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Lead generation is undoubtedly one of the most challenging tasks for B2B marketers. No wonder 61% of marketers rank lead generation as their number one challenge, according to HubSpot’s State of Marketing Trends Report.
However, lead generation becomes even harder when you aren’t aware of what’s working and what’s not. And that’s when lead generation KPIs come into the picture.
By keeping an eye on the most relevant lead generation KPIs you can understand exactly what works the best (that you can replicate) and what doesn’t (that you can change and improve).
When we say relevant, we mean the KPIs that are crucial enough to impact your lead generation strategy.
If you don’t know what lead generation KPIs to follow, we got you covered. This blog includes a curated list of 6 crucial lead generation metrics you must keep your eyes peeled for. Along with that, you’ll find an amazing way to improve these metrics. So, read in full.
Often ignored, the number of qualified leads is perhaps the most important lead generation KPI.
Generating more and more leads may be a milestone, but it’s not the end goal. The end goal is to improve revenue, and that cannot be achieved if you focus merely on the number of leads generated. For that, you need to measure the number of qualified leads.
Qualified leads are the ones who fit the profile of an ideal customer and show an intent to buy your product or service.
Here’s what you can do to calculate the number of qualified leads:
Set criteria for lead qualification. Once done, measure how many leads generated from a particular lead generation campaign meet that criteria. And there you have your number of qualified leads.
If you’re bringing in more companies (qualified leads) meeting your minimum level of lead qualification each time, it means your lead generation is effective. And this, in turn, leads to more conversions and thus better overall revenue.
However, if the number of qualified leads is subpar or is reducing, it denotes the poor effectiveness of your lead generation strategy.
Cost per lead (CPL) is the amount you pay to lead generation companies or spend on paid ad campaigns for generating leads.
Let’s say for an ad campaign, you spent $1000 and generated 20 leads. Now, the cost per lead will be $50. (CPL = total money spent on lead gen/total leads generated.)
This is the only KPI that’ll help you assess the cost efficiency of your lead generation campaigns, plan your budget, calculate your ROI and modify your strategy accordingly.
However, always use the number of qualified leads instead of the total number of leads generated while calculating CPL. This will help you with a more honest value. How?
Let’s say a lead gen company helps you generate 100 leads for $1000. Here your CPL will be $10. This may sound affordable, but what if 80% of those leads aren’t sales or marketing qualified and have no intent to buy? If that’s the case, your actual cost per lead will be $50 (1000/20).
Whether the cost of $50 per lead is high or low depends on customer lifetime value. However, before jumping right into customer lifetime value, let’s also consider the customer Acquisition cost. Doing this will help you get a better idea.
CAC, or the customer acquisition cost, is the amount you spend (including all the sales and marketing expenses) to convert a lead into a paying customer.
While the major portion of CAC is about converting the lead into a customer, it also includes the cost per lead. So, the total customer acquisition cost will be the cost per lead plus the amount spent in nurturing the lead and converting them to a paying customer.
Here’s the formula for cost per acquisition:
CAC: Total money spent on acquiring customers in a given time, including CPL/number of customers acquired in that given time.
If you spent $5000 in a year and acquired 50 customers. Your CAC will be (5000/50) $100.
Low customer acquisition cost means you’re spending less money to acquire the same number of customers and generate the same revenue. And when your customer acquisition cost reduces your ROI increases.
Whether your customer acquisition cost is high or low also depends on customer lifetime value, just like cost per lead (CPL.)
Customer lifetime value is directly related to cost per lead and customer acquisition cost. It’s this KPI that tells you whether your CPL or CAC is high or low. How?
Well, customer lifetime value is what your business will earn from a business account from the beginning to the end. It can be calculated using this formula:
Customer Lifetime Value = Average Purchase Value * Average Purchase Frequency * Average Customer Lifespan
Let’s say the average purchase value is $10 and purchase happens once every month, and the average customer lifespan is 6 months. So, according to this, your CLV would be (10*1*6) $60. This is what your business will earn on average from a customer.
Now, the total customer acquisition cost, which includes the amount spent to generate the lead and converting that lead into a customer, is $150
So, for converting an average visitor into a lead and then to a paying customer, which is the total customer acquisition cost, you’re spending $150 and earning only $60 (CLV) from them. This means you’re acquiring customers at the cost of your profit.
Therefore, you should work on reducing your CPL and CAC to increase profit, or you can focus on generating quality leads that generally stay for longer and spend more which translates to a higher customer lifetime value.
Lead conversion rate is yet another important KPI to consider. It’s the number of your website visitors who shared their contact information and became leads. You can calculate it using this formula:
Lead conversion rate: total number of conversions (leads) / total number of visitors on your website * 100
So, if your website gets 100 visits and 20 of them share their contact information, the lead conversion rate would be 20%. The higher the lead conversion rate, the better it is. Because higher conversion rate means your lead generation strategy is working and your website has the right landing page.
However, if your lead conversion rate is poor, it means there’s a problem with your landing page (poorly placed CTA or low-quality copy). Or there could be a disconnect between the ad that brought the prospect to your website and your landing page.
Measuring the traffic your website receives can help you understand many things, such as the performance of your marketing & sales campaigns. You can easily measure this KPI by checking the number of visitors your website gets in a month, a week, or a day.
Let’s say before launching sales and marketing campaigns, your website received 1000 visits a month. And after launching the campaigns, the visits touched 10,000 a month. This way, you can determine how successful your sales and marketing efforts were in bringing visitors to your website.
Along with website traffic, you can also measure bounce rate. Bounce rate is the rate at which your visitors leave your website without interacting with any other page (apart from the landing page). And to view these KPIs, you can refer to google analytics.
A high bounce rate indicates problems with your landing page, such as low-quality content or poorly positioned CTA. It could also indicate the leads you’re generating don’t match your buyer persona.
Here are some steps you can take to enhance all of the aforementioned KPIs and make your lead generation more effective:
Create a buyer persona, identify your target market segment and start posting content. You can both syndicate existing content or create a new one. However, ensure the content is quality and portrays you as a thought leader.
Focussing on demand generation will expose your business/brand to more people and, more importantly, your ideal target audience.
When you create demand or awareness among the prospects within your target segment, the traffic on your website automatically increases. And as you’re focussing on your target segment, you’re more likely to generate quality leads that convert better, further improving the lead conversion rate.
Account-based marketing is a lead generation approach that can help you launch highly targeted marketing campaigns. Once you have leads at hand, you can supplement them with more information such as their buyer intent, technologies they use, or contact info of the decision makers and then nurture them accordingly.
However, ABM is more complex than it looks. Fortunately, DAT-ACCURATE® can help. DAT-ACCURATE® uses buyer intent to help you generate quality leads (with more intent to buy) and create ideal customer profiles that are equipped with all the information from the technology they use, revenue, and purchase intent to the contact information of decision-makers.
All you’ll have to do is use that information to reach out to your target audience and surprise them with personalized sales and marketing efforts.
Paying attention to ABM, especially hiring an ABM expert like DAT-ACCURATE®, will help you fill your sales pipeline with highly qualified leads. This will help you reduce the average customer acquisition cost as qualified leads are much easier (and affordable) to nurture and move across the sales funnel.
As DAT-ACCURATE® can help you with buyer intent, you can use that data to determine if your existing customers are talking to your competitors. With this information at hand, you can contact those customers, learn more about the problem and upgrade their features if required. This way, you can retain your customers and thus improve overall customer lifetime value.
Wrapping Up
It’s not easy to determine which lead generation KPIs truly impact your lead generation efforts. This is why several businesses end up choosing the wrong lead generation KPIs and fail to improve.
Don’t be one of those businesses. Go through the aforementioned lead generation KPIs, rectify the problems, replicate the things that work, and ensure effective lead generation.
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