Most organizations do a pretty good job of tracking basic marketing KPIs – top of the funnel performance metrics like webpage visits, session lengths, bounce rates, and lead conversions. Those are early indicators. They tell us if our marketing is accomplishing its most basic function – attract an audience and generate leads.
Your marketing, however, should accomplish much more. Ultimately, isn’t the role of marketing to help drive revenue?
Too many organizations seem to be doing marketing for marketing's sake. They produce some cool campaigns and even generate a few leads, but in the meantime, the organization is failing to meet its revenue growth objectives. Are you generating the right kind of leads? What happens after a lead is generated? Are your leads converting into opportunities that close? Most organizations struggle to track the movement of leads through the sales process. If you can’t say definitively that your leads result in closed business, then you will never know for sure if your marketing is performing as it should. Below are five metrics that will give you visibility into the movement of leads through the sales process.
1. Lead to MQL Conversion Rates
Not all leads are created equal. It’s important to distinguish between a lead and a marketing qualified lead (MQL). Is the lead a student doing research for their thesis or someone legitimately in your target market? Does your lead have valid contact information or are your lead numbers inflated by several people named Mickey Mouse? An MQL is a lead that fits within your target persona criteria. This metric tells you if you are generating the right kind of leads. It’s a measurement of lead quality. If your MQL % is too low, then you may need to adjust your targeting and/or messaging.
2. MQL to SQL Conversion Rates
Most organizations are good at generating top of the funnel MQLs. But often the pipeline is bloated at the top because nothing moves beyond this point. SQLs are leads that warrant the attention and action of a salesperson. These are the leads that your sales team should be getting excited about. An SQL is a lead that not only fits within your target persona criteria, but additional qualifying criteria was identified, or behavior exhibited by the prospect that warrants action from the sales team. This is typically where the handoff from marketing to sales occurs.
3. SQL to Opportunity Conversion Rates
This is a measurement of sales activity. When the sales team takes ownership of the lead, their focus should be to identify a valid business reason for that prospect to engage with them, discover the prospect’s specific business problem/needs, and confirm with the prospect that they are pursuing a solution to their stated problem. When this is accomplished, the salesperson has an official opportunity they can pursue. Many salespeople may talk about opportunities they’re working, but if they haven’t done these steps, they’re operating only on guess-work and hope. The hope of a salesperson is difficult to quantify and measure. Disciplined classification and measurement of opportunities will help bring reality to sales pipelines and forecasts.
4. Opportunity to Closed Deal Conversion Rates
The holy grail of marketing has always been to close the loop from lead to closed deal. Putting the previous interim metrics in place will help make measuring this metric more attainable. Measuring this metric will open the door into capturing additional insight into sales performance issues like sales cycle lengths, sales process adjustments, and sales coaching opportunities.
5. Revenue per Lead Source
When you present your marketing plan and request additional marketing budget for next fiscal year, wouldn’t it be nice to be able to justify your request with hard numbers? What if you could project for your CFO the amount that revenue will increase if budgets for a particular marketing tactic is increased? And what if your projections were based on historical data? That conversation probably goes a lot different if your budget request is based on a hunch. Tying your revenue production to your marketing tactics will help you make better marketing decisions.
The first step in measuring these metrics is defining them. It’s okay if your definition of an MQL, SQL, or opportunity is different than other companies. It’s critical, however, that you pick a definition and stick with it. If the definition is constantly changing, it will be impossible to accurately measure. Finally, everyone on your team (both marketing and sales) needs to understand and accurately apply the definitions as the prospects move through their buying journey.