Marketers in B2B should focus on these Demand Generation KPIs. You’ll gain more credibility within your business. As well as see how your Demand Gen campaign has contributed to the business’ growth.
With the right Demand Generation strategy, your company is going to grow – fast! You’ll have plenty of inbound prospects ready to buy. It almost sounds too good to be true.
Demand Generation is much more than raising awareness and interest. It’s about creating content that educates, informs, and changes peoples’ perceptions. Demand Gen is hard work, and your strategies need to be long-term.
Lead Generation is a short-term strategy with plateauing results. There’s a lot of emphasis on activities that don’t make a significant impact on the business.
Fact: Demand Gen always beats Lead Gen in the long run for growth!
Many B2B marketers use Lead Gen metrics in KPI reports. Marketing Qualified Leads (MQLs), clicks, sessions, opens, and downloads – sounds familiar? There’s nothing wrong with these metrics, except they’re only leading indicators. Focus on measuring and reporting the lagging indicators.
Source: HP Reliability
Reporting Demand Generation KPIs
Reporting on Demand Generation KPIs is very easy. But sometimes, getting your hands on the sales and finance data is tricky. If you’re in a startup, it could be a conversation with the CEO/Managing Director. If you’re part of a larger organization, get ready to bring coffee and bagels each morning.
Most marketers are comfortable talking about marketing metrics. But beyond the marketing department, no one cares. CEOs are not worried about how many sessions the website had this week. CFOs do not want to know if people clicked through to the e-book download. CROs are not losing sleep over the latest A/B test results.
Business’ leaders will support this initiative to start using business metrics. They’ll get to see how marketing is performing – without getting in the weeds. The following Demand Generation KPIs will help measure your marketing campaign’s success.
Marketing Sourced Net-New Revenue
Revenue; it’s the ultimate metric. If there’s one new Demand Generation KPI you add to your dashboard, make it this one. Net-New Revenue means all new sources of revenue. In this case, it’s revenue sourced by a marketing channel.
For example: when an inbound lead from G2, a peer-to-peer review site (Paid Search) becomes a new customer. Or a cross-selling email campaign gets existing customers to buy new services.
This report shows what impact marketing is having on the business’s bottom line. It includes the total amount of revenue generated by all marketing activities.
In Salesforce, create an opportunity report. Sum up the total amount of opportunities closed-won. Add a filter to only include marketing sourced opportunities. Lead Source or Primary Campaign are two fields that will help narrow your search.
Now you’ll know how much revenue marketing has brought into the business.
Contribution to Total Net New Revenue
Most B2Bs will have three primary sources of new revenue: sales, marketing, and channel partners. Depending on the maturity of your niche and business, the split will vary. According to Ricky Wolff from Markletic:
Mature sales territory:
- (Inside) Sales: 40%
- Marketing: 30%
- Channel: 30%
Developing sales territories:
- (Inside) Sales: 45-50%
- Marketing: 45-45%
- Channel: 5-10%
In Salesforce, create a new opportunity report. Filter down to closed-won opportunities. Then group them with a custom field that splits the revenue by the sources above. Grouping by lead or primary campaign source is going to be too granular. Marketing software like Pardot and HubSpot can link opportunities to their contributors.
Qualified Pipeline Generated
Qualified Pipeline is not the Marketing Qualified Leads (MQLs), Sales Qualified Leads (SQLs), Sales Accepted Leads (SALs), or even Sales Accepted Opportunity (SAOs). Yes, you need to go deeper down the sales funnel.
Sales Qualified Opportunities (SQOs) are prospects with the highest probability of becoming a new customer.
Demand Generation KPIs need to focus on new SQOs generated. Especially if you’re in B2B with a high-ticket product or service. Talk to the sales leaders, get familiar with the sales playbook. Understand the criteria for opportunities progressing to the next stage.
Cost of Sales Qualified Opportunities
This metric sets Demand Gen apart from Lead Gen KPIs. Cost Per Click (CPC) and Cost Per Impression (CPM) are leading indicators. Use them to guide tactical decisions but they’re not a lagging performance indicator.
Knowing how much it costs to generate an SQO is a much more meaningful number. If you haven’t automated your marketing attribution model, you’re in luck! Don’t waste time attributing SQOs to a particular lead source.
Remember, B2B buying is not transactional. The customer journey is all over the place. MarTech vendors say knowing the ROI on a specific ad campaign is important. I disagree. Would that click have become a customer if they didn’t trust the brand? Brand and Content Marketing have a huge influence on prospects.
To understand your performance, you need to see the cost of an SQO against the cost of marketing.
The win rate helps measure over time if the new marketing activities are successful. If marketing is creating the right type of content, then win rates should increase. If it declines, then we know that some went wrong. Always review the marketing sourced win rate against qualified opportunities.
This metric helps measure how fast your business is bringing in new customers. It’s one thing to convert hundreds of leads but it doesn’t make a difference if none of them become customers.
If your ACV is 25K+ you know that these deals don’t close over night. The Sales team dedicates countless hours working the opportunity until it finally closes. B2B opportunities take months, sometimes years to close.
But wouldn’t it be great it the prospects were better prepared? Remember how we said demand generation marketing is about creating content that educates, informs, and changes peoples’ perceptions?
Prospects that have been receiving value from your content will close much faster. This is why you need to build a relationship with them at the top of the funnel. Not introduce yourself when they decide it’s time to start assessing vendors.
Marketing Customer Acquisition Cost (Marketing CAC)
Growth but at what cost? You want more customers, but make sure the business is profitable in the long run. Most businesses will keep an eye on their Customer Acquisition Costs (CAC). Which is (Cost of Sales + Cost of Marketing) ÷ New Customers Acquired. But we are looking at demand generation KPIs. So we are going to look at Marketing CAC.
The total cost of marketing means everything. Martech, wages, events, vendors, ad spend, and so on. It all adds up. Marketing CAC is a very powerful metric to keep marketers focused on creating demand.
Do we need to attend more trade shows? Is another ebook worth it? Is upgrading Martech going to 10X Lead Gen? Nope! Stay focused on long-term marketing activities that build your brand and content.
Bonus Demand Gen KPI
Marketing CAC Payback Period
This Demand Gen KPI lets the business know how many months it takes to recover Marketing CAC. Great to know if you’re looking to increase next year’s marketing budget. Most SaaS businesses have a 12 month CAC payback period. But that includes the cost of sales. An industry average for marketing CAC payback remains a bit of a mystery.
To calculate months to recover CAC, you’ll definitely need to get in touch with the finance team. How you invoice your customers plays a role too. The formula below is for SaaS companies that invoice monthly. If you invoice upfront and/or have a long implementation period, you’ll need to make changes.
It’s about measuring efficiency! Most SaaS companies will have this data available. Take the initiative and request access. If they can separate marketing out as its own cohort, that’s a bonus. If not, here’s the formula.
Average Revenue per Account (ARPA)
If you need to make an educated guess at ARPA, use this formula. ($) Total Monthly Recurring Revenue ÷ (#) Total Accounts = ($) APRA.
KPIs are about measuring performance. Demand Gen is not the same as Lead Gen. Demand Generation KPIs go deep into the world of Sales and Finance. They’re business metrics that people outside of marketing will understand. Using these new KPIs will help build credibility. For your marketing team and in your own career.