The Top 5 Marketing KPIs B2B Marketers Should Focus on to Measure Success in 2022
As the new year quickly approaches, B2B marketers spanning all industries need to reflect on their current marketing KPIs. We know that monitoring and measuring certain metrics enables marketing teams to track their overall performance. The question is, are the KPIs you’re monitoring relevant? And do these metrics show you the data you truly need to make smart marketing decisions? Depending on your goals for this upcoming year, you may need to shift your focus to new KPIs.
Transitioning into the new year allows you to develop a thoughtful plan depicting which marketing KPIs will enable you and your team to make data-driven decisions to enhance your marketing initiatives. Let’s look at the top 5 marketing KPIs that will be crucial to measuring success in 2022.
1. Return on Investment of Your Tech Stack
According to a PwC study, 86% of respondents report that artificial intelligence (AI) is becoming a “mainstream technology” at their company. Likewise, AI Journal survey respondents predict that AI will deliver greater efficiency for business processes in the near future.
As automation, AI, and machine learning become more widely adopted, it’s important to measure the impact these technologies bring to your organization. Through a tech audit, you may find that one tech platform can accomplish more than another two combined. Or you might discover that your team hardly uses a certain platform and therefore, you’re wasting resources by subscribing to it. Whichever the case may be, we know a simple formula for calculating the ROI of your tech stack. Let’s take a look at an example.
Say that in Q1, your marketing influenced annual revenue is $100,000 and the cost of your total tech stack is $12,000 for the quarter. To determine the ROI, follow the formula below. Keep in mind that the marketing influenced annual revenue will require a meaningful attribution model to determine what that numerator is for your organization.With this information, you’ll be able to audit your current tech stack and remove any platform or service that no longer brings value to your business. While the actual ROI of your tech stack may differ from organization to organization, the best tech stacks help generate enough revenue that they end up paying for themselves and more.
In this example, an ROI of 733% is great and proves that your tech stack brings in more than enough revenue to cover the costs of all your marketing technology as well as additional revenue. If you find that your return on investment is 100%, you’re just breaking even on your tech stack. However, if your ROI is less than 100% your tech stack is failing to bring in revenue. We recommend performing a tech stack review at least once a year to ensure your current tools are delivering the desired results. If your tech stack is insufficient at helping to garner revenue, you may want to consider removing an underperforming technology from your stack.
Pro tip: Keep this ROI formula in mind because it works for determining the ROI of just about everything.
2. Customer Acquisition Cost
One of the most important marketing KPIs is customer acquisition cost (CAC). Essentially, the CAC tells you how expensive a single customer is to acquire. This KPI is so crucial to marketing success because if it costs you more to acquire customers than the value they bring to your business, you’re not generating any revenue.
For example, say you’re spending $5,000 each month on your entire marketing costs including (but not limited to) employee wages and your tech stack. And in the same month you acquire 100 new customers. By using the formula below, you can determine how much it costs, on average, to acquire each of these 100 customers.
Remember: For this marketing KPI, the lower the number, the better. As shown above, the CAC in this example is $50. By monitoring this marketing KPI you can make data-driven marketing decisions to lower this number. For example, determine where in your marketing budget you may be spending a little extra money on something that doesn’t bring in a positive ROI. Can this money be reallocated into something that will make a greater impact?
3. Customer Lifetime Value
The customer lifetime value (CLV) marketing KPI defines how much revenue each customer brings to your business over the span of the time they remain your customer. This KPI helps you understand which customers bring in the most revenue over time. With this insight, you can prioritize these customers and focus on upselling to them. Additionally, if you have a customer with a lower CLV, you can try to increase their CLV through nurturing campaigns. Let’s take a look at an example.
Let’s say the annual revenue from a specific customer is $200,000. Plus, they have been a loyal customer for 3 years. To calculate their CLV, use the formula in the graphic below. For this formula, you will also need to know your CAC. For the sake of this example, let’s say your CAC is $100.In this example, the CLV is $599,900. Now, you can compare your other customer’s CLV and determine who your top customers are. Additionally, you can determine who your least valuable customers are and develop a plan to increase their CLV by upselling other products or services.
4. Traffic-to-Lead Ratio
Next, the traffic-to-lead ratio is another important marketing KPI for 2022. This is because the traffic-to-lead ratio depicts the percentage of website visitors who turn into actual leads. By leveraging this KPI, you can uncover potential reasons why your site is getting a lot of organic traffic and yet visitors are not converting into leads. Is it possible that there is a misalignment between the CTA they click on to get to your site versus what is actually on your site? Or maybe the content on your site lacked information or relevance.
Ultimately, monitoring your traffic-to-lead ratio on a consistent basis will help you figure out which pages work well to convert leads and which pages may be in need of improvement. To determine your traffic-to-lead ratio, follow this example. Let’s say that the number of website visitors you have in a given month is 1,000. In the same month, 100 of these visitors became leads.By dividing the number of website visits by the number of leads garnered in the month, we determined that the traffic-to-lead ratio of this example is 10:1 or 10%. That means for every 10 website visitors, 1 of them will convert into a lead. Experts report that a great traffic-to-lead ratio is at or above 2-4%. If your ratio is less than 2%, you may need to improve the copy on your site or the site overall.
5. Lead-to-Close Conversion Ratio
Lastly, the lead-to-close conversion ratio is the percentage of leads that become your customers. This marketing KPI is critical to prioritizing your marketing initiatives. Ask yourself this, which campaigns convert the most leads into customers? Likewise, which campaigns convert the least amount of leads into customers? With the lead-to-close conversion ratio, you can uncover these valuable insights.
Consider this example. In a given quarter the total number of marketing influenced closed won deals your team made was 80. Yet, the number of leads generated in the same quarter was 500. To determine the lead-to-close conversion ratio, follow this formula:In this example, the lead-to-close ratio is 16%. That means that for approximately every 500 leads, 80 of them are likely to make a purchase. While some experts proclaim that best-in-class organizations have a lead-to-close ratio of 30% and average companies have a ratio of about 20%, we know that the ideal ratio fluctuates depending on your industry. According to HubSpot, the lead-to-close ratios for various B2B industries are as follows:
- Biotechnology Industry: 15%
- Business & Industrial Industry: 27%
- Computer Software Industry: 22%
- Computers & Electronics Industry: 23%
- Finance Industry: 19%
Understanding this marketing KPI helps you determine the value of your leads. Are you bringing in hundreds of leads but only a dozen are making purchases? If so, it might be time to rethink your marketing strategy.