With a ton of marketing technology available in today's market, it's easy for marketers to drown in the overload of data available to them.
But, finding the right metrics to track is crucial to building an effective and successful demand generation campaign.
The question then arises: where to start?
That's why we've put together the most useful demand generation metrics you can use to optimize your strategies. Let's dive in.
Top Demand Generation Metrics To Track
Creating a strong plan to attract customers requires looking at different areas where you can improve. The numbers you should focus on depend on the channels, mediums, and forums through which you're trying to get more business. It's important to pick the right metrics to track because spending too much time and effort on vanity metrics can complicate things and slow your sales.
Here are 11 metrics that B2B demand generation marketers should keep an eye on to make their strategies work:
Marketing Qualified Leads (MQLs)
Starting with the basics, a Marketing Qualified Lead is someone that has shown interest in what your business has to offer.
For example, a potential lead visits your website and downloads a whitepaper. It's safe to assume that there is some curiosity and because of that, they're more likely to turn into your customers.
Now, how you deem someone as an MQL depends entirely on your strategy. If you're hosting a webinar, then the number of attendees that turn up is your main metric to measure. Some other intent indicators are:
- Time spent on your website
- Clicks on website pages
- Ebook or whitepaper downloads
- Visits to product or feature pages
- Newsletter signups
Sales Qualified Leads (SQLs)
The next metric you need to be tracking is a Sales Qualified Lead. Similar to MQLs, these leads show interest in your solution. Except they're more direct.
An SQL is someone ready to talk to your sales team. They've done their research and are familiar with what you offer, so it's time to move them further down the marketing funnel.
A few indicators of an SQL are:
- Visits to the pricing page
- Demo or free trial signups
- Contacting sales team
- Taking an interactive demo
You can turn your MQLs into SQLs through targeted campaigns and nurturing.
An SQL is a crucial demand generation metric because it guides your team's efforts toward driving quality leads. And when combined with other metrics like Conversion Rate, you can further produce more meaningful insights.
As AswinSampath Kumar from DataVinci puts it, "By keeping an eye on SQLs, we can double down on the leads that matter. This focus on quality over quantity helps us identify which marketing efforts are truly paying off and connect with those who are ready to take the next step with us."
Customer Acquisition Cost (CAC)
Since demand generation attracts new people to your business, it's important to know how many of them convert to customers. More specifically, you need to know if the channel or marketing campaign you've implemented is profitable.
CAC measures the direct costs associated with acquiring a new customer, including costs related to advertising and promotions. The lower your CAC, the more cost-effective your demand generation efforts are.
Tracking CAC also helps set prices that cover demand generation campaign costs. Over time, CAC data helps predict future costs and match your marketing strategies with the overall business goals.
So, how do you calculate CAC?
Divide the total amount spent on acquiring new customers by the total number of customers you've converted in that period of time, and there you have it.
Customer Lifetime Value (CLV)
Customer Acquisition Cost, also known as Customer Lifetime Cycle, is the money you earn from a customer while they're with your business.
"Knowing your company's CLV allows you to understand the limits of your marketing investment and helps you to make more informed decisions about where best to allocate your spend to have the greatest impact on long-term profitability and business growth."
It's important to track CLV in marketing because it guides your strategy, and predicts future income and the success of your campaigns. For instance, if your CAC from LinkedIn ad campaigns is £50 and your CLV is £500, then this channel is profitable and it's smart to put more resources into it.
Cost Per Lead (CPL)
Cost Per Lead is similar to Cost Per Acquisition, but it gives you the direct costs associated with acquiring a new lead. A lead is someone who shows interest in your business, like visiting the pricing page or clicking on a promo ad.
CPL helps answer questions like: How much does it cost to attract a person's interest? How well are your marketing investments paying off in terms of generating potential customers?
Find out CPL by dividing the total amount spent on a specific marketing campaign by the number of leads that campaign generated. For example, if you spent $1,000 on a campaign and it produced 200 leads, the CPL for that campaign would be $5.
Number of Activations & Signups
Demand generation's main goal is to put your product before potential customers. So, while measuring the performance of your campaigns, activation and sign-ups are vital.
Signup is when a lead registers to try your product. It doesn't have to be a paid registration. All they have to do is sign-up for your product and get a feel of it.
Activation comes after. When a free trial signup starts using your product, they've "activated" it.
Both these metrics show the effectiveness of your campaigns in attracting prospects at the beginning of their customer journey. In other words, they help you see if your marketing is working and if people are curious about what you offer.
"Measuring signups in demand generation is like counting the people who walk through the door of your shop. Signups are the first step in building a relationship with your audience. By tracking signups, you're quantifying interest and setting the stage for deeper engagement and eventual conversions."
It's easy to push every lead that comes your way into the sales pipeline. But, if they aren't the right fit for your solution, sales reps end up spending too much time on leads that don't matter. The impact of poor lead quality is a bloated pipeline. It looks like you’ll hit your revenue goals, but poor leads mean a higher number of drop offs in the final stages of the sales process. Bloated pipelines also lead to a chain reaction of poorer forecasts.
This is why tracking the quality of your leads is important. 70% of B2B marketers prefer quality leads over quantity.
Lead Quality tells you how close your prospect is to being your ideal customer, and how likely they are to buy your solution.
Various factors tie in when you're considering your ideal customer, like persona, industry, company size, and geography. So, when a lead checks all these boxes, they're the perfect fit for your solution. They're more likely to purchase your product as your solution would solve their business pains.
Average Deal Size
If you've ever wondered what the average amount of money a business earns from each customer transaction is, you're thinking about average deal size. In simple terms, average deal size helps companies understand how much money they typically make from each sale on average.
This metric is especially important because, in the plethora of campaigns within your demand generation strategy, you can double down on the marketing channel that brings you the largest deals, as opposed to the most deals. With this, you can refocus your time and money on the most profitable channels.
How to calculate this metric? Take the total revenue generated from all sales within a specific period and then divide that sum by the number of deals.
For instance, if a business made $100,000 from 50 deals in a month, the average deal value would be $2,000.
Return on Investment (ROI)
While average deal size focuses on understanding the typical revenue from individual sales, ROI assesses the overall profitability and efficiency of investments.
ROI is a way for businesses to evaluate how much value they're getting back compared to what they're putting in, in terms of resources, time, and money.
Demand generation campaigns generally have a longer-term impact. So, ROI might not be immediately apparent. For example, an SEO or brand campaign will take longer to reflect in your ROI estimates, whereas an email campaign or PPC may reflect sooner. But tracking ROI over time helps you understand the cumulative efforts of your demand generation strategies. The key here is to define your goals and set up tracking processes to effectively measure your ROI. For example, when setting up nurture campaigns or webinars, set a goal of 500 sign ups, or a 50% reply rate, and such.
Marketing Cycle Length
Marketing Cycle Length measures the time it takes for a potential customer to go from learning about your product or service to deciding to buy it. It's also called the sales cycle or buying cycle.
This metric may vary depending on the industry, the complexity of the product, or buyer behavior.
It includes stages like awareness, consideration, evaluation, and purchasing. With the knowledge of how long this process takes, you can cater your marketing strategies to match the stage of the prospects - which yields better results as the prospect's journey is customized to their awareness of your solution.
To calculate your Marketing Cycle Length, add up the total number of days it took for every prospect funnel and divide that sum by the total number of deals.
Payback Period refers to the time taken by a business to recover the costs invested in acquiring new customers. Tracking this helps assess the speed at which marketing investments translate into tangible returns.
Basically, a shorter payback period indicates quicker profitability in customer acquisition. On the flip side, a longer payback period may require a business to reassess the sustainability and efficiency of its demand generation process. And deciding on which campaigns or strategies to invest in will depend on the maturity of your SaaS business. If you’ve started out and are looking to scale, invest in strategies that can give you profitability in the long run.
The average benchmarks for startups to recover their initial investment costs is 12 months or less.
The Importance of Measuring the Right Demand Generation Metrics
Now that we've discussed the key metrics to track for your demand generation strategy, how do you know which metric is important?
Well, it depends on your strategy and what you're trying to achieve.
"Why would we measure a campaign on CTR when we were optimizing for reach?
Why measure a video series on conversions when what we are really looking for is engagement and infeed consumption?”
Focusing on the right metrics guides you to make informed decisions about where to allocate resources and marketing budgets, which channels to prioritize, and how to best optimize your campaigns.
In agreement, Kailash Ganesh, Product Marketing Lead at CultureMonkey says that to align marketing and sales, calculate ROI of marketing efforts, and to drive an optimized marketing strategy, it’s important to properly measure your demand generation metrics.
Demand generation is vast. Traffic and leads can flow in from a variety of sources, each following a unique journey and timeframe as they move through the sales funnel. This is precisely why what worked for someone may not work for you. So following industry-standard benchmarks is futile.
Furthermore, in the race to track every metric possible, you could lose sight of what matters. And that's why it's important to establish your own demand generation goals first and then set your KPIs.
Remember, overnight success is a myth. Success in demand generation improves incrementally over time. But regularly evaluating and optimizing your strategies can get you there faster.
Q1. What is demand generation?
Demand generation refers to the inbound marketing strategy focusing on piquing interest in your product or service. Demand generation strategies often occur in 3 stages: evaluating how well a target audience knows the brand, finding new ways to introduce the product or service, and nurturing the target audience to build relationships and trust.
A data-driven strategy, demand gen aligns marketing and sales efforts to drive more revenue for the business.
Q2. What are the key demand generation metrics?
The most essential demand generation metrics include cost per acquisition, cost per lead, activations and sign-ups, customer life cycle value, cost per lead, and average deal size.
Q3. Who owns demand generation metrics?
The marketing team, specifically demand gen, typically owns demand generation metrics, strategies, and campaigns. As part of their responsibility, they strategize how to create awareness for their product, run campaigns, track the campaign's effectiveness, and optimize marketing initiatives accordingly.