March 10th, 2017 | by

Key performance indicators (KPIs) set expectations for Marketing and Sales teams, and provide metrics for success. So, what KPIs should Marketing and Sales departments track? What metrics should be assigned to each?

There are a lot of KPIs that can be tracked, which is why the word ‘key’ in key performance indicators is so important. You may have a large dashboard of charts, graphs, and metrics that you can track, but the KPIs you choose to focus on should be high level, more critical, and the most telling metrics regarding your marketing performance in conjunction with revenue. Typically, you formulate KPIs to capture behaviors that translate into revenue.

Sales FunnelThink of the sales funnel—how do customers travel from ‘awareness’ to ‘buying’ your product or service?

  • Top of the funnel KPIs track exposure. Customers do not buy without knowing the vendor, so it makes sense to track this first step. Some examples include:
    – Cost Per Click
    – Click Through Rate
  • Bottom of the funnel KPIs tie the top-funnel metrics to those that really matter—new accounts, and revenue growth. Some examples include:
    – Cost of Customer Acquisition
    – Customer Lifetime Value
  • Between these, mid-funnel KPIs measure effectiveness in engaging and converting leads into MQLs and SQLs. Some examples include:
    – Traffic-to-lead ratio
    – New Leads / Contacts

Level one: The website

The website is often the best platform for a company’s value proposition. B2B e-commerce has nearly doubled in revenues since 2009, signaling that more buyers are beginning and ending the buyer’s journey online. Another commonly cited statistic indicates 81% of buyers do research online before making a major purchase.

For KPIs, you want to drill down further to measure web traffic. Google Analytics and Adobe Analytics are the market leaders when it comes to measuring website traffic and user behavior. There are alternatives to consider that also offer a similar look into web behavior—KISSmetrics, Chartbeat, and Webtrends are viable second tier options you might use to vet Google or Adobe numbers.   

Most digital marketers watch two types of web traffic.

  • Organic Search traffic – number of users that reach a website from a search engine query. Organic has the reputation as the bona-fide way to drive revenue. The ‘content is king’ attitude drives companies to produce articles and blogs around the subject matters potential customers might be searching.
  • Referral Traffic – number of users that reach a website from another URL. Most often these come from an affiliate site, paid search (Google Adwords or SEM), and social channels.

Top funnel KPIs

  • Cost per click (CPC) measures clicks on company URLs from referral against the total spend on referrers. (total clicks/spend = CPC)
  • Click through rate (CTR) measures the number of users shown the link against the total number that clicked on it.
  • Organic traffic growth year over year (YOY) percentage growth
  • Website visits / traffic

Read More from Neverbounce: Top Digital Marketing KPIs You Should be Tracking

Level two: On-site behavior

On-site behavior represents the second level of the sales funnel. Form fills are the standard method of marking a successful conversion. A company may have several types of form fills throughout the customer journey and analytics platforms segment the type of traffic (organic or paid) that accounts for the conversion.

Mid-funnel conversion KPIs

  • Traffic-to-Lead ratio – Organic conversion rate measures the percentage of organic visitors to your site to those who fill out the form.
  • CPC conversion rate measures the percentage of referral clicks that fill out the form.
  • New Leads / Contacts – Increasing total number of social media followers, content subscribers, or email recipients—measured YOY.
  • Conversion rate – How many visitors performed the desired outcome (clicked on a link, filled out a form, etc.)

Typically, once a site visitor fills out a form, that visitor enters the realm of a ‘lead’. That’s not to say Sales needs to follow up with a phone call right then and there—that is usually an unwelcome call and a waste of time and resources.

Instead, Marketing teams need to engage leads further in order to warm them up for a call or reasonably expect an online purchase to occur. Usually this entails getting customers to comment on social postings, open emails, download content, and sign up for other promotions throughout the buying cycle.

Mid-funnel engagement KPIs

  • Percentage of emails opened vs. emails sent
  • Ratio of social impressions to number of engagements (likes, retweets, comments)
  • Bounce rate (percentage of visitors who arrive on your website, but navigate away without further action)

Level three: Converting site traffic to qualified leads

After an agreed-upon level of engagement is achieved, showing that a potential customer has your company top of mind, the lead gets a special designation—a Marketing Qualified Lead, or MQL, which is a lead ready for human engagement.

A company usually sets sales KPIs around MQLs. Depending on structure, certain Sales team members, like business development reps,  might reach out for further lead development and qualification by phone before handing the lead to Account Executives with conversion metrics attached to their KPIs.

Low-mid funnel KPIs

  • Number of MQLs generated YOY
  • Number and percentage of MQLs contacted within a designated time span
  • Number of MQLs that become SQLs

Level four: Tying it back to revenue generation

At the lowest level of the sales funnel, everything should tie back to driving revenue. Typically, both Sales and Marketing have a revenue growth KPI to achieve. Overarching marketing KPIs are often based on leads they bring in who make a purchase.

Low funnel / overview KPIs

  • Cost of Customer Acquisition (marketing spend / new customers acquired)
  • Revenue growth YOY
  • SQLs to Customers
  • Customer Lifetime Value (revenue  X  gross margin %  X  average # of repeat purchases)
  • Marketing Originated Customer % (the percent of new business generated by marketing)

What should you shoot for when setting KPIs?

Every company is different. Finding the appropriate metrics for benchmarking your KPIs is relative to the company’s growth trajectory. There are not many (if at all) meaningful umbrella metrics independent from that. If you are unable to find benchmarks for companies very similar to yours, look at your metrics from the previous year and add projected growth.  

Notable benchmarks

For rate-based KPIs like CTR, email open rate, organic conversion rate, etc. there are some industry benchmarks to measure your efforts against. These are usually supplied by popular tools and platforms used by digital marketers. For example:

You can use these benchmarks as a starting point for gauging your own effectiveness when constructing KPIs.   

Aiming for growth

Basing your KPIs around your industry makes sense to a certain extent. Much of your success should be tracked on a year-over-year basis. A well-rounded KPI set pulls from growth metrics as well as industry benchmarks.

While checking out resources like Hubspot’s State of Inbound []  presents a good idea of the general digital marketing environment for your industry or company size, it’s best to compete against yourself when measuring growth. Since growth metrics are closely tied to size, budget, trajectory, and goals, understanding these on a company-to-company basis makes the most sense.   

If you are looking for a hard fast rule to apply to marketing growth, apply this wherever applicable: Marketing spend should grow in proportion to the revenue a company wants to generate. With that in mind, it’s a good play to set a percentage growth revenue goal and apply that at each level of your marketing budget for KPIs measured YOY.      

As a marketing leader, the most important part of setting metrics involves tying KPIs to budget allocation, so you are able to follow your marketing dollar as it relates to the cost per acquisition. This is an ongoing process that should be measured throughout the year.

Use a spend tracking tool to keep up with budget expenses year-to-date alongside your KPI metric talley. Do this in accordance with your budget on a channel-by-channel basis, and watch the actual results as the year progresses. If something isn’t working, you can reallocate and change course without overspending your marketing budget.


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