If you are hiring marketing people to generate leads for you, stop right now. Call me today and I will buy you some leads. With one phone call I can get you a list defined by your target marketing demographics. When a sales team says they want leads this is not what they are asking for. There is much more to marketing than a list of leads. If number of leads is still your top marketing KPI, you have a lot of catching up to do.
The definition of a lead is: an individual or organization that expresses an interest in your goods or service. Today, while this is technically correct, we as marketers have used the term more and more to define the possession of data.
Marketing measurements will be different if you are a B2C company vs. a B2B company. If you are an online businesses vs. a brick and mortar.
In the B2C world you would be looking more at what kind of traffic you can generate (into a store or onto your website) and what percent of that traffic resulted in the sale of your product/service. These transactional based marketing KPIs are often easier to measure than marketing in B2B where the KPIs involve a sales cycle, sometimes a rather complex sales cycle. For B2B marketers you need to start with what you know today. I paid “x” for this marketing effort and it resulted in “y” leads.
x = y gives you your Cost Per lead (CPL)
Now of those leads that I generated I am going to determine that “r” are valid enough to pass to sales. Read blog post Marketing Qualification to learn more.
Lead to Marketing Qualified Lead (MQL)
r/y = MQL ratio
Of those that we passed to sales they are actively working “w”
MQL to Sales Accepted Lead (SAL)
w/r = MQL to SAL ratio
Now that they are working the lead they have managed to convert “o” to an open opportunity.
SAL to Opportunity
o/w = SAL to Opportunity ratio
Now they are closing some of these opportunities to sales “s”
o/s = Opportunity to Won ratio
Now you look at the number of sales (won) and connect this value back to the original cost of the program.
This will give you your Customer Acquisition Cost (CAC)
Marketing cost/number of customers acquired = CAC
Nope, we are not done yet. You should also look at the value of the sale to the cost of the program to determine an ROI. If you will only plan to sell this customer one product one time you can stop there. However in most businesses the real value of acquiring a customer is in the lifetime value (LTV), or the value of the customer for the lifetime of the customer relationship.
Lastly you will want to track your Opportunity to Loss and your Returned to Marketing conversion rates to use as metrics for ways to improve your overall marketing efforts. If you are seeing that these numbers do not correlate with your leads you might have an issue with lead process and it could be that sales is not moving leads through the funnel and they are just sitting at stages that become inactive. We will talk about ways to design a sales process that doesn’t leave you with ghost leads in a later article.
My name is KC DeKorte-Cox and I am a demand generation marketing expert with over 15 years of experience focused primarily on helping businesses with marketing and sales alignment strategies aimed at driving growth. I help design marketing and sales programs that scale by leveraging the power of technology, specifically CRM and Marketing Automation.