As a CEO, CMO, or Marketing director of your B2B company, you undoubtedly understand the importance of generating quality leads. After all, the company’s growth is what ultimately matters to us, right?
However, the challenges of lead generation in the B2B landscape can be daunting. There are lots of factors that contribute to your lead generation and customer acquisition efforts. Strategy, metrics, KPIs, demand capture, demand generation and there are many more things.
And if you don’t know where to start, you are absolutely at the right place. In this blog, the Kunoichi Growth team will navigate you through performance marketing analytics. As a digital marketing agency specializing in performance marketing activities, we help businesses with lead generation, conversion rate optimization, customer acquisition and more marketing activities.
Together, we will explore all the key performance marketing metrics and KPIs you should track to measure your marketing success. And, we are not just talking about abstract indicators here. These are the key indicators that can revolutionize your performance marketing activities and lead generation strategies. How? It will tell you what really matters for your campaign and your business. These metrics and KPIs will act as beacons, guiding you through the labyrinth of lead generation challenges.
With the information provided in this blog, you will gain a clear understanding of how these metrics work together, helping you improve your marketing strategies and use your resources wisely. Let’s delve into the depths of performance marketing analytics. We will uncover the magic behind Click-Through Rate (CTR), Conversion Rate (CR), Cost Per Acquisition (CPA), Return on Advertising Spend (ROAS), Customer Lifetime Value (CLV), and more.
And don’t you worry! We will refrain from jargon-laden speeches. Instead, we will provide real-world examples and relatable scenarios, ensuring that every insight gained translates into actionable steps for your business.
Before we start spilling the beans, let’s understand the difference between marketing metrics and marketing KPIs.
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What’s the difference between marketing metrics and marketing KPIs?
Marketing Metrics and Marketing KPIs (Key Performance Indicators) are two essential components of the performance measurement toolkit for any marketing campaign.
While they both involve data and insights, they serve distinct purposes and play different roles in evaluating marketing success.
Marketing Metrics are specific data points that help you track progress towards achieving Marketing KPIs. They are more granular and operational, focusing on the day-to-day performance of marketing activities. Metrics provide insights into the effectiveness of individual campaigns, channels, or tactics.
Examples of marketing metrics include Click-Through Rate (CTR), Conversion Rate (CR), Bounce Rate, Cost per Conversion, and Cost per Lead.
On the other hand, marketing KPIs are strategic, high-level metrics aligned with overall business goals. These indicators are carefully selected and reflect the critical success factors for a company’s marketing strategy. KPIs are quantifiable and time-bound, providing a clear benchmark to gauge performance.
Examples of Marketing KPIs include Customer Acquisition Cost (CAC), Customer Lifetime Value (CLV), Website exit rate, Customer Retention Rate, and Return on Investment (ROI).
KPIs give an overarching view of the marketing strategy’s success, while Metrics offer valuable details to fine-tune and optimize specific marketing efforts.
Let’s understand each of them one by one.
CLICK-THROUGH RATE (CTR)
Click-Through Rate measures the percentage of clicks generated by an ad or marketing campaign relative to the number of impressions (how many times the ad is shown).
A high Click-Through Rate (CTR) means your ad is connecting with the audience, while a low CTR may indicate the need for changes to boost engagement.
Click-Through Rate (CTR) = (Number of Clicks / Number of Impressions) * 100
Example: If your ad receives 1,000 impressions and gets 50 clicks, the CTR would be calculated as follows:
CTR = (50 / 1000) * 100 = 5%
CONVERSION RATE (CR)
The Conversion Rate is perhaps one of the most critical KPIs in performance marketing analytics. It measures the percentage of website visitors or leads who take the desired action, such as making a purchase, signing up for a newsletter, completing a form or booking a demo.
A high conversion rate indicates that your marketing efforts are effective in persuading your target audience to take the desired action.
Conversion Rate (CR) = (Number of Conversions / Number of Visitors) * 100
Example: If your website receives 10,000 visitors in a month, and 500 of them complete a purchase, the conversion rate would be calculated as follows: CR = (500 / 10,000) * 100 = 5%
Bounce Rate is a crucial KPI for website performance, indicating the percentage of visitors who leave a website after viewing only one page.
A high bounce rate may signal that the website’s content or user experience needs improvement.
Bounce rate = (Number of Single-page Sessions / Total Sessions) * 100
Example: If your website has 800 single-page sessions out of 2,000 total sessions, the bounce rate would be calculated as follows:
Bounce Rate = (800 / 2000) * 100 = 40%
COST PER CONVERSION (CPC)
Cost Per Conversion measures the average cost incurred to generate a specific action or conversion, such as form submissions, lead sign-ups, or purchases. This KPI is crucial for assessing the efficiency of individual marketing campaigns and evaluating their cost-effectiveness.
Cost Per Conversion (CPC) = (Total Marketing Costs / Number of Conversions)
Example: If your marketing campaign costs €2,000 and generates 100 conversions (e.g., 100 lead sign-ups), the Cost Per Conversion would be calculated as follows: CPC = €2,000 / 100 = €20 per conversion
COST PER LEAD (CPL)
Cost Per Lead measures the average cost incurred to acquire a new lead, whether through website forms, email sign-ups, or other lead generation methods.
Cost Per Lead (CPL) = (Total Marketing Costs / Number of Leads)
Example: If your marketing campaign costs €5,000 and generates 500 leads, the CPL would be calculated as follows:
CPL = €5,000 / 500 = €10 per lead
RETURN ON INVESTMENT (ROI)
ROI is the ultimate measure of marketing success as it quantifies the revenue generated relative to the marketing investment. A positive ROI indicates that your marketing efforts are generating profit, while a negative ROI calls for a reevaluation of your strategies.
Return On Investment (ROI) = ((Revenue – Cost) / Cost) * 100
Example: If your marketing campaign generates €100,000 in revenue and costs €20,000 to run, the ROI would be calculated as follows:
ROI = ((€100,000 – €20,000) / €20,000) * 100 = 400%
CUSTOMER ACQUISITION COST (CAC)
Customer Acquisition Cost is the average cost incurred to acquire a new customer. It helps businesses measure the efficiency of their marketing efforts and budget allocation.
A lower CAC signifies more cost-effective marketing campaigns, while a higher CAC may indicate that adjustments are needed to improve ROI.
Customer Acquisition Cost (CAC) = (Total Marketing and Sales Costs / Number of New Customers)
Example: If your marketing and sales expenses amount to €50,000, and you acquire 200 new customers, the CAC would be calculated as follows: CAC = €50,000 / 200 = €250 per new customer
CUSTOMER LIFETIME VALUE (CVL)
Customer Lifetime Value is a vital KPI that determines the long-term value of a customer to your business. It takes into account the revenue generated from a customer over their entire relationship with your company. By understanding CLV, businesses can make informed decisions on customer retention and loyalty strategies.
Customer Lifetime Value (CVL) = (Average Purchase Value * Purchase Frequency * Customer Lifespan)
Example: If the average purchase value is €50, customers make purchases twice a year, and the average customer stays with the business for 5 years, the CLV would be calculated as follows:
CLV = €50 * 2 * 5 = €500
COST PER THOUSAND IMPRESSIONS (CPM)
Cost Per Thousand Impressions (CPM) is a common pricing model in digital advertising, indicating the cost incurred for 1,000 ad impressions. CPM helps marketers compare the cost-effectiveness of different advertising platforms and campaigns.
Cost Per Thousand Impressions (CPM) = (Total Ad Spend / Number of Impressions) * 1000
Example: If an ad campaign costs €500 and receives 50,000 impressions, the CPM would be calculated as follows: CPM = (€500 / 50,000) * 1000 = €10
RETURN ON ADVERTISING SPEND (ROAS)
Return on Advertising Spend (ROAS) is a performance marketing metric that measures the revenue generated for every euro spent on advertising. ROAS is particularly valuable for businesses running paid advertising campaigns, as it quantifies the effectiveness of ad spending.
Return on Advertising Spend (ROAS) = (Revenue from Ad Campaign / Cost of Ad Campaign)
Example: If you spent €1,000 on a paid advertising campaign and generated €5,000 in revenue from the campaign, the ROAS would be calculated as follows: ROAS = €5,000 / €1,000 = 5
A ROAS of 5 indicates that for every €1 spent on the advertising campaign, the business earned €5 in revenue. A ROAS greater than 1 means that the ad campaign is profitable, while a ROAS less than 1 may require optimization.
CUSTOMER RETENTION RATE
Customer Retention Rate measures the percentage of customers who stick around and keep doing business with your company over a certain time frame. A high retention rate indicates customer satisfaction and loyalty, which can significantly impact long-term business success.
Customer Retention Rate = ((Number of Customers at the End of a Period – Number of New Customers Acquired) / Number of Customers at the Start of the Period) * 100
Example: If your business starts the month with 500 customers, acquires 50 new customers during the month, and ends the month with 450 customers, the customer retention rate would be calculated as follows: Customer Retention Rate = ((450 – 50) / 500) * 100 = 80%
AVERAGE ORDER VALUE (AOV)
Average Order Value measures the average amount spent by customers on each purchase. Tracking AOV helps businesses identify upsell and cross-sell opportunities to increase revenue per customer.
Average Order Value (AOV) = Total Revenue / Number of Orders
Example: If your business generates €10,000 in revenue from 500 orders, the AOV would be calculated as follows: AOV = €10,000 / 500 = €20
Churn Rate is a critical KPI for SaaS companies, businesses with subscription-based models or recurring revenue streams. It measures the percentage of customers who cancel their subscriptions or discontinue using a service over a specific period. A high churn rate can indicate issues with customer retention, customer satisfaction, or the overall value proposition.
By tracking churn rate, businesses can identify pain points in their customer journey and implement strategies to reduce customer attrition, ultimately increasing customer lifetime value and revenue.
Churn Rate = (Number of Customers Lost / Total Number of Customers at the Start of the Period) * 100
Example: If your business starts the month with 1,000 customers and loses 50 customers during the month, the churn rate would be calculated as follows: Churn Rate = (50 / 1000) * 100 = 5%
WEBSITE TRAFFIC BY SOURCE
Website Traffic by Source allows you to analyze where your website visitors come from, such as organic search, paid advertising, social media, or referrals.
Understanding traffic sources helps you prioritize marketing efforts and allocate resources effectively.
Website Traffic by Source = (Traffic from a Specific Source / Total Website Traffic) * 100
Example: If your website receives 500 visitors from organic search and has a total of 2,000 visitors, the traffic from organic search would be calculated as follows:
Organic Search Traffic = (500 / 2000) * 100 = 25%
WEBSITE EXIT RATE
The Website Exit Rate indicates the proportion of visitors who choose to leave your website after interacting with a specific page. High exit rates on critical pages may indicate issues with content or user experience that need attention.
Website Exit Rate = (Number of Exits from a Page / Total Number of Pageviews) * 100
Example: If a specific page on your website has 2,000 exits and 10,000 total pageviews, the exit rate for that page would be calculated as follows:
Exit Rate = (2,000 / 10,000) * 100 = 20%
MARKETING QUALIFIED LEADS (MQLs)
MQLs are leads that have been identified by the marketing team as potential prospects who meet specific criteria and have shown sufficient interest in the company’s products or services. These leads are considered more likely to become customers compared to general inquiries or leads obtained through various marketing efforts.
Criteria for MQLs can vary depending on the company’s target audience, industry, and marketing strategy. Common qualifiers include specific actions taken by the lead, such as downloading a whitepaper, subscribing to a newsletter, or attending a webinar, as well as demographic information, company size, or specific job roles.
Marketing Qualified Leads (MQLs) = Marketing Qualified Leads = Count of Leads Meeting MQL Criteria
Example: Through your marketing campaigns, let’s say you collected leads and used specific criteria to determine which leads qualified as MQLs. At the end of the quarter, you identified 150 leads that met the criteria.
In this example: Total Marketing Qualified Leads = 150
SALES QUALIFIED LEADS (SQLs)
SQLs are leads that the Sales team has identified as potential prospects that meet specific criteria and are highly likely to convert into paying customers. Unlike MQLs that are identified by the marketing team, SQLs are those leads that have progressed further in the sales funnel and are now considered ready for direct sales engagement.
Sales Qualified Leads (SQLs) = Total Sales Qualified Leads = Count of Leads Identified by Sales Team as SQLs