The average data-driven business is growing more than 30% year-over-year, according to Forrester. By 2021, the same companies will take $1.8 trillion annually from companies that aren’t using data insights.
In the modern marketing era, there is no place for “winging it”. If you want to thrive among fierce competition, you must keep tabs on vital metrics that are relevant to your goals. For virtually every business, the most relevant key performance indicators (KPIs) are lead-generation metrics, as they provide a view into the customer journey.
If you aren’t measuring something, how can you manage and improve it? It’s time to find out which 9 lead-generation metrics you should be tracking and, more importantly, how you can leverage these data insights to grow your business.
Key Considerations to Identify the Right Lead Generation Metrics
There is no one-size-fits-all KPI, as each business will have different goals, customers and processes.
Because of these differences, the approach to lead generation and customer acquisition will also differ. So, before you can get into the nitty-gritty of data analysis, you must consider your business goals, your target audience and your processes. With those in mind, you can figure out which metrics matter the most.
Here are four key aspects you should think about:
1) B2B or B2C?
The demands, processes and key metrics for lead generation in B2B are entirely different from those used in B2C. Whereas a B2C blogger offering an online course will focus on lead quantity, a B2B company may care more about lead quality.
For instance, a B2C company might prefer to use social media to capture leads for its new course in a cost-effective way, whereas a B2B company with a bigger budget would be happy to shell out on a targeted PPC (pay-per-click) ad campaign. With PPC advertising, you can perform audience segmentation to target people in a variety of ways, including:
- Demographics
- Age
- Gender
- Average income
- Interests
- Past purchases
This highly targeted, refined approach to advertising is much more effective in generating quality leads that are more likely to convert. Studies show that advertisers earn $2 for every $1 spent on Google Ads. Keep this in mind when you start your lead generation campaign.
Dive Deeper: Everything You Need to Know About B2B Performance Metrics
2) Product Type, Category and Cost
Customers have a lot to consider before buying. Therefore, you need to get into their minds and think about the same things.
How much customers spend and how often they make a purchase is intrinsically linked to the type of product, its category and, of course, the cost. So before you dive into metrics and measurements, identify these factors for each of your products and services:
- Product category – Some categories generate much higher sales volumes than others. For example, a customer might buy electronic products like a TV once every five years, but they will buy clothing like new t-shirts once a month.
- Product type – Luxury items are those that sell in low volume, so brands can set a high cost and earn significant profit margins. By comparison, a recurring purchase like bread or a novelty, impulsive item like a gag gift will sell for cheaper. The product type will impact your entire sales process.
- Product cost and margins – As you may expect, if you want to make money with low cost/low margin products, you need to sell a lot! This tactic requires a high volume of leads and strong conversion rates. On the other hand, you could focus on products with a high cost/margin, which requires fewer, higher-quality leads.
Before you get started, it’s a wise move to map out the life-cycle of your product. Check out this guide from ProductPlan to discover more about the management role in every phase of the product lifecycle:
3) Upsells, Cross-sells and Down-sells
Many businesses make the mistake of thinking that the conversion is the end of the customer journey. In reality, closing that first big sale with a new customer is not the end – it’s just the beginning.
When you go that extra mile through upselling, down-selling and cross-selling, you can maximize the customer lifetime value (CLTV) of every one of your leads.
So, just what do we mean by that? Let’s break it down:
- Upselling is when you sell your customer an upgraded, more expensive version of the product they are considering. For example, you may offer a premium version of your software that has more features than the free trial.
- Cross-selling is when you sell a product to a customer that’s relevant to their needs, based on the product they are currently considering or buying. For example, a furniture business may offer bedside tables to someone that is buying a bed.
- Down-selling is when you sell a cheaper version of a product because the lead didn’t convert at first. For example, if a prospect was deterred by the price tag of your premium SaaS product, you might offer an affordable, customized version as a trial.
If you need any proof of the power of upsells, cross-sells and down-sells, think about how Amazon attributed over $4 billion per year to these tactics. That’s four billion dollars just from doing a little bit more to make your customer happy.
Incorporating these tactics in your sales strategy helps to nurture a relationship with leads beyond the first sale. What’s more is that you can use these techniques to recover a “lost sale”, increase the average order value and build a lasting relationship that increases the customer lifetime value, which results in more leads and thus more profits.
Related Content: The Ultimate Recipe for Effective Customer Lead Generation
4) Sales Process
As a marketer with a focus on lead generation, your job is to keep the pipeline filled with leads. However, you can’t just stop there.
If you don’t have a smooth sales process further down the funnel, a lot of your time, effort and money spent on lead generation will be a complete waste. And you don’t want that, right?!
So, before you get excited about measuring the impact of your lead generation efforts, you must find (and plug) any leaks in your sales process.
To do that, ask yourself the following questions:
- Is your sales funnel completely mapped out?
- Have you created offers for every stage of the funnel?
- Are you applying automation and optimization at every stage of the funnel?
- Is there a clear lead handover between the sales and marketing departments?
- Have you got clear metrics defined for your MQLs (Marketing Qualified Leads) and SQLs (Sales Qualified Leads)?
This is important: Do not skim over these questions with a “hmm, I’ve kind of done that…” approach!
Instead, put each step of your sales process under a magnifying glass. Study them hard and be honest with yourself. Test and optimize everything from landing pages to checkout pages. With this attitude, you’re more likely to reach the levels you need to be at to succeed with lead generation.
Ideally, your funnel should offer your visitors a seamless user experience from one digital touchpoint to the next. With a highly optimized funnel, you’ll have no hitches along the way, which makes the customer journey to conversion much more straightforward.
Also, remember that optimization is an ongoing process that demands a constant approach to testing, tweaking and monitoring throughout your campaign.
Related Reading:
9 Lead Generation Metrics You Need to Track
Once you’ve developed a clear understanding of the fundamental facets of your organization, you will find it easier to select the right metrics to monitor your efforts in lead generation.
Now, let’s take a look at some of the most critical lead generation metrics that you should be tracking. These vital barometers are worth keeping an eye on, regardless of the size or structure of your business.
PERFORMANCE METRICS
Performance metrics are exactly what they sound like – you can analyze them to gauge the performance of your campaign. With these insights, you can assess the performance of any particular creative asset, paid ad, offer or landing page, and determine whether it is having the desired impact.
1) Click-Through Rate (CTR)
CTR measures the click performance of any Call To Action (CTA), in that it shows you the percentage of viewers that click your CTA on any given ad, link, email or landing page, etc.
Typically, your lead generation campaign will have several different CTAs. Therefore, for each element in your campaign, you should:
- Identify the CTA
- Measure the click-through rate
Imagine that you have a campaign where you buy traffic through Google Ads and send it to a landing page that has a download offer for an e-book. Let’s say Mary from Florida enters her contact details on the landing page. After doing this, she receives an email with a link to verify her email address. Only once Mary follows through by verifying her email, can you call her a “lead.”
In this campaign, you have three separate CTRs to track:
- CTR for the PPC ad
- CTR for the landing page
- CTR for the verification email
So, at this point, there’s an obvious question that we need to answer: How do you calculate click-through rate?
You can calculate the CTR on any aspect of your campaign with this formula:
So, with our example above, it could go a little like this:
- 2,500 people view your PPC ad, and it receives 500 clicks. CTR = 20%
- 500 visitors arrive on your landing page, and 50 of those click the download button. CTR = 10%
- 25 out of 50 clicks on the verification link in the email. CTR = 50%
- Total leads = 25
CTR is a crucial metric in lead generation, especially in paid advertising. As such, you must keep a close watch on it.
2) Conversion Rate
In any campaign, the conversion rate is easily one of the most important metrics to track.
What is conversion rate? It is the percentage of your leads that perform a specific action on an ad, email or landing page. This “specific action” is something that you define when setting up your campaign. Some examples of a conversion include when a user:
- Completes an email newsletter subscription form on your website
- Clicks a link or button in an email
- Downloads an e-book
- Makes a purchase
In essence, conversion is the end goal of many campaigns. That being said, it doesn’t always have to be a sale – it can be any goal you have set.
So how do you measure conversion rates?
You’ll need to do two things:
- Define your campaign goal (e.g., you set a target of acquiring 50 new leads from your PPC campaign)
- Measure the percentage of potential leads who complete the conversion goal. (e.g. people who click on a link to verify their email address)
In the earlier example, we captured 25 leads from 2,500 ad viewers. If your campaign goal was to capture new leads, your conversion rate here would be 1% (25/2,500).
While that may sound abysmal, the average conversion rate across all industries in 2019 is just 3.48%:
The conversion rate is a crucial KPI in any campaign. If your focus is lead generation, then there are several conversion rates to consider keeping tabs on:
- Visitors-to-lead is the number of visitors who convert to become verified leads.
- Leads-to-opportunity is the number of leads that get transferred to your sales team (i.e., these leads become “opportunities”).
- Opportunity-to-win is the number of opportunities that convert to become actual paying customers. This metric is also known as the lead conversion rate.
While the first metric helps you determine the top-of-the-funnel performance of any campaign, the final metric – “opportunity-to-win” – is the best indicator of whether your campaign is generating tangible results.
When your data analytics report shows that your campaign has generated a lot of views, page visits and clicks, it’s easy to think that everything is going well. Ultimately, though, it’s conversions that matter.
For that reason, you should never stop working on conversion rate optimization, as there is always more that can be done.
Learn More:
3) Time to Conversion
Ever wondered how long it takes for a visitor to become a verified lead? Well, if you track the time-to-conversion metric, you’ll soon have your answer.
At every stage of your funnel, it’s important to track the total time to conversion so you can get a clear picture of the length of your sales cycle.
How do you track time to conversion? This process is quite straightforward. You calculate the total time spent by all your visitors before they complete your defined conversion goal, then divide that number by the total number of leads.
For example, let’s consider these three leads:
- John verifies his email address after 6 hours.
- Mary verifies her email address after 24 hours.
- Eric verifies his email address after 60 hours.
Using the formula above, we can calculate the time to conversion as follows:
Time to conversion = ((6 + 24 + 60)/3) = 30 hours
Customers expect a smooth and easy process when they want to buy something. If you have a long-winded checkout or sales funnel, it may deter people, and you’ll lose out on potential sales as a result. In fact, 56% of online shoppers abandon their cart because of a frustrating or confusing checkout process.
You should aim to reduce your time-to-conversion metric by minimizing the number of touchpoints in your funnel. Done right, this will help you generate more leads and more conversions.
4) Return on Investment (ROI)
Return on investment is arguably the most crucial metric in any campaign. Yes, we know that we’ve already stressed the importance of some lead generation metrics here, but ROI is different. You might even say that ROI is the single most important metric in your entire business. (Yeah, we think it’s pretty darn special.)
What is ROI? It’s is a percentage value or ratio that gives you a quick answer to the big question that every C-suite member and investor wants to know: Is the juice worth the squeeze? As in, are you making enough money to justify this business venture?
Let’s say you make $15 from every lead you capture. Now, you currently spend $12 capturing each lead, so your ROI is 25% ($15/$12).
That’s a simple example. In reality, it can be challenging to accurately measure ROI, particularly with a complex product or service. If you want to get a holistic overview of your campaign ROI, you must calculate:
- Total costs for every stage of your funnel
- Total income you can potentially make for each one of your customers (i.e., Average Customer Lifetime Value – CLTV).
To keep things simple, start by measuring the total cost of capturing a lead. This measurement comprises three elements:
- Total cost of creating an offer, including all supporting content, ad creatives, landing pages, etc.
- Total money spent on generating traffic through ads, social media, PR, etc.
- Estimated profit you expect to earn from each verified lead.
Here’s an example to give you a sense of how this ROI measurement works:
- You spend $500 developing an e-book. You pay an additional $50 on a landing page template and another $50 to create 10 Facebook ad variants.
- Next, you pay $200 to run your ads on Facebook. This nets you 100 visitors at an average cost of $2/click.
- Out of these 100 visitors, you convert 10 into leads.
- You spent $50 to verify your leads – working out at $5/lead.
- On average, 1 out of 10 leads purchases your $1,000 product.
In this scenario, your total lead generation cost is $850, bringing you 10 verified leads, and you’ve earned $1,000. As a result, your return on investment (ROI) is 15%.
It’s important to remember that some costs are recurring, such as Facebook advertising spend, while other costs are a one-off, like the cost of creating an e-book. Consider all the costs in your campaign to get a true reflection of your ROI.
Learn More: How to Use Big Data Analytics to Grow Your Marketing ROI
COST METRICS
Cost metrics are a top priority for every business. Even the best marketers can’t ignore their costs, regardless of how big a budget they have at their disposal.
When you pay attention to your cost metrics, you get a better understanding of the expense associated with driving traffic and lead generation.
In HubSpot’s State of Inbound Report for 2019, 63% of marketers listed “generating traffic and leads” as the top marketing challenge their company faces.
Coming to grips with cost metrics is a huge part of that challenge. Here are three key cost metrics you should be on top of in any lead generation campaign:
5) Cost per Click (CPC)
Are you using paid advertising to drive traffic? You probably are, as PPC ads can help you increase brand awareness by 80%:
When you use paid advertising, measuring the cost per click (CPC) metric is a no-brainer. CPC is the cost that advertisers must pay for a single click from any user who views (and clicks) their ad.
In the screenshot below from Facebook, you can click the “Performance and Clicks” section in the ad manager to view your CPC:
By keeping tabs on the CPC of your paid ads – and your overall campaign – you can factor in the costs of acquiring traffic. Getting a ton of new visitors from a new ad may sound good, but if your CPC is soaring through the roof, all those visitors may be an expense that you could do without.
6) Time on Page
You may have heard that content is king. It has been said once or twice. Considering that content marketing is the foundation of many businesses today, it’s hardly surprising to learn that your content plays a significant role in lead generation.
Monica Carol of Team Bonding NYC asserts that “There’s a strong correlation between how much time users spend on the page and the quality of the lead.”
Conversely, if your content is substandard, you might notice that the average session duration of your site visitors is pretty short. If people are landing on your page, then bouncing off again without spending much time reading your content, that’s a problem.
Even amidst the advances in video, voice search and chatbots, content may still have the power to be king, but only if you are ruling over it. You should track visitors’ time on your webpages and make adjustments where needed to create more engaging content that keeps people on your site. Moreover, it keeps them coming back.
7) Cost per Lead
Cost per lead is the total amount of money you spend to acquire a lead. As such, it is the average cost per lead.
Here’s how to calculate the cost per lead metric:
When you’re calculating the costs for this formula, make sure to include the following three cost components:
- Variable costs that might vary over time, such as traffic acquisition costs.
- One-time costs, like the cost of creating a downloadable e-book.
- Recurring costs involved in lead capture, such as the monthly subscription fee for email marketing software.
It’s easy to forget about one-time costs and recurring subscriptions. Many marketers overlook these expenses, making the mistake of thinking that they only need to consider the cost of driving traffic. If you do this, you’ll get an incorrect figure for your cost per lead, and that’s not a good basis for sound decision-making!
To illustrate this point, take another look at our earlier example. If you buy traffic through Google Ads and drive it to a landing page that offers visitors a downloadable e-book, you’ll need to consider these costs:
- $1,000 for running your campaign on Google Ads (variable)
- $50 for your Google Ads copy (variable)
- $500 for e-book design (one-time)
- $25/month for email marketing software (recurring)
- $25/month for landing page software (recurring)
- $120/year or $12/month for website hosting (recurring)
After running this campaign for one month, your costs will be $1,610. So, if you generate 100 leads, the cost per lead is $16.10.
Keep in mind that some of your one-time and recurring investments can be reused. You might run a similar campaign on Facebook using the same e-book offer. In this case, you should divide your one-time and recurring costs by the total number of campaigns.
For instance, if you use the same e-book offer for five different campaigns, your one-time offer cost per campaign is $100. Following this structure and these calculations will give you a much more accurate picture of your lead acquisition costs.
What’s interesting is that it pays off to nurture a relationship with your leads. According to Weidert, companies that nurture their leads make 50% more sales at 33% less cost than those leads that aren’t nurtured.
Learn More:
CHANNEL METRICS
Channel metrics focus on the performance of individual marketing channels, including SEO and social media.
Here are the channel metrics that matter:
8) Lead Generation Rate by Channel
Lead generation rate is the total number of leads captured, divided by the total number of visitors through a particular channel. This metric is useful if you’re running a campaign on multiple channels, as it provides an overview of each channel’s performance.
Regardless of your business or what you’re offering, it’s quite likely you’ll be using the same channels as most other businesses, namely:
- Social Media
- Organic (SEO)
- Paid
- Referral
Of course, you can dive into more detail by tracking the traffic sources within each channel (such as Facebook, Twitter and LinkedIn).
If you converted 100 of your 10,000 visitors through social media into leads, your lead generation rate is 1%. If you converted 100 of your 2,000 organic visitors into leads, your SEO channel rate is 5% (100/2000 x 100).
Remember that lead generation rates will differ depending on the traffic source. You shouldn’t expect Twitter traffic to have as high a conversion rate as a highly targeted paid ad. But generally speaking, social media visitors convert at a lower rate than PPC or SEO traffic. Therefore, you should factor in your traffic acquisition costs when measuring the performance of any one channel.
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9) Month-to-Date (MTD) Channel Goals
The final metric on our list gives you an update on your progress towards your lead generation goals. You can assess the performance of each channel in any particular month to see if you’re on track. With the insights from this metric, you can determine if any adjustments are required.
For example, you may see that your SEO performance is way off your projected targets and, therefore, it may be prudent to reallocate your budget. You may decide to invest more to drive better results in SEO, or you could reduce spending to save your budget for higher-performing channels.
This process of budget optimization is an integral part of lead generation success, so the MTD metric is a practical yardstick to guide you. You should get into the habit of assessing your channel goals on a month-to-month basis to develop a solid overview of your campaign performance. If you have a significantly high volume of leads, it may even be best to do this on a week-to-week basis.
How do you track the MTD metric? Follow these steps:
- Define a target for monthly leads. Be realistic here!
- Use the monthly goal to figure out your daily target for lead generation.
- Continue tracking data for each channel to determine if you’re meeting your daily target.
For example, if your monthly target is 600 leads through social media, your objective is to generate 20 leads each day. If you cross this threshold regularly, you’re on target for the month.
What About Tracking Content Metrics?
Given that content marketing is such an integral aspect of business nowadays, it’s a good idea to track metrics related to your content efforts.
And yet, according to 2019 B2B Content Marketing Research by Content Marketing Institute, just 1 in 4 marketers claim to be proficient in tracking metrics. But, as John Hall says, you can’t know if your content is meeting goals if you don’t know how to measure the journey.
Here are four content metrics you should follow to gauge how your content is helping in the quest for your lead generation goals:
- Leads generated per offer – By using a highly valuable piece of content as a lead magnet, such as a course or cheat sheet, you can entice people to convert.
- Landing page new contacts – This will give you a sense of how many unique visitors your content attracts.
- Keyword performance – As the building blocks of great content, it’s imperative to analyze your keywords to identify which ones generate a positive ROI.
- Content conversion rate – Similar to using lead magnets, you can use this metric to determine which content pieces on your site are best at securing conversions, whether that be basic inquiries, email newsletter sign-ups or a download.
Dive Deeper:
Conclusion
Lead generation is an essential part of business and you have to get it right to ensure that your company budget goes to good use. Taking on a serious lead-generation campaign can be daunting because it needs a robust process to measure its performance.
However, with some groundwork to determine the right metrics for your business, goals and audience, you’ll have a solid foundation from which to build. As you track more metrics and gather data over a significant period, you’ll develop a better understanding of the customer journey and your business.
With a holistic view that considers key performance indicators at every touchpoint, you’ll have a more in-depth knowledge of your channels and campaigns. This approach will give you everything you need to make smarter business decisions that improve your lead generation results.