In most functioning companies, the executive suite keeps a close eye on how marketing and sales perform. But across C-suites, how executives measure can vary greatly. Is the chief of business development just assessing annual sales? Do they understand how marketing performance regardless of sales? Is there analysis of sales from new customers versus sales from existing customers?
All of these are important variables to consider in assessing the performance of business development and where improvements can be made. Yet many executives don't have the information they need.
These days, one of the toughest jobs in leading a business devlopment team is keeping up on how to effectively measure performance, given the constant advances in marketing analytics. In many ways, the shear amount of data has blindsided many directors and VPs overseeing growth. Many leaders struggle to identify which numbers actually matter. In short, what are the key performance indicators for marketing? Which numbers tell the whole story?
Now before we go there, let's remember that it wasn't all that long ago that marketing was more a game of "impressions" and "viewers" than numbers that can be tied to sales. Before trackable online data, advertisers weren't generating leads for sales; they were simply building audience and brand recognition. For B2Bers, there wasn't much of an opportunity to track marketing's impact on revenue growth separately.
So, having data is awesome. Marketing and sales metrics empower business development leaders like never before, and that's a good thing. The only problem is figuring out which set of numbers tell a complete story, and which metrics are only tactically useful. For that, you need to do an assessment of how your business development process works.
1. What are your sales channels? How many do you have?
To figure out the right KPIs for your marketing, you need to have a strong understanding of your sales channels. Are referrals a big part of what you do? Do you generate most new business from online requests? Do you have a group of resellers? Marketing should support sales growth in each channel, and your expectations for each channel will form an underlying basis of how you assess marketing performance.
2. How does each sales channel contribute to your total sales goals?
Evaluating the role of each sales channel allows you to weight areas of performance differently. For instance, if your business is fairly vertical-specific and considered niche, then perhaps your traditional word-of-mouth referral channel is one of your most valuable. On the other hand, maybe you're trying to grow the business your receive from online requests; in that case, it might be appropriate to set the benchmark for performance in that area higher.
3. How does marketing support the growth of each channel?
Regardless of how you see your sales channels, marketing has an opportunity to optimize and grow where and how sales occur. Depending on the channel, marketing will have a variety of activities that should all be measured and included in key performance indicators. For instance, if sales is looking for inbound leads, marketing efforts will aim to attract leads and nurture them toward sales-readiness. If referrals are the main target, then marketing should aim to delight customers and improve their likeliness to refer your products or services. If sales is getting most opportunities through outbound calls, then marketing has a decision to make: will marketing aim to generate a list of warm interested leads? Or will they try to use more traditional approaches like tradeshows to get a list of interested buyers?
4. What stages do buyers go through during your marketing process?
In today's world, no matter the variety of your marketing and sales efforts, buyers go through a journey toward their final sales choices. In inbound marketing, the goal is mostly to attract visitors who are in a stage of learning about how to solve their problems. For the marketer, the goal becomes "converting" visitors into leads by capturing their contact information. Similarly, in tradeshows, visitors might approach a booth, and when they do, the booth marketer's goal is to explain the product, get the visitors card, and usually, take a scan of their pass to capture their information.
From there, it's critical to understand what other stages a buyer might go through to eventually get to a sale. By understanding each stage of the buyer's journey, you can assess what the "conversion rate" is from one stage to the next.
Conversion Rates for Each Channel are the Best Marketing KPIs
If you find the conversion rates for every stage of the buyer's journey in each of your sales channels, you'll be looking at very strong KPIs to assess how marketing is doing. When a business' sales mostly comes from inbound leads, then marketing's ultimate indicator of performance is the number of sales-qualified leads that get brought to sales reps. In general, a sales-qualified lead means that the lead is ready to talk to a sales rep because she fully understands the purchase decision that she is about to make.
Prior to becoming sales-qualified, a lead is marketing-qualified—i.e. the marketing team has assessed that the lead fits the company's profile of a strong potential customer. Only a certain percentage of leads are marketing-qualified, just like only a certain number of visitors convert into leads. These percentages—rates of conversion—are precisely the key performance indicators you need to see the whole picture of how marketing's doing, regardless of sales' performance.