In today's competitive technology sector, CEOs must ensure that their marketing investments deliver the best possible results. After all, with tech companies allocating around 10% of their annual revenue to marketing activities (according to Gartner research), getting the most bang for your buck is crucial.
But as a CMO or marketing team member, do you know what your CEO truly expects from your marketing efforts?
In this blog post, we'll uncover the top five marketing-related key performance indicators (KPIs) that are sure to catch your CEO's attention and help you align your objectives with their expectations. So, grab a cup of coffee, and let's dive into the world of marketing metrics that matter most to tech CEOs.
What B2B Tech CEOs Look for in Marketing Metrics and KPIs
Before diving into marketing metrics and KPIs for the CEO, we need to understand what the CEO is interested in when it comes to marketing money spending and the marketing team's overall contribution to the business.
There are five things every CEO is looking for in marketing metrics:
Clarity - CEOs want to see results demonstrating their marketing efforts are working and increasing ROI, seeking the same clarity across both sales and marketing leadership.
Accountability - CEOs want to hold their marketing leaders responsible for reaching their goals, metrics, and KPIs. They want to know exactly how many leads they generate, how many convert into opportunities and deals, and at what cost.
Revenue impact - CEOs want their metrics to be directly linked to business outcomes, ideally revenue. If there's no correlation between what they measure and what they spend money on, it makes sense why they might feel confused about whether their marketing programs are working.
Transparency - Many companies use vague terms like "brand awareness," "engagement," and "lead generation." Although these phrases sound appealing, they lack the specificity needed to prove the effectiveness of marketing programs. Instead, CEOs want to see specific numbers showing how well their campaigns are doing.
Data quality - B2B marketing departments manage various online and offline customer contact channels that generate an enormous volume of digital and physical customer interactions. When presented with data, especially for making decisions, CEOs must be sure that the data represents reality and includes data from offline channels and other non-digital touchpoints, including analyst interaction.
Navigating the Hierarchy of B2B Marketing Metrics for Different Stakeholders
Every CEO wants to know how much money and resources their company spends on marketing and whether those investments yield the desired return.
While there is more to marketing metrics than just the metrics for the CEO, it's essential to understand the broader context. Don't be disappointed if the CEO isn't as ecstatic as your digital team is when your email open rates double.
There are various levels of measuring marketing performance, including monitoring digital traffic, and campaigns, analyzing channels and strategies, assessing pipeline and revenue contribution, and evaluating brand value. To understand marketing performance comprehensively, we need to explore beyond the CEO level.
The table below outlines the different levels of marketing metrics and the interests of various internal stakeholders. The table aims to contextualize CEO metrics: CEOs are primarily interested in (and understand) strategy, outcomes, marketing, and sales performance metrics.
Crucial Marketing Metrics CMOs Should Present to Their Tech CEOs
We have covered metrics and KPIs from the perspective of marketing organizations in more detail across other posts, including the use of analytics tools to monitor overall health. Here, we present a list of the top five metrics that demonstrate the impact of lead generation and revenue which is the topic the CEO and boards are most interested at.
The top six metrics related to the executive leadership and technology boards are:
New clients and revenue originating from marketing channels
New clients and revenue influenced by marketing channels
The total value of a client (originated or influenced by marketing) during the whole relationship
The cost of winning a new client
The efficiency of marketing activities and investment (ROI)
The time it takes from generating a lead to closing a deal.
By focusing on these top metrics, CEOs and executive leaders can better understand the impact of marketing efforts on their organization's performance. Understanding these metrics helps them make more informed decisions about marketing strategies and investments, ultimately driving business growth and success.
1. Marketing Originated Customer Percentage
This metric shows directly what portion-percentage of your new business is driven by marketing efforts. It shows your CEO how much of the company's revenue comes from leads generated by marketing-led demand-generation efforts. This metric can make you a hero.
The metric is about all customers that are marketing-generated and those that started as marketing-qualified leads.
While it's easy to see how many of those leads came from paid advertising campaigns, take care to include all customers that started as marketing-qualified leads. It really helps here to have a marketing analytics CRM and system implemented.
2. Marketing influenced customer percentage
This metric expands the Marketing Originated Customer Percentage with customers where Marketing touched the prospect at any time during the buying cycle. It, therefore, includes all clients, not only those that started the journey on a marketing channel.
For example: if a lead generated and closed by the sales team attended a marketing webinar, that customer is considered influenced by Marketing.
The metric measures how much influence marketing channels have on new customer acquisition and provides insight into how well their marketing activities perform.
3. Lifetime Value of a Customer (LTV)
"lifetime value" refers to how much money a single customer contributes to your bottom line throughout their relationship with you.
LTV will not only help you plan the recurring revenue when planning next year's revenue expectations but will also help you understand how much you should pay to acquire new customers (see CAT below).
This metric also helps determine how much it makes sense to invest into retaining existing clients.
4. Customer acquisition cost (CAT)
The CAT metric tells you how much you spend to acquire a new customer. Combined with a client's lifetime value, it defines a limit of a profitable relationship.
The metric can also help to understand and compare the acquisition cost across different market segments, geographies, and products and services. So, apart from profitability, it helps us to understand the efficiency of different sales channels and invest in the more profitable ones.
5. Return on Marketing Investment (ROI)
The ROI metric is a tool to figure out whether your marketing performance and efforts are paying off. This lets you know (and your CEO) whether your marketing budget is being spent wisely.
It makes sense to use this metric also on the level of individual campaigns. It tells whether a marketing strategy or tactics work- if the campaign does not pay off or has a relatively low ROI, you can drop it or tune it to perform better.
6. Time to Revenue
Time to revenue measures the time between the customer's first touchpoint with your brand and the moment it starts generating revenue.
It is quite an interesting and vital metric that can help you budget, book, and forecast accordingly. One of the key goals of marketing is to shorten this as much as possible, especially when considering digital and moving to self-services.
On the other hand, it can be pretty tricky to measure it as it is challenging to know when in reality, it was the first time your prospect touched your brand.
Marketing departments can use several tactics to improve time to revenue, including:
Developing effective strategies for lead generation
Creating campaigns that target specific audiences
Using data analytics to identify potential leads and opportunities
Implementing effective tools to manage the sales pipeline
Summary
To achieve success, tech CEOs and marketing CMOs must jointly define the list of key performance indicators (KPIs) that tie into their company's overall strategy.
These KPIs should be linked to specific business objectives to be measured and tracked across the organization. They should also be shared across functions to align the executive leadership and ensure a common route to the common goals.
Finally, marketing leaders must delve down to understand how tactical levers and operational actions affect higher-order strategies and objectives to drive performance towards business objectives.
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