What is the measure of your B2B marketing campaign’s success?
As CEOs worldwide are looking at marketing as a growth driver, they have become more critical in measuring all marketing efforts’ performance.
Leaders are looking beyond engagement numbers and qualified leads. They are now looking for quantifiable answers to these questions:
- What, or when, is the return of investment (ROI)?
- How much is marketing contributing to revenue?
As a CMO or director of digital marketing, you can use a handful of B2B marketing metrics to answer them.
Quick Takeaways:
- If you’re not tracking B2B marketing metrics, you are playing a guessing game, with a likelihood of more losses than hits.
- Identify the relevant data and statistics to accurately measure your marketing success or you’ll miss the opportunity for improvement and growth.
- Use the right marketing metrics to gather insights to maximize your marketing efforts, align with your organization’s business goals, and improve overall performance.
The end goal of marketing remains consistent even if the processes are continually evolving – generate leads, boost conversion rates, and increase sales pipelines in the shortest time and most cost-effective manner.
Here are some foundational marketing metrics – key performance indicators (KPIs) used to measure marketing projects’ effectiveness.
Qualified Lead Rate
Leads are businesses with an interest in your services or products, which have the potential to be paying clients.
Qualified leads are businesses that replied to your marketing campaign via phone, email, or social media response, comment, or inquiry.
The formula for calculating the qualified lead rate is:
Qualified Lead Rate = (Qualified Leads / Total Leads) x 100
Personalize your connection with your leads through phone calls or face-to-face meetings. Do not rely solely on cold calling or marketing email blasts.
Cost Per Lead (CPL)
The CPL gives a dollar value to acquiring new leads. Marketers use it in businesses with high-value products or subscription services.
The formula for calculating CPL is:
Cost Per Lead = Total Ad Spend / Total Attributed Leads
Base your target CPL on business goals and not on fixed percentages. Choosing the right target CPL helps you assess your marketing projects, prioritize efforts, and spend your marketing budget on ones that align with your business goals.
Website Traffic
Analyze your website’s traffic (through tools like Google Analytics) to help measure your marketing performance. Low traffic can indicate a website technical problem, a Google algorithm penalty, or broken links.
When more people click on your site, you develop brand authority and become trustworthy to clients. You also grow organic traffic, which is free.
The marketing metrics above help your marketing team focus on the right projects and troubleshoot problematic marketing processes. However, your CEO will zero in on results and costs, not only on intermediary processes.
Here are essential marketing metrics that you should include in your dashboard for quantifying revenue and ROI that you will want to discuss with your CEO:
Lead Velocity Rate (LVR)
The LVR calculates your pipeline development and measures the qualified leads’ month-to-month growth percentage.
To calculate LVR:
Lead Velocity Rate = (Qualified Leads Current Month – Qualified Leads Last Month) / Qualified Leads Last Month X 100
- Tracking LVR gives you a real-time growth indicator of growth since you can generate more qualified leads if you observe that you are lagging for the month.
- The LVR metric becomes unreliable when problems in the sales process arise since LVR is not revenue.
Customer Acquisition Cost (CAC)
The CAC looks at how much it costs to convert a lead into a customer. Calculating and monitoring CAC is crucial, if not more essential than determining the CPL.
Use this formula to calculate CAC:
Customer Acquisition Cost = Sales and Marketing Cost / New Customers
- Perform A/B split testing of new checkout systems and set up Google Analytics goals to improve website performance, site speed, landing page, and mobile optimization.
- Implement an effective customer relationship management (CRM) process to improve customer satisfaction. Address your clients’ inquiries smarter and quicker on all contact points.
Return on Marketing Investment (ROMI)
The ROMI metric calculates a marketing campaign’s revenue compared to the cost of executing that marketing campaign. ROMI helps identify marketing projects that generate revenue or lack traction.
The formula for calculating ROMI is:
ROMI = (Marketing Income – Cost of Goods – Marketing Expenditures) / Marketing Expenditures) x 100
- Your marketing investments are not generating revenues if your ROMI is less than 100%. They are profitable if ROMI is more than 100%.
- Use ROMI carefully in deciding which marketing tactics to boost, retain, or remove. Do not immediately cancel low-performing marketing projects that may need adjustments to be successful.
Average Revenue Per Account (ARPA)
The ARPA metric measures per account revenue and have two types: new and existing. ARPA is essential if you want an exact average income, especially when you change the pricing.
The formula for calculating ARPA is:
Average Revenue Per Account = Total Monthly Recurring Revenue / Total Accounts
- The ARPA helps reveal trends in account contraction and expansion, assess pricing plans, and identify how ARPA is changing.
- The ARPA changes depending on your pricing and product. Check internal benchmarks like last year’s ARPA for comparison.
Time to Payback CAC
The Time to Payback CAC refers to the period it takes to earn back the CAC and identifies your break-even point.
The formula for calculating Time to Payback CAC is:
# of Months to Recover CAC = CAC / (ARPA x Gross Margin)
- Time to Payback CAC helps you measure capital efficiency and identify the cash amount you need before turning in a profit.
- A company will be more profitable with a shorter payback period. Reduce the time to payback CAC to lower the lost CAC from churned customers.
Gross Monthly Recurring Revenue (MRR) Churn Rate
Gross MRR Churn Rate is the total revenue loss percentage due to downgrades or cancellations. It is inversely proportional to the Gross MRR Retention Rate, which is the monthly retained revenue.
The formula for calculating Gross MRR Churn Rate is:
Gross MRR Churn Rate = (Total MRR Churn this month / Total MRR at the start of this month) x 100
- The churn reflects customer targeting and increasing product value.
- Monitor gross churn to see the exact lost revenue, accurately identify if it is attracting the right customers and if the product or service has a high value.
Customer Lifetime Value (CLTV)
The CLTV calculates your business revenue by estimating the customers’ pre-churning average gross income.
The formula for CLTV is:
Customer Lifetime Value = Average Revenue Per Account / Customer Churn Rate
- CLTV is useful for planning future expansion, but this metric can fluctuate. The estimated CLTV will vary month-to-month for businesses with a small sample size.
- Implementation of new features or an increase in churning rate has an impact on CLTV value.
Content Marketing for Improved B2B Marketing Results
B2B buyers look at their vendors as partners in business growth and not just service providers.
Instead of just putting a client’s name in an email’s subject line, there should be content in every touchpoint of a buyer’s journey personalized by use and audience.
Encourage your clients to share your business partnership experiences on peer-to-peer platforms to harness industry influencers’ power.
Moreover, come up with high-impact thought leadership and content marketing strategies, and create regular authority website content to help convert leads to sales, strengthen customer relations, and drive revenues.
At Marketing Insider Group, we offer brand storytelling, thought leadership, content marketing, and blog subscription services. Contact us if you need help crafting your web copy or content.
