10 Key B2B Marketing KPIs To Keep a Close Eye On
February 25, 2021 10 min. read
Get your first leads today and turn them into closed deals!
Unfortunately, not all marketing campaigns generate results. But how exactly will you know which activities are paying off and which are not?
When you have clearly defined Key Performance Indicators (KPIs), metrics that measure the effectiveness of marketing activities, you will know which activities work and which don’t, so that you can either double down on them, adjust or remove them completely.
On top of that, having a number that shows the value of marketing campaigns can prove the effectiveness of marketing efforts.
Not sure which marketing metrics to keep an eye on? In this article we will guide you through the 10 most important marketing KPIs your B2B company should be tracking.
1. Return on Investment in Marketing
If you spend money on the activity, you should know if this activity generates money or not, right? This is what Return on Investment (ROI) shows you.
It compares the amount of money you spent on marketing and the amount of money you gain from it. That’s why ROI is an important metric that every company should measure.
The basic formula for calculating marketing ROI is:
(Sales Growth – Marketing Cost) / Marketing Cost = Marketing ROI
Today marketers more often use the revenue to marketing cost ratio because it is easy to understand and interpret. Typically, it represents how much money is generated for every dollar spent on marketing.
For example, if one dollar spent on marketing brought five dollars in sales, the ratio is 5:1. This ratio is considered to be quite strong; anything below 2:1 is not profitable.
But keep in mind that ratios depend on the cost structure and it will vary from business to business.
2. Customer Acquisition Cost
Customers are everything and you simply can’t make money without them, can you? That’s why to acquire them, you invest in marketing.
Customer Acquisition Cost (CAC) gives you an idea of how expensive a single customer is to acquire.
To calculate CAC you need to divide your total marketing expenses by the number of newly generated customers over a specific time period:
Marketing Cost / Number of New Customers = CAC
The lower the number is, the better. A high CAC might indicate one of two things: that your marketing efforts are ineffective, or that your sales team is performing poorly. Tracking this metric over time might help you to see the improvement dynamics.
Calculating CAC by campaign is also a great idea. That way you can prioritize projects that have lower CAC.
3. Customer Lifetime Value
Another extremely important B2B marketing KPI is Customer Lifetime Value (CLV). CLV evaluates how much profit each customer brings to your business.
Knowing your CLV is vital because it helps you to:
• decide how much you can spend to acquire a new customer
• understand which customers bring greater profit so you can focus on them.
Additionally, you can use data from customers with the highest CLV to create Ideal Customer Profiles and focus your efforts on finding more of them.
A core formula to calculate CLV is:
The Annual Profit from the Customer x Number of Years – CAC = CLV.
The higher the number, the greater the profit. A question worth asking yourself is “How do I offer more value so that customers stay longer?”
4. Traffic-to-Lead Ratio
Now that every business is online, it’s crucial to know whether your prospects turn into leads when they reach your website.
The percentage of website visitors turning into actual leads is the Traffic-to-Lead Ratio. The formula is simple:
Number of Website Visits / Number of Leads = Traffic-to-Lead Ratio
If you are getting a lot of traffic to your website but visitors are not converting into leads, there’s something to consider:
• there’s an obvious misalignment between what they were clicking on and what they found
• your content didn’t answer their question
• or maybe there was simply no Call-to-Action (CTA) and the user left.
Tracking your Traffic-to-Lead Ratio regularly will help you to understand which type of pages and content convert and which don’t and should be worked on.
5. Lead-to-Close Conversion Ratio
More often than not, marketers are focused on the number of leads they generate. But what matters is their quality. Because if at the end of the day they don’t buy from you, then what’s the point?
Lead-to-Close Conversion Ratio (CVR), the percentage of leads that become your customers, will provide you with valuable insights about which marketing campaigns convert leads into customers and which do not. With this information at hand, you can make changes and prioritize your efforts.
To calculate CVR:
Number of Sales / Number of Leads = Lead-to-Close Conversion Ratio
6. Marketing Originated Customers
At its best, all customers should be generated by marketing efforts. Unfortunately, it is not always the case. And if you’re still struggling to prove the effectiveness of marketing, you better check out this metric — Marketing Originated Customers Percentage.
It shows the percentage of customers generated through marketing efforts over a specific period. You can easily calculate it if you track lead sources:
Marketing Leads / Total New Customers =
Marketing Originated Customers Percentage
Obviously, the higher the percentage, the better. This metric clearly shows how much business grew thanks to marketing.
7. Marketing Influenced Customers
Even if leads were not generated by marketing, there are ways for marketing to turn non-marketing originated leads into ready-to-buy customers — through thoughtful content and nurturing.
A metric that shows the percentage of leads that turned into customers through marketing efforts is calculated like this:
Customers that Interacted with Marketing / Total New Сustomers = Marketing Influenced Customers
This metric proves the importance of content, email campaigns, and other initiatives that help customers to move through the funnel and to the purchase.
Now let’s focus on more campaign specific KPIs, that will help you to measure the actual effectiveness of a certain digital marketing campaign. Click-through-Rate (CTR), for example.
CTR measures the percentage of users that click on the ad published online:
Number of Users that Clicked the Ad / Number of Times the Ad was Shown = CTR
Indicating the number of times users click on an advertisement compared to the number of ad views, CTR helps you to understand if your ad is actually converting or not. So that you can track the performance of each campaign and use the results for future adjustments.
Another metric that will help you to measure the effectiveness of a digital marketing campaign is Cost-per-Action (CPA).
It measures the cost of acquiring a customer through a specific action that you decide on before the start of the campaign. An email subscription, downloading a document, or requesting a demo — anything that you consider as a relevant step to push a user closer to a purchase.
CPA helps you to evaluate the effectiveness of a specific action and ensure that you are investing in the right digital channels. It is also quite simple to calculate:
Cost of Advertising / Number of Conversions = CPA
Looking for a metric that will help you to evaluate the effectiveness of your online campaign in the early stages? Cost-per-Click (CPC) is the one for you!
CPC shows the number of visitors sent to your website from an online advertising campaign. Basically, you pay each time someone clicks on your ad:
Cost of Advertising / Number of Clicks = CPC
This metric can also help you to understand what changes can be made to your online marketing campaign. Because obviously, you can see if it resonates with your audience or not. Maybe there’s something wrong with the message you are delivering?
If you are looking for solutions to smoothly run your online campaigns, Signum.ai tools turn out to be quite useful: AI Content Generation platform will generate highly-converting ad headlines in seconds and Demand Generation Platform will find target accounts that will convert into leads.
Only by tracking the KPIs can you really get a good grip on where your marketing efforts are best rewarded and having a measurable outcome allows you to prove the importance of various marketing initiatives.
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