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7 Must-Know Demand Generation Metrics

How effective are your lead generation campaigns? How about your content marketing — is it successful? If you’re like some marketers, you’re struggling to determine whether or not your marketing efforts are worth it.

One study shows only 39% of marketers are somewhat successful at tracking ROI for content marketing. And only 21% say they’re successful at determining ROI. But this isn’t just an issue with content strategy — it’s digital marketing as a whole.

If you’re using demand generation methods to attract leads, then how are you tracking campaigns to identify success? As with any marketing initiative, it’s about tracking the right KPIs.

So we put together this guide to help you identify and track the best demand generation metrics. Let’s jump right to it.

What is Demand Generation Strategy?

Demand generation strategy is a plan B2B marketers use to create awareness and interest in their brand and products (or services). The idea is to develop content for and connect with their audience across every touchpoint throughout the buyer’s journey. This typically means creating content for multiple channels, including social media, website copy, blog posts, videos, and downloadable content. 

What makes demand generation exceptional is that it helps marketing and sales teams to work together to drive quality leads. The two departments have to share data, so marketing knows what topics, questions, and concerns to address in their content. It makes sales teams’ jobs easier by giving prospects answers and guidance before speaking to a salesperson. 

When done right, it can hasten the sales cycle and enable salespeople to close deals faster and easier. 

But what works the best for demand generation efforts? It depends on your audience, industry, and product. And the only way to know for sure is to monitor key metrics. 

Let’s take a look at what they are. 

How Do You Measure Demand Generation?

In marketing, you never want to get caught up in vanity metrics. So it’s critical to identify which KPIs are worth monitoring. For example, the purpose of demand gen is to, well…create demand. And one of the best ways to identify this is to look at the amount of attention you’re getting. 

This may include numbers like website traffic, social media views, and likes on your posts. But these metrics don’t say much about performance. Just because you’re getting views doesn’t mean it’s from the right audience. And if it’s not from the right audience, then you won’t boost demand for your product or service. 

So let’s take a look at what lead gen metrics matter the most.

1. How Many Leads Turn into Customers (Closing Percentages)

Alright, so your content is driving leads into the pipeline for your sales team to convert. But how well are they doing? The best way to determine this is to track closing percentages. This tells you how many prospects are turning into customers. 

The higher the percentage, the better your marketing efforts are. If it’s low, then this means you’re not attracting the right prospects or need to work on your content. It can also be an issue in the sales process — maybe it’s too long or needs improvement. So rule this out before blaming the content. 

To calculate your win rate, you just need to use this formula:

# of Opportunities Closed / # of Total Opportunities = % of Win Rate

When your content is relevant, high-quality, and high-value, then you’ll have higher win rates over time. 

2. How many leads are moving through the funnel

Getting leads into your funnel is great. But this doesn’t mean anything if they’re not converting throughout the funnel. The leads you gather at the top are marketing-qualified leads (MQL). They saw your content and signed up for your newsletter. 

But this is only the beginning. You want to also look at their conversions in the middle of the funnel. This will determine whether your nurturing campaigns are working. For instance, are your subscribers opening emails, clicking on links, and completing calls to action (CTAs) like booking a call?

To determine this, you’ll need to look at what percentage of MQLs become sales-qualified leads (SQLs). SQLs are the leads that convert into meetings or calls. With these insights, you can determine whether your marketing is bringing in quality leads. If not, you may have to change channels, messaging, or topics. 

 To calculate your funnel conversion rate, just use this formula:

# of Leads / # of Conversions = % of Funnel Conversions

3. How Much it Costs to Acquire Leads

The cost to acquire new leads will determine if your demand gen efforts are worth it. To determine this, you’ll have to calculate whether the lifetime value of customers (LTV) outweighs the cost to get them. 

Here’s a simple formula you can use to calculate CAC (customer acquisition cost):

Total Cost for demand gen campaign or channel / # of New Customers Acquired through that campaign or channel = CAC

The total cost of your demand generation may include costs for things like:

  • Vendors
  • Events
  • Wages
  • Martech
  • Ad spend
  • Content marketing

To improve the results, you’ll want to refocus your campaign on better channels. Or optimize your content to include better topics, offer higher value, or use different formats. 

4. How Quickly You're Driving in New Customers (Sales Velocity)

When you start a demand gen campaign, the goal is to build visibility and leads as quickly as possible. So the faster you achieve this, the better your campaign. But how do you calculate this?

This is especially challenging in B2B since it can take months to close sales. With the help of marketing, salespeople will have the content needed to educate, inform, and influence leads. This will prep qualified leads, making it easier and faster to close deals. 

The key is building a relationship with leads from the top of the funnel (well before they begin shopping for vendors). 

So how do you calculate sales velocity? Here’s a simple formula:

# of Opportunities x $ Amount x % Win Rate / Length of Sale = Sales Velocity

5. How Much Sales Qualified Opportunities Cost

Being able to attribute your leads and opportunities to a particular lead source is challenging. It’s not always clear whether a prospect saw an ad before reaching out. Or if they looked you up after seeing one of your social media posts. 

The B2B buying process isn’t transactional, and it doesn’t go in a linear order. It’s all over the place, so what you can track instead is the cost of SQO (sales qualified opportunities).

This is more meaningful to demand generation campaigns. Metrics like Cost Per Click (CPC) and Cost Per Impression (CPM) align with lead gen efforts. You can use them to make strategic decisions, but they don’t provide the insights needed to determine performance. 

To calculate lead generation performance metrics, you have to identify what it costs to acquire sales opportunities and compare it against marketing costs. Here’s how the formula looks:

$ Cost of Marketing / # of SQOs = SQO Cost

6. How Much Each Customer is Worth (Customer Lifetime Value)

The leads you acquire from your demand gen efforts should result in conversions from high-value customers. This can either be a client who spends a lot over a few years or remains loyal over many years. 

The best way to determine lead value is to see how much each are worth as a customer. In other words, the customer lifetime value (CLV). 

With this number, you can determine whether you’re targeting the best leads. For instance, if your leads are converting, but they don’t stick around long enough, then it may be that you’re targeting the wrong people. You’ll have to find out why they leave to see if it’s due to budget constraints (you’re too expensive) or the product doesn’t align with their needs. 

In these cases, you’ll have to reassess your offer and pricing or target folks who better suit your offer. 

So how do you come up with a CLV? Here’s a formula for you:

($ Yearly Revenue per Customer x # of Years as a Customer) – Customer Acquision Cost (CAC) = CLV

7. How Much You're Getting in Return (ROI)

At the end of the day, demand generation is all about increasing your revenue. So it makes sense to monitor your revenue stemming from demand gen campaigns. Now, it’s vital to differentiate between net-new revenue and income coming from current customers. 

So you’ll need to track campaigns and the journey of each customer. For example, a lead that signs up to your newsletter after reading a specfic blog, clicks a product link in your email campaign and completes the purchase. This is directly attributed to your marketing campaign (content and email). 

Here’s how to calculate net-new revenue:

# of Sales x $ Average Sales Price = Revenue

Then you can look at how much you spent on the campaign(s) to determine if you’re losing or making money.

What Metrics Are Best for Measuring Lead Quality?

The quality of your leads will determine the quality of your marketing campaigns (and sales initiatives). If you’re driving a ton of traffic, but only 2% are converting, this means 98% of your traffic is low-quality. This isn’t just a lead issue. It’s a source issue (where the leads are coming from).  

But how do you improve these numbers? It requires looking at the right demand generation benchmarks to identify the issues. For example, you’ll need to measure KPIs like:

  1. Visitors to leads: How many leads are turning into customers (i.e., conversion rate). 
  2. Leads to opportunities: How many leads complete lead-qualifying actions (i.e., signing up to a newsletter, viewing a product page, reading a series of emails/blogs, etc.)?
  3. Time to conversion: How long does it take your leads to become customers? How hard is it for sales to convert them? The easier and faster it is, the higher the quality of your leads. 

If you’re seeing low-quality leads, then there’s an issue with either the sources or the messaging. Maybe you’re using the wrong channels to reach your target audience. And/or it’s possible your copy isn’t attracting the right groups. 

Run A/B tests to see if performance improves using different channels and marketing messages. 

Improve Your Metrics, Improve Your Marketing and Sales

Knowing the right metrics to track within your demand generation campaign is critical to enhancing your marketing and sales outcomes. If you’re struggling to generate sales-qualified leads, then chances are, your marketing needs improvement. 

With these tips, you can begin monitoring the KPIs that matter most to your demand gen efforts. But if you’re looking to learn more, then we invite you to watch the on-demand event: Out of the Box: ABX Strategies for Marketing, Sales, and CX today!

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