Show Me the Numbers: 6 Critical Demand Gen Metrics
Run a Google search for "lead gen reporting" and you’ll find plenty of articles that cover “essential” or “must-have” lead gen metrics. While they’re mostly good articles, the majority fails to get into the “how-to”. Not to mention many times you have to sift through fluffy vendor articles that don’t add much value.
This post covers the top 6 demand gen metrics you should be using and provides a step-by-step guide on how to measure those KPIs. The metrics have been divided into 3 categories:
Basic, top line metrics: These should be a staple in your reporting arsenal and you should know these numbers by heart.
Campaign attribution metrics: These metrics are slightly more sophisticated and really get into the nitty gritty of measurement. Full disclaimer: these can be very tedious to measure because this type of reporting is often not automated. However, I consider them a necessary evil. You’ll see why when we get to this section.
Cost & ROI metrics: Know thy costs! Do you know what your average cost per lead (CPL), cost per MQL (marketing qualified lead), or even cost per SAL (sales accepted lead) and opportunities are? If not, you should.
BASIC, TOP LINE METRICS
1. Goal Achievement The intention here is to answer a simple question: “How close to goal did I get?” Did you blow it out of the water, or not even close? If you’re hitting your bottom of the funnel metrics but really short on top of the funnel numbers (leads and MQLs), your initial goal might be off. Knowing your % to goal achievement can help you readjust. Here’s a good way to present % to goal achievement:
2. Funnel Conversion/Lead Velocity There are two types of marketing funnels: multi-touch and liner. Most marketing departments take a multi-touch approach, so we’ll start with that.
A multi-touch funnel doesn’t actually represent a true conversion because it’s a moment in time depiction of the numbers. Take the numbers on Table 1, here’s how they are actually measured:
Leads: Number of leads created in 2015
MQLs: Number of leads that MQL’d in 2015 (they could’ve been created years prior)
SALs, Opportunities and Deals follow the same MQL logic
While a multi-touch funnel will be useful over time, you’re still missing the aspect of velocity. Enter the linear funnel. A linear funnel shows yield (MQLs, SALs, Opps and Deals) only from leads created in the timeframe in question.
Figure 1: Multi-Touch vs. Linear Funnel
Ideally, you’re measuring both. But if you must choose one, go with multi-touch. Here’s why: The marketing funnel is no longer linear. The concept of lead nurture has changed the way we look at the funnel. The main goal of nurture is to optimize conversion at every lead stage. Therefore, we need to account for those efforts. A multi-touch funnel is the only way you can do that.
3. % Improvement In addition to goal achievement and conversions, it’s also important to measure improvement over time, be it month over month, quarter over quarter or year over year. Are you improving or are your marketing efforts stagnant? You won’t know what to improve unless you’re measuring it.
Figure 2: % Improvement Year Over Year *Numbers show improvement in lead volume, not conversion. You may choose to measure both.
CAMPAIGN ATTRIBUTION METRICS
4. Lead Distribution by Channel and Program If you run paid campaigns, this is a must-have. Say you generated 3,000 MQLs in 2015 - what percentage came from organic vs. paid channels? As you move down the funnel to SALs and opportunities, does that distribution change or stay the same? (See Figure 3).
Figure 3: MQLs, SAL and Opportunity Distribution by Channel
The type of data visualization in Figure 3 is helpful because you get a clear view of what channels are likely to generate opportunities down the funnel. In this example, content syndication and email are doing a great job at producing top of the funnel leads, but they’re not actually generating opportunities. And that is OK. The goal here is to know what channels contribute to what, and if awareness is part of your goal, then keep on doing paid email and content syndication.
Now take a look at what’s actually generating opportunities. The data indicates that your opportunities are coming from events and paid search (along with organic, which is usually a given). I would keep investing in those channels!
5. Conversion by Program and Channel In addition to lead distribution by channel, it’s also important to measure conversion by channel. Below is a simple way I like to display that data. The purpose here is to measure the efficiency of each channel as well as accurately forecast what each channel is going to bring in later down the road.
People often confuse distribution (figure 3) with conversion (table 2). As you can see below, these are two very different measurements.
Table 2: Funnel Conversion by Channel
COST & ROI METRICS
6. Cost per Lead (CPL) It’s important to measure the CPL at every stage of the funnel. Below are a couple of different ways you can both measure and structure your data.
Table 3: Cost Per Lead – Events (each channel will have its own table)
Figure 4: Cost per Opportunity by Channel (each funnel stage will have its own version)
7. ROI ROI is by far the most difficult KPI to measure. Not because there’s complicated math involved, in fact, the math itself couldn’t be more simple. Unfortunately, marketing teams often lack visibility into the funnel once a lead moves beyond the opportunity stage. This could be due to a number of reasons including poor sales and marketing alignment or poor tracking standards. But if this is something you can measure, here’s the simple formula:
Plug in the numbers (in this case I’m using events), and it’ll look like this:
There are so many different ways to slice and dice the data but these are some of the ones I find useful from a planning, forecasting and investment perspective. Over the years, I’ve also found that management likes having visibility into these particular metrics.