How To Measure B2B Demand Generation

Michael Brenner on Mar 30, 2011 in Demand Generation

How to measure B2B Marketing

This question was asked recently on Focus.com. I am cross-posting my answer here since this is a GREAT question. But I encourage you to add your thoughts as well either in the comments below or on their website. While you’re at it and since I’m not shy about asking for help: if you think I answered it well, I would appreciate it if you give me a thumbs up 😉

One caveat before you read on: This answer is specific to measuring B2B Demand Generation. I talked about the “New Marketing Accountability” before where I state my view that the ultimate measure of success for the full set of integrated marketing activities is Lifetime Value or how well marketing achieves the goal of getting and keeping customers

The Question:

“What metrics do you recommend marketers use to track the success of their demand generation efforts?”

My Answer:

The best way to measure the success of Demand Generation efforts is Revenue! This is the literal Value of the leads generated.

While Revenue may be difficult and there may be lots of great reasons why this can be challenging (systems, process, people), this should be the goal: to measure revenue that directly results from demand generation spend. This can be expressed as either a dollar amount, a percentage or an index.

Now if that is literally impossible for some companies, the next most important metric is the Pipeline Value of the Opportunities created directly from demand generation spend. Pipeline value can be a helpful metric where the deal cycles are long, as they are in most B2B Marketing organizations. You can use this metric to make “in-flight” optimization decisions of a campaign as pipeline value should be identified relatively quickly in a demand generation process.

Other metrics to use include what is commonly referred to as the “3 V” approach. The 3 Vs are:

  • Volume (Impressions, Clicks, Registrations, MQLs, SQLs, Opportunities, Deals)
  • Velocity (conversion rates from each unit above to the next level)
  • Value (mentioned above: revenue and pipeline)

Some organizations may also add a 4th “V” called “Viscosity” which can measure the obstacles or friction to rapid conversion from one lead stage to another. Viscosity is generally more specific to marketing tools, infrastructure, process and training issues as opposed to the actual value of demand generation.

———-

Let me know what you think in the comments below or on Twitter, LinkedIn, or Facebook. Want more? Subscribe to the B2B Marketing Insider Blog today!

 

Michael Brenner
Michael Brenner
Michael Brenner is a globally-recognized keynote speaker, author of The Content Formula and the CEO of Marketing Insider Group. He has worked in leadership positions in sales and marketing for global brands like SAP and Nielsen, as well as for thriving startups. Today, Michael shares his passion on leadership and marketing strategies that deliver customer value and business impact. He is recognized by the Huffington Post as a Top Business Keynote Speaker and a top CMO influencer by Forbes. Please follow him on LinkedIn, Twitter, or Facebook and Subscribe here for regular updates.
Showing 7 comments
  • Eric Wittlake

    The point is revenue, so measure revenue. I agree 100%.

    The challenge, even if using pipeline as a proxy, is it is (1) slow to develop and (2) demand isn’t driven by a single touchpoint. That is what makes B2B demand generation so challenging to measure.

    So, in addition to revenue, I would like to see companies start with a firm understanding of how marketing will contribute to demand. Pick a weakness in your demand generation funnel today and make it a strength. This gives demand generation marketing a clear focus on where they can quickly make a difference. And of course, drives specific measurements.

  • Michael Brenner

    Eric, you make an excellent point.I have discussed a few times the need for “Attribution Modeling” to be employed across more B2B marketing departments. The problem again: complexity.

    Attribution modeling best practices are not employed across a large enough sample of marketing departments. And while I think my answer is simplistic, I think it addresses the main challenge: measure something.

    So I look at it this way:
    1. Start measuring something. I think this is the REAL problem area.
    2. Then try to measure what you can easily track and analyze (ie revenue or pipeline)
    3. Evolve towards better marketing decisions and attribution models.

    I think your approach is very realistic: pick an area of weakness and make it a strength. Probably much more possible in today’s complex B2B Marketing orgs.

  • Ken Stout

    As a provider of B2B leads, we are continually challenged with meeting the needs of
    marketers responsible for maintaining a pipeline for their sales oganizations. In your opinion, how important is a nurtured lead before it goes into the pipeline? Would you consider nurturing a valuable addition to your 3V approach?

    • Michael Brenner

      Hi Ken Stout!!! Thanks for the comment and excellent question. A lead should be nurtured to the point until it is ready to go into pipeline. I think this would be covered in the velocity metrics. Many organizations look at so-called “stalled leads” and try to ensure that proper process is in place to nurture those leads with the goal of getting them closer to the point of purchase. So I think nurturing is more of a marketing activity as opposed to a metric but that the metrics can determine whether leads are getting nurtured effectively based on the time factor of conversions. This is both a velocity and viscosity issue. I hope that makes sense.

      There is also a nice discussion we can have (over drinks at your favorite ballpark?) as to whether leads can be “accelerated.” There are strong opinions on either side of this debate.

  • Ken Stout

    Ok Michael, Here is another one……

    How important is data pre-lead? Do you place any value in knowing behavioral activities of a lead pre-registration? An example would be… number of content assets downloaded on campaign-related topics, editiorial activity or pageviews on related topics, peer to peer activities, etc.

    Would you rank this type of informations as…1)a must have, 2)nice to have, 3) not a factor in evaluating a lead for pipeline.

    Tomorrow is opening day! Get that schedule out and let’s make an appointment to have that drink.

  • Michael Brenner

    Alright Ken, I’m game.

    As you know, a “lead” is not a registrant in my eyes. It still has a way to go before it gets that designation.

    So I would say that all information we can collect is important as long as we can collect it in a systematic way. We can then use that to enable nurturing techniques and marketing content targeted at that individual and their buying phase.

    Hard to rank because it all comes with a cost. If it’s easy to get, then yes, it’s must-have. Hard to get or expensive and I might sharpen my pencil and evaluate whether it’s worth it vs. getting more “blind” leads. Hope that helps…

    It’s gonna be a tough year for tickets at Citizens Bank park!!!

  • Ken Stout

    Thanks for all of your valuable insight Michael, much appreciated as usual. Talk soon.