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 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.