How do you know if your marketing campaign is giving you optimal results? Are you tracking performance and if so, what data are you looking at?
Statistics show that 74% of B2B marketers set goals for their campaigns but only 3% achieve their objectives. Most often, success is measured in the form of total sales. And while such data provides important information, it doesn’t paint a complete picture.
Essential marketing metrics assess performance, return on investment, and long-term effectiveness. If you’re not tracking the right key performance indicators (KPIs), you’re missing out on advertising opportunities and you’re probably spending some money on activities that aren’t optimal.
If you don’t know what marketing metrics are and how to track the right ones, the time has come to gain some insight. With a plethora of tracking and reporting tools out there, you really have no excuse!
What Are Marketing Metrics?
B2B marketing metrics, or KPIs, are measurable values that demonstrate the effectiveness of a campaign. In essence, this is a measure of business campaigns and an evaluation of the organization’s ability to reach its promotional targets.
Some B2B marketers commit the grave mistake of tracking B2C campaign metrics or relying on generic measures. By doing so, they can never obtain a comprehensive overview of the big picture.
Marketing metrics differ from one organization to another and from campaign to campaign. Choosing the right metrics is heavily dependent on the campaign’s objectives and the most effective ways to quantify them.
Marketing Metrics That Matter: How Are They Defined?
When speaking of key marketing metrics, it’s important to differentiate between essential KPIs and vanity metrics.
The term vanity metric refers to many things you can easily measure but that don’t really matter. Vanity metrics are generic. They can be manipulated and are fickle. Many performance tracking platforms are based on vanity metrics because they are fairly easy to track.
The problem with vanity metrics is that you can make a wrong decision on the basis of such information.
Website visits, for example, is a vanity metric. It doesn’t really matter how many people visit your B2B website. What matters is how many of these visitors convert and what the cost of a single client acquisition is.
This is the main difference between vanity and actionable metrics. Actionable metrics help your business and guide your promotional attempts in the right direction. By tracking actionable metrics, you can reduce the cost of promotion, enhance targeting, and simplify customer acquisition.
5 Key B2B Marketing Metrics
What are good metrics to measure marketing productivity? As already mentioned, key marketing metrics vary. Still, some KPIs provide a lot of valuable information and can form the backbone of performance tracking.
If you need information on some KPIs that you can get started with when assessing your B2B campaigns, here are five metrics to track:
- Cost Per Lead (CPL)
Cost per lead (CPL) is a key metric used to measure the cost effectiveness of a marketing campaign. CPL varies from one channel to another and by tracking this KPI, you can determine where you’re going to place most of your advertising budget.
CPL is calculated using a simple formula:
Cost per lead = Total cost of campaign / Number of leads generated
If you spend 1,000 dollars on a campaign and you acquire 100 leads, the cost per lead would be 10 dollars. If this amount is lower than the cost of your B2B product or service, you’ve done a good job when it comes to setting up the campaign.
- Qualified Leads Rate
Also known as marketing qualified leads (MQL), this metric refers to leads that are qualified by predetermined criteria to become customers.
Usually, these are the prospects that engage with a campaign’s content, make an inquiry, or provide valuable personal data (fill out a questionnaire, subscribe, etc.). As you can see, determining how you’re going to define leads as qualified is very important.
- Customer Acquisition Cost (CAC)
CAC is a measure of the total amount you have to spend on acquiring a new client.
This metric differs from CPL. CPL tracks the amount required to generate a lead. The lead, however, is not necessarily going to turn into a customer.
The formula used to calculate CAC is:
Customer acquisition cost = Total cost of sales and marketing / Number of new customers acquired
As such, CAC often paints a more comprehensive financial picture than CPL. For most B2B organizations, it’s essential to track both of these KPIs to have a realistic understanding of promotional spending effectiveness and return on investment.
- Customer Lifetime Value
What’s the gross profit that your B2B organization generates from a single customer? You can answer the question by measuring customer lifetime value (CLV).
The formula for calculating CLV is as follows:
CLV = (Annual revenue per customer x Customer lifespan in years) – CAC
CLV is a long-term metric that gives you a deeper look at promotional campaigns and their effectiveness. Based on this information, you can set reasonable lifetime value goals and tweak marketing to make such milestones easier to accomplish.
- Return on Marketing Investment (ROI)
In essence, this metric shows a marketing campaign’s ability to generate revenue for the organization.
The simplest way to calculate the marketing ROI is the following:
Marketing ROI = (Gross profit for units/Services sold – Marketing budget) / Marketing investment
In some instances, marketers substitute gross profit with CLV.
The results of a marketing campaign should always contribute to the growth of the company. Marketing ROI, in combination with the other four key marketing metrics, helps you assess if this is happening.
Begin with the End in Mind
Obviously, the five KPIs mentioned in this guide are just the beginning. Setting the right goals for each of your campaigns should always be the first step toward tracking effectiveness. Once you know what you want to accomplish, you can select the metrics that are most reflective of this goal.
As a final recommendation remember the following: The right essential marketing metrics have to be SMART. This acronym stands for specific, measurable, achievable, relevant, and time bound. Any KPI that meets the SMART requirement is going to provide valuable information about the execution and results of the respective campaign.
Over to you now.
Tell us which B2B marketing metrics you measure regularly for your marketing efforts.