5 Inbound Marketing Key Performance Indicators You Can’t Ignore

Greg Linnemanstons
Posted by Greg Linnemanstons on June 28, 2013

pile_of_keysMany businesses use a scorecard containing their key performance indicators (KPIs), metrics that present a concise snapshot of how the business is performing. Most businesses track revenue and gross margin or gross profit by month, by quarter, and year-to-date, with a comparison to year ago or plan. If you sell a physical product you probably track orders and shipments, product quality and labor efficiency, and hopefully some measures of customer service like orders shipped on-time or complete. 

A thoughtful scorecard is a management and leadership tool that good business leaders rely on to keep all their constituents, including employees, vendors, and investors, informed and motivated.

One of the things I love most about Inbound Marketing is that it lends itself to creation of an Inbound scorecard of KPIs that tie directly back to business goals, and give the ability to quickly evaluate performance and make instant adjustments to strategies and tactics. Just as important is how your scorecard can contribute to a virtuous cycle: improved results lead to strengthened commitment and participation, which leads to more support, continued resource commitment…and even better results!

Inbound Marketing allows businesses access to more marketing metrics than most businesses have ever had the luxury of enjoying.

Here’s a list of what we consider our top five Inbound KPIs:

1. New Business from Inbound Activities

This should be the easiest and most important category to track, since it starts with logged visits to your website. What new customers or new revenue from existing customers can you attribute to inbound?

2. Marketing Qualified Leads (MQLs)

Any lead that identifies themselves at your site and satisfies the dimensions of attractiveness (size, industry, spending power, geography) that you established as your target is MQL, regardless of the indications they offer about timing of their purchase intent.

3. Sales Qualified Leads (SQLs)

These are MQL giving “buy” signs. SQL is based on behavioral triggers, and is always a subset of MQL, as some part of MQL will move down the funnel as they get closer to a decision, and some won’t.

4. Inbound Customer Acquisition Costs (CAC)

This is the most difficult piece to get your arms around, especially for manufacturers who are used to accounting for the cost to build something, but not so good about the cost to sell it. Professional services businesses (like ours) are better equipped to do this because we typically are expected to account for all of our time at work, and that’s the vast majority of CAC for firms like ours. Understanding the true CAC makes it much easier to make decisions about who to target and pursue, and who to expend little effort to acquire.

5. Future Value of Customer (FVC)

Some people look at lifetime customer value, but that seems hard to estimate to me. We prefer to look at a 12-month expectation. That seems to be a prudent horizon for our business, and it’s something we feel more confident predicting. Watching the rolling average ratio of FVC:CAC we can see if the steps we’re taking to improve our target attraction and lead scoring are contributing toward our goal of continuous improvement.

It’s never been more true than today that you can’t manage what you don’t measure. The ability to measure prospect behavior in real time, and modify strategies and tactics just as quickly, is one of the aspects of Inbound that made it so exciting to us in the first place. Even more exciting is the idea that by measuring you have more and better opportunities to inspire and motivate. Because at the end of the day, marketing that's authenticly fun will attract and keep more proponents.

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Topics: Inbound Marketing, Marketing Automation

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