B2B Marketing KPIs: How To Measure Success
Updated on: 8 February 2023
What gets measured, gets done. No matter if your startup is at pre-seed or Series C, it's critical for your company to set, measure, and track your B2B Marketing KPIs.
No single KPI works by itself, as each metric only provides an indication of performance on its own silo.
Instead, having an array of KPIs will provide signals on what's not working — so you can end unprofitable activities quickly and cut losses, as well as what's working — so you can double-down, optimise, and improve your bottom-line.
In this article, we'll go over the 10 most relevant B2B marketing KPIs that your B2B startup or company should consider in 2023. You can also read up on our 8 KPIs for any kind of business model.
What are B2B Marketing KPIs?
B2B (Business-to-Business) Key Performance Indicators (KPIs) are a set of quantitative measures that tracks, informs and assesses your business' progress towards your growth goals.
The Importance of Setting KPIs
According to a survey by B2B International, 57% of US and Europe B2B companies listed "growing market share" as one of the main challenges they face as a B2B business.
Setting B2B Marketing KPIs reminds everyone in your company of the core business goals, ensuring that everyone is rowing in the same direction.
By first principles, setting the objective of setting B2B marketing KPIs is simple — to increase the profits of your company.
The 10 Core B2B Marketing KPIs
1. Number of Leads, i.e. MQLs and SQLs
What are MQLs?
MQL refers to Marketing Qualified Lead, and it refers to a lead who has indicated an interest in your product or service based on your marketing campaigns.
MQLs can be measured in several ways. A MQL would have qualified by their actions, such as submitting their contact details, adding your product to cart, or downloading materials.
What are SQLs?
SQL refers to Sales Qualified Lead, which refers to an MQL who is ready to be buying.
SQLs are a step beyond MQL. The sales team has qualified SQLs as not only leads who are interested in your product but also at a stage where they are looking and able to purchase your product.
Find out more about MQL and SQL here.
Naturally, the objective for this KPI is to maximise the no. of SQLs achieved by your sales and marketing campaigns.
2. Customer Acquisition Cost (CAC)
What is CAC?
Customer Acquisition Cost (CAC) refers to how much it costs to convert a customer to purchase your product or service.
How to calculate CAC?
CAC = Total Cost in Acquiring New Customers ÷ No. of Customers Acquired within the same period
How do I implement CAC in practice?
Set your targeted CAC every quarter by dividing your total sales and marketing budget by the customer growth target for that quarter. This gives you your Target CAC.
Compare your Target CAC with the actual CAC at the end of the quarter.
A rising CAC indicates inefficiencies in your sales or marketing campaigns or general changes in trends in the market. The objective is naturally to keep CAC as low as possible.
3. Customer Lifetime Value (CTLV)
What is CLTV?
CLTV refers to the value a customer brings to your business over their lifetime.
How to calculate CLTV?
CLTV = (Monthly Revenue per Customer x Expected no. of months) - Cost of acquiring and serving them.
How do I implement CLTV in practice?
The aim is to keep CLTV as high as possible. This can be done by introducing new products to increase average order value per customer or reducing the churn rate by trying to keep customers for as long as possible.
A declining CLTV signals that you need to spend more on releasing new products, adjusting your pricing, or to invest more in customer success to lengthen the period of time your customer stays with your company.
Improving your demand generation strategy and content marketing strategy are two great ways to acquire and serve customers.
4. Time-to-Conversion
What is time-to-conversion?
Time-to-conversion is the average no. of days it takes for you to convert a client from an SQL to a customer.
Why is time-to-conversion important?
For B2B businesses that are sales-heavy, you need to keep your time-to-conversion as short as possible. This is because sales is a labour-intensive process, which has opportunity cost in time and wages.
What should my time-to-conversion be?
The amount of time you should spend chasing a lead to convert an SQL to a customer should depend on your estimated customer lifetime value (CLTV) and/or average annual contract value (ACV).
Generally for B2B companies:
- SQLs worth less than US$2,000 should be closed within 15 days.
- SQLs worth less than US$5,000 should be closed within 30 days.
- SQLs worth less than US$20,000 should be closed within 90 days.
- SQLs worth less than US100,000 should be closed within 180 days.
- SQLs worth much more than US$100,000 might take up to a year to close.
The aim is to shorten the cycle between Consideration and Purchase as seen in this graphic by as much as possible.
5. Website to MQL Conversion Rate (or Website to Lead Ratio)
What is the Website to MQL Conversion Rate?
Conversion rate refers to the percentage of prospects that becomes an MQL after visiting your website or clicking on one of your ads.
How do I evaluate this ratio?
Your aim will be to increase the ratio of customers converting as a visitor into completing a form that turns them into an MQL. For example, filling in an interest form on your website with their contact details.
In order to maximise the Website to MQL Conversion Rate, you need to work on optimising your landing page engagement, increasing unique page visits, and conversions per site visit.
6. MQL to SQL Conversion Rate (also known as Lead to Opportunity)
What is the MQL to SQL Conversion Rate?
This is the success rate of turning an MQL (interested prospect) into a SQL (a sales-qualified customer).
Why is this important?
By tracking both SQLs and MQLs separately, this allows B2B companies to learn where their bottlenecks are in the sales process. Perhaps your marketing team is doing an excellent job bringing in MQLs, but your sales team needs help in converting them into SQLs.
The industry benchmark from MQL to SQL is at around 13%. This statistic however varies substantially based on where the MQL was acquired.
According to SalesForce, email campaigns convert at an average of 0.9%, events at 4.2%, with a higher conversion of 17.8% for webinars and 31.3% from website leads.
Once your sales team has accepted a lead as sales-qualified, it also means that the marketing team has brought in a high-quality lead and are not wasting marketing dollars chasing poor or fake prospects.
7. Lead Quality
What is Lead Quality?
Lead quality is a value that allows your sales team to identify how likely an MQL will become a customer.
Why is Lead Quality relevant?
The better the quality of your MQLs, the more likely they will become customers. This increases your bottom-line.
Also, poor lead quality means substantial inefficiencies in the sales process, with your sales team dedicating time to servicing and/or reaching out to prospects who (i) do not have the ability to purchase your product, and/or (ii) are not interested in buying your product.
Lead quality is a qualitative process, based on demographic factors of the lead, such as their job seniority/level, their department, the company size and profile of the company.
8. Churn Rate
What is churn rate?
The churn rate is the percentage of your customers who cancel or do not renew their subscription with your company during a given time period.
How do I calculate churn rate?
Within a given time period,
(No. of customers who have churned (i.e. did not renew) ÷ No. of new customers acquired) x 100%.
For example, if your SaaS company acquired 1,000 customers in the last quarter, but lost 50 customers who did not renew or cancelled their contract, your churn rate will be 5%.
Why is this important?
Churn rate is vital to maximising your company's revenues. If your customers do not stick around, you might not even recoup your CAC. Maximise your CLTV by reducing your customer churn rate.
To reduce churn, you can invest more in training for your sales and customer success teams, and keep an eye on the NPS (explained below).
9. Net Promoter Score (NPS)
What is NPS?
The Net Promoter Score (NPS) measures customer experience and is a core metric used to evaluate customer satisfaction across the globe.
It goes a scale from 0 to 10. Users are asked the question, "How likely are you to customer our company to your friend or colleague?" in surveys sent out through email.
How to evaluate NPS?
Your Promoters (score 9 to 10) are your most loyal product enthusiasts, who will stay for the longest, and also bring in new customers for you through referrals.
Your Passives (score 7 to 8) are satisfied customers, but are not loyal and could easily switch to a different company based on features and price.
Your Detractors (score 0 to 6) are unhappy customers. These customers could leave negative feedback on your company, churn, and also provide negative word-of-mouth.
How to calculate NPS?
Calculate your NPS by subtracting the percentage of Detractors from the percentage of Promoters.
For example, if 70% of your customers are Promoters, 10% are Passives, and 20% are Detractors, your NPS score is 0.7 - 0.2 = 0.5.
NPS can range from -1 (every customer is a Detractor) to +1 (every customer is a Promoter).
Why is NPS important?
NPS helps you understand what is lacking in your product and customer service, so you can learn how to increase your CLTV by reducing your customer churn rate.
A high NPS can also be leveraged by building in referral schemes to help bring more customers in, thereby reducing CAC.
10. Sales Team Response Time
What is Sales Team Response Time?
This is the average no. of minutes or hours it takes for your sales team to respond to sales queries.
Why is this important?
Harvard Bussiness Review found that most businesses took an average of about two days to respond to sales queries, during which the customer loses interest, and your SQL might be lost.
Tracking your Sales Team Response Time is vital to keep leads 'hot' and convert an MQL/SQL into a paying customer. Research by ChatPath has shown that the odds of contacting a lead also decreases over 10x in the first hour.
Consider the likes of B2B companies like Stripe, which has an estimated response time in the matter of minutes.
Measuring and Analysing your B2B Marketing KPIs
It may seem daunting to track so many KPIs; consider using these tools to aid you in the process.
- Google Analytics tracks website traffic data and provides you with an overview of your core web traffic statistics.
- Hubspot is a CRM that can help you track and analyse data on Sales Leads and handle your outreach, all in one place.
- Traktion's Smart Dashboard incorporates performance marketing metrics for a holistic overview of your sales and marketing performance. Traktion's Smart Dashboard is available for free to all companies who hire a pre-vetted digital marketing talent via Traktion.
In Conclusion
Over the past decade, B2B marketing has swiftly evolved from a sales-heavy art to data-driven science. Firms have engineered marketing and sales processes and invested heavily in marketing automation.
More so than ever, B2B businesses need to set, track, and learn from the right set of B2B KPIs. Use the above KPIs as a north star for you and your company to incorporate into your growth strategy. This will guarantee you get the most return from your marketing efforts.
If you are looking to hire a growth talent to take your B2B marketing to the next stage, consider hiring through Traktion, our platform only works with the top 5% digital marketing talent with experience from companies including Atlassian, Google, Allianz, SAP and EDITED. Traktion is free-to-use to hire growth talent.
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