I think people are finally coming around to the idea that good marketing requires good measurement. I’ve seen online B2C startups use Dave McClure’s Startup Metrics for Pirates as a starting point for measuring what marketing is doing. For those of us selling to businesses however, particularly where there is a sales team involved and a pipeline to track, the world is quite different and Dave’s metrics don’t cover everything you need to track.
Here’s how I’d construct a basic set of marketing metrics for a B2B startup (and a single slide that I would use to present them):
Think about the goals before you start
The main goal of tracking marketing metrics is to get a measure of ROI or program effectiveness so you can make sure you are spending more and more on things that drive revenue and less and less on things that don’t. A good set of metrics will allow me to predict that if I spend $1 on a certain marketing tactic, I’m likely to get $X of revenue in Y days. A good set of metrics will also give you a feel for inside and outside sales effectiveness and overall sales pipeline velocity as well.
1. Pipeline Measurements
- # of Targets– sometimes referred to as “suspects” this is anyone in the universe who is on the receiving end of your marketing. Sometimes it is helpful to track the number of companies in your universe of targets in addition to the number of individuals, especially when you are targeting a niche and want to track what percentage of that niche you are hitting.
- # of Prospects – these are folks that in some way have indicated they have an interest in your product/service by filling in a form, hitting a sufficient number of pages on your site, attending an event, speaking to someone at your company at a show, etc.
- # of Leads – a lead is a prospect that you have qualified as someone who is a good fit for your product and is likely to purchase a solution like yours in a specific timeframe. For many B2B companies, leads are qualified using BANT criteria (a salesperson will confirm that the prospect has Budget for the project, Authority to make a purchase decision, Needs the product and has a set Timeframe to make a purchase decision).
- # of Opportunities – An opportunity is a lead that is now being actively managed by a sales person and is moving along the pipeline toward either a closed sale or a loss.
- $ Opportunity Pipeline – the dollar value of the opportunity. For long sales cycles, it is important to measure this to estimate marketing ROI for tactics in the short term.
- $ Closed revenue – the actual value of the deal after it has closed.
- % conversion prospects/targets – This shows how many targets took action or showed interest enough to become prospects. This can be effected by the strength of your marketing call to action or offer, the strength of your messaging and the quality of your marketing content for your target market.
- % conversion leads/prospects– This can be an indicator of the quality of your marketing materials in terms of how well it is prompting the right types of prospects to take action. It can also show the effectiveness of your inside sales team.
- % conversion opportunities/leads – This can also be an indicator of how well your marketing materials and tactics are attracting the right types of prospects into your sales funnel. It can also indicate the effectiveness of your salesforce.
- Days target to prospect – this will vary depending on your campaign but over time you will be able to track and compare similar tactics to each other.
- Days prospect to lead – for many companies, the inside sales team has a set time within which they must qualify a prospect. Tracking this will show if they are meeting their targets.
- Days lead to opportunity – this is an important metric where you are handing over from an inside sales team that qualifies a lead to an outside sales team that accepts the lead as an opportunity. Any significant gap here needs to be investigated and closed.
- Days opportunity to close – this is important to estimate how long it may take for a given opportunity to result in actual revenue.
- Cost per target – targets can be free (organic traffic, internal lists) or paid (from advertising, purchased lists).
- Cost per prospect – given only a certain percentage of targets become prospects, what is the true cost you are paying for a prospect. This is important to measure and understand especially if you are considering purchasing leads from a 3rd party source.
- Cost per lead – even if you purchase “leads” your own inside sales folks will qualify out many of them. This number will tell you what those those “leads” actually cost.
- Cost per opportunity – This number indicates the marketing spend required to get a lead all the way to the opportunity stage.
- Cost per closed deal – this is the ultimate number representing how much you will spend on marketing to get a closed sale. This number along with the Closed Revenue number will tell you how much revenue you are driving over and above your marketing spend.
Tactic-specific metrics – Obviously there are other metrics you will track depending on the types of programs you are running such as email metrics, website traffic metrics, attendance metrics, etc. Those metrics are also interesting and important to track but can’t be compared across tactics until they hit the pipeline as a prospect, from which point, the above metrics kick in.