Wouldn't it feel great if you could have a relaxing chat with the board and CEO about how your marketing team contributes to the company? And if you could confidently demonstrate how your team's marketing activities fill the opportunities pipeline?
And if you could, for peace of mind, understand the performance of different marketing channels to balance the marketing spend efficiently and understand the value of content. Suppose you would have real-time signals to tell you when something requires your attention; something as simple as decreasing organic traffic or something of more business value, such as a strong buying intent that could convert a prospective customer into potential revenue.
Many of us were there, wondering and dreaming. And many of us took on that exciting journey of marketing data, measurement, metrics, and KPIs.
Marketing performance metrics- the solution to the never-ending struggle with marketing budgets.
One of the strategic reasons why marketing needs a good grip on data and measurement is money. Fact: Marketing budgets top the minds of B2B marketing leaders, and many I talk to tell me that the “could be improved” level of communication with the Board and the CEO is the main obstacle to proper marketing head counts and program and technology budgets. Well, the “other side” is not in a much better place. In my experience, most CEOs do not understand marketing spending and contribution well enough to say “Yes” to what you are asking for.
So, how to improve communication to get things done?
Marketing leaders must understand that the only way to get funding approved is to view it as an investment (businesses invest money for an expected return). The key to budget approval is hard fact data that backs up existing or expected positive performance of marketing activities (a.k.a. ROI).
Sales-related metrics- the safest bet for early and growing companies.
Now that we know that data is key to a good business conversation with the CEO and-or other roles influencing financial decisions, with what type of metrics should we start our data journey?
For most marketing organizations, starting with metrics focused on sales (or demand generation or new business acquisition) makes sense. Why? While early companies must close deals to prove the business model, small companies must grow sales fast enough to build size. So, the most pragmatic thing marketers can do is to show a clear correlation between marketing activities and new business. This is why this series of posts will focus on sales-related metrics focused on revenue growth.
Brand metrics and market share- hard to come by for specific markets.
In addition to sales metrics (and operational metrics indicating the efficiency of activities, (but more on this later), marketing can consider other types of metrics.
Brand-related metrics sound exciting but challenging to measure for smaller companies—for example, brand value and financial equity. Share of voice, thought leadership, 3rd party coverage (analysts, market research, industry publications), and the voice of coverage could be a more feasible selection of metrics. Yet, I would guess still a challenge to measure in absolute for most smaller or even mid-sized tech companies.
The same is true for other high-level metrics, such as market share (a % figure)- if you do not play in a mainstream market category, it isn't easy to get those numbers. Even though sometimes the data does not exist, you can be pragmatic and find the next-best metric, i.e., a good approximation. For example, you can settle for a simple "number of my clients" / "number of total potential clients in the market" formula and track it through time. You can even follow the same metrics for competitors (their press releases or similar) to understand whether your growth is below or above the market average.
If you measure nothing- do not worry. We all have been there; take the journey and trust it.
There is a lot of material on marketing metrics, including hard-line statements about what you should measure and what you should not. But when it comes to practical advice for real-life marketing teams, many (if not most) of this good-intent advice (including "don't measure traffic, focus on business metrics") fail because they miss addressing three vital things.
First is the understanding that there is a critical difference between metrics and KPIs. Second is acknowledging and considering that there are significant differences in maturity levels of different marketing organizations and-or their goals, which means that it is improbable that we can even measure the same things. The third is the fact that there are enormous differences between marketing simple and complex B2B products and services. This means that there is a significant “by design” difference in what different marketing departments can contribute which means that we can not even measure some things.
Marketing metrics versus KPIs- from operational data to business performance and contribution.
Let us talk KPIs first. I intend not to lead an academic discussion regarding definitions and differences between metrics, measurements, and benchmarks. To make it simple- for this post, we will only define and stick to the definitions of "Metrics" and "KPIs." So, here we go. Everything we measure can be a metric but not necessarily a KPI. A key performance indicator is more related to a marketing organization's goals and overall contribution to the business. And that's it regarding definitions.
As you will see later on, what we set as KPIs also depends on maturity. While a web traffic-related metric (such as traffic growth rate) can be a valid KPI early in your marketing data and analytics journey, it is unlikely to remain a KPI once you start contributing to the sales pipeline and measuring your contribution in $ or € or any other fiat currency. The latter is a highly mature KPI as it tells how you directly contribute to the business. Nevertheless, it makes sense to keep tracking the traffic metric, especially when it correlates with a KPI (more traffic, more leads). And you can also use it as a signal to react when your best traffic source starts behaving strangely (it suddenly starts decreasing regardless of the heavy ad investment).
For a more in-depth dive, many good resources discuss marketing KPIs and metrics, including this article from a marketing dashboard vendor.
Is there an ultimate set of KPIs for a mature and performing marketing organization?
What should be some of the ultimate marketing KPIs for a new business generation? As every commercial business strives to increase revenue and decrease costs, everything related to these can be a KPI. On the revenue side, it can be the amount of business coming from marketing channels, the value of the sales pipeline, and the number of generated opportunities. On the cost side, it can be client acquisition cost, opportunity cost, and similar. All these KPIs indicate a clear contribution to the overall business goals.
One ultimate KPI does not fit all.
However, selecting the ultimate KPI for a particular team also depends on the product's complexity and the buyer's journey. Let's take the software, for example. While some SaaS deals can be heavily influenced by marketing and can be closed online, other type of deals can have long cycles and require the involvement of legal, consulting, sales, and other non-marketing teams.
If marketing can not close a deal due to deal complexity, the main KPI would probably be the value of the sales pipeline rather than direct revenue contribution, i.e., you can not own something you can not control.
What we measure at a certain point in time depends vastly on the maturity of our organizations.
In the context of broader organizations’ business goals, marketing can play different roles and have different goals. Every marketing leader must ensure that his team's performance and contribution mature over time. And so should the metrics.
It is perfectly fine if your key metric is web traffic and your KPI traffic growth. But this should not be your end goal. As your team's contribution matures, so should your metrics and KPIs.
Every marketing organization must start somewhere. As long as you know your starting point is not your end-game, there is nothing wrong with beginning with some basic B2B marketing metrics. One of the articles I recently came across related to the CMOs dashboard and marketing metrics is Forresters "What marketing leaders are measuring." The author states, "CMOs aren’t emphasising lead metrics (thankfully).". I disagree; there is nothing wrong with lead metrics, such as sales-qualified leads generated through marketing channels. I would guess that the research sample includes organizations of different maturity levels, so it is natural to expect lead metrics in the research.
Why and in what situations do I recommend tracking and measuring leads? Let me outline just three of the many possible reasons.
The B2B CMOs Dashboard
Regardless of the level of maturity, it makes sense to implement a CMO dashboard early in the journey. The CMO dashboard provides a single place to see all the information about your marketing efforts. It will help you get more intimate with the metrics and better connect the work and actual real-time performance.
You can build a simple CMO dashboard by collecting, combining, and displaying data from different sources (Google Analytics, AdWords, etc.) or use one of the dashboard tools. The table below shows an example CMO dashboard that provides a good starting point at the beginning of your measurement journey. The dashboard is powered by Databox.
A CMO dashboard will vary between organisations, but despite the differences, an effective B2B marketing dashboard will cover the following:
Marketing contribution. Metrics will address the impact of marketing on opportunity volume, velocity, and conversion.
Branding. This often involves metrics related to concepts of brand recognition and share, perceptions, and preferences.
Engagement with existing customers. Metrics may address customer satisfaction, renewal rates, customer lifetime value, brand advocacy, and client success with tech.
An example of a Dashboard that provides a simplified view of your website and digital channel performance. Even incorporating these basic metrics serves well in the early stages of your marketing analytics journey.
Do not believe the lead naysayers- leads are essential.
First, for Companies dealing with long sales cycles, it is highly likely that marketing-generated leads will not contribute new business in the first, maybe not even during the second year of tracking metrics (and it is perfectly normal, most of us were there). However, also during this period, we need to understand how we perform and whether we improve. So, “lower-level” metrics are perfectly ok.
Second. It makes sense to consistently compare the contribution of marketing and sales to understand both channels' efficiency in new business generation. In real life, marketing and sales compete for the same budget, and pragmatic management will invest in a more efficient channel. Yes, budget is one of the annual internal battlefields.
Third. Because every new deal starts as an opportunity- we need to understand the conversion mechanics, such as how many leads we need for an opportunity and how many opportunities we need for a new deal. We need this to understand better the required marketing investment in case we need to accelerate growth.
Note. Yes, there are differences in how different teams define leads, prospects, opportunities, and other related terms. As we are not here to discuss definitions, just a quick note on what kind of leads I am talking about. To me, a downloaded brochure or a white paper (I am not fond of the term “lead magnet”) is not a serious lead when discussing a buying process for enterprise software in a mature industry with a well-defined procurement process. A good quality marketing qualified lead (a prospect whom marketing defines/profiles as a likely buyer) would be a demo request- based on the intent (demo), there is a high probability that the prospect started the buying journey and is currently researching alternatives.
The hierarchy of Sales related B2B Marketing metrics
Let's look at one possible scenario of how to structure marketing contribution, metrics, and KPIs. Let's do it from top to bottom, and let's also consider how the contribution and related metrics should change over time. As said above, I will focus on sales-related goals as growing companies are expected to invest more in sales during the first years (as opposed to branding investment) to prove their business model.
Revenue level. The ultimate contributions are new deals.
What is the absolute value and the % of new business that comes from marketing channels?
What is the recurring revenue from marketing channels?
What is the Customer's Lifetime value?
What is the Customer acquisition cost for marketing channels?
What is the deal rate over a defined time?
All these sound like KPIs, right? They indicate clear delivered value.
Pipeline level. Before deals, there are opportunities.
What is the value of the sales pipeline (value of potential deals sales is working on) from marketing channels?
How many opportunities have we generated?
How many have turned into paying customers?
How many sales-qualified leads have we generated? And how many turned opportunities? The conversion rate will help us understand the quality of the marketing funnel.
What is the cost of an opportunity, and how does it compares with sales-generated ones?
How long is the sales cycle time of the late funnel
What time does it take to convert an early funnel lead into an opportunity?
Also, many of these metrics could be a KPI.
Marketing channel level. It is about marketing channel contribution to the pipeline.
How many leads came from social reach?
How many came via intent search, and how many from paid advertising?
How many came from Influencers such as market analysts, consulting partners, brand Sis and other partner channels?
How many came from organic-SEO reach?
How many came from organic brand searches?
To me, this is now more metrics territory.
What is the cost of a lead across different channels? This one is important to understand the efficiency of our activities.
More advanced B2B Content marketing metrics such as content quality and value.
Marketing conversion level. The more qualitative metrics related to marketing channel metrics.
Marketing conversion rates- from anonymous to named person in the marketing CRM.
The quality (relevant profiles) of the marketing CRM. This one could be KPI in case there is a relation.
More basic B2B Content marketing metrics include the number of downloads, clicks, and impression contributions.
Marketing basic metrics level. And then there are the most basic metrics, the ones we usually have no problems measuring.
Website analytics- traffic and sources
Organic traffic and reach - impressions and click-through rates
Paid traffic from Google Ads, LinkedIn promotion
LinkedIn on-platform engagement and traffic
Social reach and engagement
Number and relevance of Social followers
Reach and traffic growth
In the early phases, traffic and relevant reach growth can be KPIs.
Marketing organization's goals- keep them in continuous sync with corporate and sales goals.
This one is rather obvious, so I am not going to spend much time on it- marketing-related sales goals should be the result of goals defined on the corporate level, such as what products we sell and promote in which markets. In case you have a well or at least semi-structured corporate planning process or a documented corporate and sales strategy, the sync should not be that difficult.
However, without documented strategies (it is not uncommon for companies at early maturity levels), you will have to make some effort to get an agreement on your goals. Here is what you can do
Ask for corporate and sales strategy documents.
If they are not nonexistent and you need to start running, the only thing that you can do is to prepare and document your own assumptions about what your goals should be
Get these assumptions confirmed by a level above you.
Break down the goals and decide on proper marketing strategies to achieve them.
Work out KPIs based on goals and metrics based on strategies and channels.
Final thoughts, Part I
It is pretty simple: a way to raise the level of conversations with CEOs and Boards (including discussions about marketing spend increases) is a clear, performance-KPI-based message on how your marketing programs and investments contribute to the overall success of the business.
In designing their performance journeys, marketing teams should be pragmatic about their initial choice of metrics. The only way to understand what works best, what contributes most, and what provides the best ROI is to start as soon as possible, measure and learn, and make small-step improvements. Starting now is more important than trying to design a perfect system that includes goals and metrics that you can not even achieve today (pipeline contribution, business contribution).
In Part II, we will look at how to design and implement a pragmatic yet systematic path to metrics and sustainable budget growth of a modern marketing department.