Marketing departments take pride in coming up with clever campaign ideas, exciting images, and compelling messages – and rightly so. However, these matter little to the executive team if the following concern is not addressed: Are our marketing investments bringing enough return?
The first step in addressing this concern, and therefore building up marketing’s credibility, is tracking the right Key Performance Indicators (KPIs) consistently, over time. These KPIs should be monitored, and the results communicated monthly (or at least quarterly) to the executive team.
(Note: While the KPIs listed here are more relevant to B2B organizations, they can be customized to serve B2C organizations as well.)
The five KPIs you should track on a regular basis are:
1. Names: These are the new “calling card” raw prospects that marketing activities generate during the period considered. These are added to your nurturing database so that your marketing automation tool can build interest over time, progressively increasing lead scores.
2. Marketing Qualified Leads (MQLs): These are the Names which have been nurtured and have passed a lead score threshold (a number previously agreed on by sales and marketing) so that they are ready to be handed over to sales.
3. Sales Qualified Leads (SQLs): These are the MQLs that passed the vetting process by sales, and are to be actively pursued for sales transactions.
4. New Customers from Marketing: The number of new customers (“logos”) that came from marketing-generated leads
5. New Bookings ($) from Marketing: The total annualized contract amount that came from marketing-generated leads
You will notice that the five KPIs listed above represent the key stages of your marketing funnel. The ratios between these KPIs are also very useful because they represent conversion between stages. When tracked over time, all these metrics together convey a powerful story of marketing accountability.
You can add other KPIs to the five listed above to make your tracking more comprehensive. Some you might consider:
- Leads: These are the Names that marketing has identified as worthy of active nurturing. In the funnel, Leads come in between Names and MQLs.
- Sales Accepted Leads (SALs): These are the MQLs that sales has preliminarily examined and qualified for the next level of vetting. SALs are useful if Field Sales is prominent in your organization. SAL qualification may be based on parameters associated with a lead (title, size, etc.) or based on other factors and vetting by the inside sales department
- Total number of new Customers: This is the number of new customers acquired, irrespective of how they are generated. This allows you to understand the percentage of new customers generated by marketing’s efforts.
- Total new Bookings $: This is the annualized contract amount from new customers, irrespective of how they were generated. This allows you to understand the percentage of new revenues generated by marketing’s efforts.
I hope this KPI guidance is useful. This blog is first of many that will explore how marketing teams can build credibility in their larger organizations. Planned future topics include:
- Associating leads with a Lead Source and Marketing Channel
- Tracking leads to sale by Lead Source and Marketing Channel
- ROI by Marketing Channel and budget optimization
- Key things to focus while presenting marketing updates to executive team
Are there other ideas you would like us to explore? Let us know in the comment box below. We look forward to your feedback!
Photo of the open road by Trey Radcliff of Stuck in Customs,used under a Creative Commons 2.0 license.
Photo of a speedometer by Kevin Kryptonic83, used under a Creative Commons 2.0 license.