This can sometimes be tricky as different information will matter to different people, and top-level KPIs aren’t necessarily a great representation of what demand gen success looks like. Some activities can be hard to quantify and a lot of what you do can take months or years to show its true value. Remember that demand generation is a holistic, end-to-end strategy, so it’s not about the quick wins.
Careful consideration of all these factors needs to be done in order to develop an accurate and useful reporting system. To get you started, here are 6 KPIs that you should think about tracking:
When all is said and done, revenue is the most important metric for sales and marketing. The purpose of demand generation is to raise your profile and drive interest in your products or services. While it’s very much a branding and awareness exercise, the end goal is to ultimately boost sales.
A solid demand generation strategy, supported by seamless lead gen and lead nurture, will increase revenue from new customers as well as recurring revenue from existing customers. Therefore, sales need to be tracked and included in monthly reports, with breakdowns of new and existing accounts.
However, it’s also important to remember that revenue isn’t the main metric to look at every single month. It may take some time before marketing efforts have a demonstrable impact on revenue. With a lot of inbound marketing tactics used for demand gen, it can be a while before prospects turn into qualified leads. More often than not, the sales funnel isn’t a simple one and organizations should look at demand gen as a benefit for long-term branding.
2. Pipeline value
Not all prospects in your pipeline will convert so it can be useful to understand what opportunities are expected to close in a certain time period. Although this is educated guess-work, it helps to build a picture of how your campaigns are performing.
By looking at what percentage is likely to convert, you can closely-manage pipeline health. If things are looking great one season then less healthy the next, it may be time to review your strategy.
Pipeline stage percentages are there to give you a long-term view of potential revenue and can even help you identify problem areas that need optimizing.
3. CPL, CPA and ROI
Cost Per Lead (CPL), Cost Per Acquisition (CPA) and Return On Investment (ROI) are vital measurements for any demand generation program. After all, if a campaign doesn’t generate revenue in the short or long term, it isn’t successful for your business.
CPA is the cost to acquire a single paying customer through a specific campaign or channel, while CPL tracks overall spend on a lead-by-lead basis. The latter is important for knowing how much you have to spend to keep your funnel full.
These metrics are also a way to understand how well marketing budgets are being allocated. For companies that are dealing with budget cuts, this can be extremely useful, giving you information on areas that are most worthwhile in terms of returns. They can also help marketing departments justify level of spend to stakeholders and investors.
Remember though, just like revenue, you may need to wait some time before the value is clear. Use the average length of the purchase process as a guide for seeing results.
4. Customer lifetime value
According to Harvard Business Review, it’s somewhere between 5% and 25% more expensive to sell to new prospects than to existing customers. It’s also more profitable to increase overall expenditure of one customer than to convert more of them. So understanding the value that customers can bring is important for marketers.
While many metrics can help you understand this value, Customer Lifetime Value (CLV) is the most popular. This is calculated based on the projected revenue that a single customer will generate across the lifetime of your business – so it looks at the long-term value of every account. It takes into consideration the work that is done to address an existing customer base, providing a clear picture of profitability in the long-run.
In very simple terms, it’s an average profit of all of your customers, factoring in the ones that spend less and the ones that spend more. Many things can influence your CLV – including other facets of marketing and your customer service operations – but it’s the best metric to use when reviewing individual campaigns and channels.
A climbing CLV shows a healthy demand generation funnel, as this demonstrates what you’re doing is more than just getting more customers – you’re generating higher-value customers.
5. KPIs for optimization
Some subsets of demand generation are straightforward – like lead generation and nurture, where success is measured by conversion. But for the most part, demand gen is an exercise for raising brand awareness.
Not only are there no quick wins, but the process can be burdened by a sales funnel that is complex. This makes things like brand awareness, market positioning and demand extremely hard to measure. According to Challenger, 57% of the buying journey may already be completed before the customer reaches out to you, so perfect tracking isn’t possible.
But a few things can help you get an understanding of how your brand is performing. Things like social media reach, brand mentions, media mentions and brand searches give you a view of your brand reach in the digital space.
6. Content Performance
Finally, measuring content is a crucial step in your reporting. There’s no single metric (or set of metrics) than can be widely applied to all your content though. They all differ and require separate KPIs. For instance, the measures of success for short landing pages with sign-ups/downloads will be completely different to a long-form technical whitepaper.
To keep KPIs focused, have clear performance metrics for different types of content and omit any metrics that simply aren’t relevant to your campaign.
You should also avoid vanity metrics. These are the metrics that look good on a report but don’t actually tell you anything useful. Stick with this rule: if the data isn’t actionable, don’t use it.