. By focusing on quality over quantity, leveraging data to drive decisions, and staying nimble, we can achieve (and prove marketing contributed to) great results.
We started with leads, and more leads, and even more leads, but in the end, it’s about building a marketing engine that fuels sustained growth. Marsden Marketing can be your partner on this journey, ready to talk?