Get Better Clarity with These 4 B2B Marketing Metrics
We live in a data-driven ecosystem where everything is tracked, measured, and analyzed. This equips organizations and their various departments with a great amount of data. And with great data comes great responsibilities along with confusion. It’s quite easy to get stupefied and lose sight of important goals when you are flooded with heaps of data.
This is exactly the case with most marketers. They are definitely data-driven, but with the amount of analytics and data they have access to, they can get off-track since it becomes difficult to differentiate between the important metrics and vanity metrics. The amount of pressure to prove their efforts is increasing. And it gets more difficult for B2B marketers since the buying process is more complex.
For those fighting this battle, here are the crucial B2B marketing metrics to measure and improve in order to make your campaigns more effective and data-driven.
4 Crucial B2B Marketing Metrics to Measure and Improve
1. Lead-to-Customer Conversion Rate
Being a fellow marketer, I can say that I am guilty of spending the majority of my time worrying about leads and where to find them. Finding leads is important, but if you cannot convert them into paying customers, then you are just wasting your time, energy, and money.
So make sure you are paying attention to the lead-to-customer conversion rate (average percentage of leads that end up becoming your customers) and including this metric in your marketing practices. It’s quite easy to calculate; all you need to do is divide the number of sales made during a specified time period by the number of leads. For example, if you converted 30 leads out of 100 leads then the lead-to-customer conversion rate would be 30 percent.
Proven tips to improve lead-to-customer conversion rate:
- Pay attention to the quality of your leads. You can map channels against the average customer lifetime value - this way you’ll be able to invest marketing budget on the right channels and improve the quality of your leads.
- Spend time and resources to nurture your leads through blogs, social proof, social engagement, etc. Track all your brand’s touch points and revamp & realign them with your overall marketing strategy for better synergy which can translate into more conversions.
- Most importantly, integrate your marketing automation tools with your CRM to get a holistic view of the entire customer journey and touch points.
2. Customer Acquisition Cost (CAC)
This B2B marketing metric is a no-brainer and might already be on the list of your marketing metrics to track and measure, but it’s always better to get a reminder, because it’s one of the most important metrics for any B2B company.
To calculate CAC, take the total cost of sales and marketing and divide it by the total number of customers acquired during a specific time period. For example, if you acquire 1,000 customers within a quarter and spent around $2 million collectively, then your CAC would be $2,000. Remember, for B2B companies, CAC is usually higher compared to the customer acquisition cost of B2C or D2C companies because of the complex buying process. But the customer lifetime value is also quite high for B2B companies.
Tips to reduce overall customer acquisition cost:
- Have an exhaustive retargeting strategy for a better lead-to-customer or visitor-to-lead conversion ratio. The more leads you’ll convert, the lower our customer acquisition cost will be.
- Review and revamp your ad campaigns. See what’s working and what’s not working with your target audience and improve your future campaigns accordingly. This will reduce the overall cost, improve the quality of leads, and increase the number of leads.
3. Customer Lifetime Value (LTV)
This metric directly affects your CAC. Based on the customer lifetime value, you can benchmark the amount of money you should spend to acquire a customer.
Customer lifetime value gives you an idea about the amount of money a customer will spend with your business during their lifetime. You want LTV to be as high as possible or at least more than your CAC to be profitable.
To calculate customer lifetime value, you need to multiple three things:
- The average value of a purchase
- The average number of times a customer buys from you within a year
- The average time(in years) a customer stays with your organization
Yes, it’s complicated to calculate, but it’s among the most important metrics in the entire scheme of marketing things.
Tips to increase LTV:
- Use an integrated digital adoption platform (DAP) that will help you create an impactful experience for your customers with features like onboarding, product walk-throughs, in-product surveys, etc. One of the popular DAPs is AppCues, and if you want to explore more, you can check out these best Appcues competitors—some of which are more affordable and customer-centric.
- Create a focus group of your target audience to understand where they spend time offline and online. Based on the findings, create integrated marketing and advertising plans to target them with the right messaging.
- Run customer ambassador programs to turn your loyal customers into brand ambassadors. This works as social proof as well.
4. LTV:CAC Ratio
How would you know if your marketing and sales efforts are successfully translating into revenue for your organization? By calculating the LTV:CAC ratio, which is the ratio of customer lifetime value to customer acquisition cost.
You can calculate this ratio simply by dividing the average lifetime value by average customer acquisition cost. Preferably you want a higher LTV:CAC ratio but not too high, because if this ratio is higher than 3:1 or 4:1, then it’s quite possible that you are losing out on some hidden opportunities. And if your ratio is on the lower side, then your marketing team is not spending efficiently or the sales team cannot map the right products with the right leads.
In case of a higher ratio, hold a joint sales and marketing meeting and look for opportunities and ways to improve your customers’ experience with your brand.
In case of a lower ratio, review your brand communication strategy and make it more personalized. You can also review your marketing campaigns and see if they are being positioned properly.
Marketing gets more complicated with the ongoing improvements in the frameworks, tools, techniques, and data. And it’s always a great competitive advantage to be innovators or early adopters especially when data is concerned. Just make sure to not lose sight of your goals.
Hazel Raoult is a freelance marketing writer and works with PRmention. She has six-plus years of experience in writing about business, entrepreneurship, marketing, and all things SaaS. Raoult loves to split her time between writing, editing, and hanging out with her family.