What are B2B marketing KPIs?
As a B2B marketer, you know that your job contributes to the bottom line. The best B2B marketing campaigns generate qualified leads that can eventually be handed off to sales. Leads convert into customers, which result in sales revenue and profit.
But how do you optimize the effectiveness of your campaigns and demonstrate their value to the C-suite?
This is where KPIs come in.
Key performance indicator definition
Key performance indicator (KPI) - a metric used to measure the performance of an initiative
Key performance indicators are metrics, such as conversion rate or number of sales qualified leads, that help you evaluate whether you met your SMART goals and measure your progress toward those goals.
What are SMART Goals?
The “SMART” framework is a popular goal-setting method that helps ensure that your goals are realistic, tactical, and achievable.
SMART stands for:
Specific: Your goal is narrow enough that you are able to create a focused plan for achieving it.
Measurable: You are able to use KPIs (metrics) to track your progress and determine whether or not you achieved your goal.
Attainable: You can reasonably meet this goal within the time frame you have specified.
Relevant: It aligns with your business’s needs and objectives.
Time-based: You have defined a time frame for achieving this goal and have set a deadline.
Learn more about setting SMART goals.
For every goal you set, you will want to use one or more KPIs to measure your initiative’s performance.
For example, if you want to generate 50 new leads per month from a particular piece of content, you might choose the KPI of landing page views to keep track of how many people reached the conversion page for that content.
Based on the number of views and conversions you have received after a week, you could also calculate the average conversion rate of your landing page (another KPI) which tells you what percentage of your landing page viewers (on average) convert into leads.
This data could be used to estimate how many views you would need to get in order to acquire 50 new leads. This could help you track your progress toward your goal over the course of the month.
Types of KPIS
Different types of KPIs help you measure different processes and aspects of your goal, or present information in different ways. According to BrightGauge, the 11 most common types of KPIs are:
- Quantitative indicators: provide numerical data, such as number of page views
- Qualitative indicators: provide qualitative data, such as customer feedback
- Leading indicators: predict the outcome of an initiative or performance of a company, such as % of growth in sales pipeline
- Lagging indicators: measure the results of an initiative or performance of a business, such as annual net income
- Input indicators: "measure the resources used during the initiative," such as hours spent
- Process indicators: gauge the efficiency of a process, such as customer support tickets resolved
- Output indicators: evaluate whether the goal was or wasn’t reached, such as new customers acquired
- Practical indicators: gauge the effectiveness of a process, specific to your company’s processes
- Directional indicators: measure trends, such as whether a metric is improving, declining, or stable; for instance, whether your ROI is growing or shrinking
- Actionable indicators: measure how well a business is able to implement an initiative within deadlines
- Financial indicators: measure stability and growth, such as liquidity
How to choose the right KPIs
There is no uniform answer for how to select the correct KPIs, but here are some tips that should be relevant for most any goal.
Choose KPIs that are directly relevant to your goal
Ask yourself which KPIs can help you measure progress toward your goal, and which KPIs can help you determine whether or not you achieved the goal.
Let’s go back to the example goal of generating 50 new leads from your new piece of content per month. Let’s say that you decided to advertise that content with Facebook ads which ran for the whole month.
A KPI that could be useful for measuring goal progress might be the number of clicks your ads received.
A KPI that could determine whether you achieved the goal might be Facebook-driven lead volume, or how many leads you received as a result of your Facebook ads.
Measure both qualitative and quantitative KPIs
Quantitative KPIs, such as the number of customers acquired, provide hard, objective data. Qualitative KPIs, such as positive customer reviews, provide qualitative, subjective information. Both provide valuable insights into your performance.
Quantitative KPIs can tell you what happened, while qualitative KPIs can help you learn why something happened. For example, let’s say you update your “get a quote” page. After three months, you notice you’ve received dramatically fewer form submissions (a quantitative KPI) since you updated the page, and people abandon it after a few seconds (another quantitative KPI).
So you perform a user test. Many of the test subjects say they do not like the length of your form (a qualitative KPI). You shorten the form dramatically and within a month see a rise in submissions.
It’s a good idea to measure both qualitative and quantitative KPIs so you can piece together the whole story and diagnose problems.
Measure both leading and lagging KPIs
Leading KPIs help you forecast the results of an initiative while lagging KPIs tell you how well it actually worked. It’s best to use both.
One will help you set realistic expectations and make adjustments during your campaign, while the other will help you identify what did and didn’t work.
For example, let’s say that your goal is to generate $2,000 in revenue from leads acquired via a 30-day LinkedIn campaign. A useful leading KPI to use in this case would be expected lead value (the estimated revenue value of your leads), because it allows you to use data you already have during your campaign to help you estimate whether or not you're on track to meet your goal. It can be calculated this way:
Average customer lifetime value x average lead-to-customer conversion rate x Number of leads generated by your campaign = expected lead value
If your average customer lifetime value is $1,000, your lead-to-customer conversion rate is 10%, and the number of leads generated by your campaign to date is 50, then:
$1,000 x 10% x 50 = $5,000 expected lead value
Leading KPIs can help you make informed decisions that may improve the outcome of your campaign, such as how much you should invest or how long it should run.
In this case, your lagging indicator would be campaign-assisted revenue generated. Once the campaign is concluded and the leads it generated have finished making their way through your company's sales cycle, you can use CRM or accounting data to calculated how much actual revenue those leads produced. This data can then be used to inform leading indicators for future campaigns.
10 best marketing KPIs for B2Bs
While this list of B2B marketing KPIs is by no means exhaustive, it includes all KPIs we regularly use for our B2B clients.
- Customers generated
- Average customer lifetime value
- Lead-to-customer conversion rate
- MQLs/SQLs generated
- Expected lead value (in revenue)
- Leads generated
- Lifecycle stage progress report
- Source/medium reports
- Advertising campaign ROI
- Top pages viewed by leads/MQLs/SQLs/customers
This KPI represents the number of paying customers you acquired within a given time frame. If possible, it may make sense to refine this KPI to only include marketing-assisted customers acquired (i.e. - number of customers with one or more marketing touches prior to becoming customers).
Average customer lifetime value
This KPI represents how much revenue an average customer generates for you over the duration of your relationship.
Getting an understanding of customer lifetime value allows marketers to understand how much revenue they can expect from each customer they’re able to generate. It also allows businesses to calculate ROI.
Lead-to-customer conversion rate (sales conversion rate)
This KPI represents what percentage of a company’s qualified leads result in sales. According to the Corporate Finance Institute, it can be calculated this way:
Lead-to-customer conversion rate = number of qualified leads that resulted in sales / total number qualified leads x 100
For example, if 100 of your qualified leads in a given timeframe became customers and 1,000 total qualified leads were generated during this timeframe, then your lead-to-customer conversion rate is 10%.
This metric helps B2Bs get an idea of how many qualified leads they need to generate in order to generate a customer.
These KPIs refer to the number of marketing-qualified and sales-qualified leads a given marketing initiative generated.
Marketing-qualified leads are potential customers who showed implicit interest in your business, typically by performing an action such as downloading a lower-funnel content offer and/or viewing a service-related page.
Sales-qualified leads are potential customers who showed explicit interest in your business, such as by submitting a "Contact Us" form.
Every company has their own precise definition of what marketing and sales-qualified leads are. These metrics are useful for making projections about who will turn into customers, and more generally, assessing whether or not your marketing is producing leads that are actually valuable.
Expected lead value (in revenue)
Expected lead value allows you to forecast revenue from a set of leads using data you already have. According to AdStage, expected lead value can be calculated this way:
Average customer lifetime value x lead-to-customer conversion rate = expected lead value (on a per-lead basis).
- your average customer lifetime value is $10,000
- 10% of MQLs become customers
- 25% of SQLs become customers
- MQLs are worth $1,000 to your business
- SQLs are worth $2,500 to your business
This KPI represents the total number of leads generated by an initiative.
Leads are a useful metric to track, since a certain percentage will convert into customers.
Lifecycle stage progress report
This KPI refers to a report that shows contacts’ progress toward becoming a customer.
This progress report helps you track how many people are in each stage at a given time, and can help you see how many leads you have successfully converted into customers and make estimates about how many leads you can expect to convert in an upcoming period of time.
This KPI refers to reports in Google Analytics and most other website analytics platforms that show you where visitors to your site came from. A source refers to the name of the specific channel that drove a user to your site, and medium refers to the broader channel that Source is a part of. For example, if they found your site via a Google search, their Source/Medium would be Google (the name of the search engine)/Organic (meaning unpaid search).
These reports help you to track which channels are driving traffic, site conversions, and revenue.
Advertising campaign ROI report
This KPI helps you compare the cost of your advertising campaign to the revenue it generated.
For example, if you spent $1,000 on Google search ads in a month, and those searches resulted in $4,500 in revenue, your advertising campaign ROI is 4.5.
Especially if your business has a long sales cycle, you can also plug in expected lead value into this equation to calculate expected ROI.
So if that $1,000 Google Ads campaign produced three SQLs and you know SQLs are worth $2,500 to your business, your expected advertising campaign ROI is 7.5.
Top pages viewed by customers/leads/MQLs/SQLs
These KPIs refer to the pages on your site that were most viewed by customers and different types of leads.
If you have a large database of customers, it might be best to track your customers exclusively, since they have already made a purchase. However, if you don’t have a large number of customers already, then you can also track the pages viewed by (ideally) qualified leads, or just leads generally.
Tracking these metrics can help you to monitor the steps your leads take toward becoming customers.
Choosing the right KPIs for your B2B’s marketing goals can help you stay on track, evaluate your progress, and make more informed decisions. At the end of the day, it can also provide quantitative evidence of a job well done to share with your coworkers and superiors.
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Food for Thought
Topics: Strategic Analytics