Demand Generation Metrics & Benchmarks
No plan survives contact with the real world without adjustments; and the same is true of your demand generation strategy. To run a successful demand gen program, you must be able to track and measure your performance so that your team may adjust as necessary. This article will help you identify critical metrics to analyze when running a demand generation campaign.
The table below identifies essential demand gen metrics to track. In addition to the definition of each metric, the table also provides a general benchmark so teams can contextualize their own campaigns.
Demand Generation Benchmarks & Metrics
|ROI||A high-level overview depicting the health of the campaign by comparing overall cost vs overall profit.||Organic Channels: 748%
Inorganic Channels: 117%
|Customer Acquisition Cost (CAC)||The average cost of acquiring a single new customer.||$644|
|Customer Lifetime Value||The total amount of money made from a customer over the course of their lifetime.||See Industry Benchmarks|
|Cost Per Lead (CPL)||The cost of getting a prospective lead to leave their information for further contact.||$393|
|Total New MQLs||The number of marketing qualified leads generated by a campaign over a specific period of time.||40% Increase Year over Year|
|Lead to Win Rate||The percentage of leads that eventually convert into closed sales.||3.7%|
|Visitor to Lead Conversion Rate||The percentage of visitors to the website that choose to leave their information for further contact.||2.2%|
Demand Generation Success Metrics: ROI, CAC, and LTV
The three most important metrics for any demand gen campaign are Customer Lifetime Value, Customer Acquisition Cost (CAC), and ROI. The first of these is the customer lifetime value (abbreviated both as LTV and CLV), which is calculated using the following formula:
|Customer Lifetime Value (LTV)|
|Average Revenue Per Customer: How much money a company makes from a customer during a given period of time.|
|Average Lifespan of a Customer: How long a customer stays with your company. This can be determined by averaging data from your existing client base.|
|Gross Profit Margin: The percentage of profits remaining after any expenses for producing goods or providing services|
The resulting amount gives you the total profit—or value—each new customer brings to your company. Your team can then average the LTVs of the customers your demand gen program brings in, and compare this number against your customer acquisition costs, with an LTV-to-CAC ratio of 4:1 being the hallmark of a healthy campaign.
ROI is also a relatively simple metric, calculated by dividing the total return generated by the demand gen program by the program’s total cost. This is most often expressed as a percentage, and serves a similar role as your CAC to LTV ratio in determining overall success.
Taken together, these three metrics provide the highest-level overview of how successful your entire demand generation is. As such, these are the metrics that are most relevant to C-suite executives, but provide less guidance for teams on the ground. To evaluate performance on a more granular level, demand generation teams will need to turn to cost per lead, total MQLs, and lead-to-win rate.
Demand Generation Performance Indicators: CPL, Total MQLs, and Lead to Win Rate
Because the three previous metrics—CAC, LTV, and ROI—all rely on long-term measurements that are often more difficult for marketing teams to measure. This is particularly true of younger companies who may not yet have the LTV and revenue data necessary to calculate the more high level metrics. Even for more established businesses with ready access to this information, performance metrics such as cost per lead (CPL), total MQLs, and lead-to-win rate allow teams to more quickly assess the month-to-month performance of their campaign.
Of these metrics, Total New MQLs is particularly useful, but only when measured year over year to account for seasonal fluctuations in business. Comparing new MQLs in January versus December, for example, will often result in overestimating the impact of your demand generation program, as more companies will naturally seek new business opportunities at the beginning of the year rather than during the holidays. Comparing one time period versus the same time period the previous year provides a more complete view.
Once you have your total MQLs, you can then divide this number by the cost of your campaign to determine your average Cost Per Lead. Likewise, dividing your total number of closed sales by your total MQLs will result in your Lead to Win Rate. These two metrics provide insight into your overall demand generation program’s success, and its ability to bring in actually interested leads.
Demand Generation Leading Indicators: Conversions & Micro-Conversions
In addition to overall success metrics, teams should also track visitor actions and conversions, both of which revolve around “events”. An event is any defined, trackable action that someone takes on a page, and should be chosen based on how much purchasing interest they reveal. The most important of these are sales, followed by contact form fills, and it’s these types of events that are called macro-conversions (but often shortened to simply conversions). The other type of conversion that should be tracked are micro-conversions—actions such as visiting multiple pages, email list signups, or white paper downloads—that indicate potential buying interest but far less strongly than macro-conversions.
Both types of conversions can be tracked with the use of marketing analytics tools. The most popular of these is Google Analytics, which can be used both to track these events as well as create reports detailing your conversion rates and most visited pages. The basic procedure for doing so is:
Using these leading indicator reports allows your team to take a proactive approach to adjusting your demand gen. Unlike the monthly-to-quarterly time scale that the performance indicators or success indicators are measured on, these leading indicators can be monitored weekly, providing early signs that adjustments are needed.
Working with a Demand Generation Agency
Applying the above techniques may be difficult for inexperienced marketers, particularly if you hope to hit the listed benchmarks quickly. Understanding how the metrics above reflect changes in your target audience and what will drive demand for your product a moving target, even for veteran marketers.
For this reason, most companies opt to work with an outside agency. Our agency specializes in combining thought leadership and SEO to provide industry leading demand generation for our clients. Contact us to discuss a future partnership.