Top 6 B2B demand generation metrics & KPIs that matter

Imagine this scenario: Your executive team asks you to present next week on the impact of last quarter’s demand gen campaigns. What metrics would you present? How could you illustrate that their investment in marketing is paying off?

As demand gen leaders, it is critical that you can tie revenue back to your marketing spend. Why? Demand generation is much more than executing campaigns and generating leads. Demand generation is responsible for generating pipeline and sales by growing and accelerating demand for your products and services.

Here are 6 KPIs every demand gen leader should be measuring to quantify success:

1. Marketing-sourced pipeline

The two most common B2B marketing KPIs reported to executives are marketing-sourced pipeline and marketing-sourced revenue. Marketing sourced, sometimes also referred to as marketing contributed, is a lead, account, opportunity, and/or revenue that marketing initially acquired (first touchpoint).

This KPI is typically measured and goaled, both, in absolute dollars ($XX million) and in contribution percentage (30%). Contribution percentage is an important metric when forecasting the future year’s pipeline and budgets.

While the reason for this may be the short attention-span of executives, sales also cares little for how many new leads your demand generation programs have acquired.

Ultimately, sales and executives care about the number and deal size of highly-qualified opportunities in the revenue/sales pipeline. While not all pipeline will convert, this may be the most important success metric of your demand generation efforts. Prioritizing opportunities over revenue can also takes into account that closing opportunities, successfully or unsuccessfully, is typically outside the direct influence of marketing.

One con with this metric is that it does not reflect the efforts or success marketing may achieve in account expansion (upsell, cross-sale), retention, or account-based marketing programs. Therefore, we need other KPIs to measure the success of these programs.

2. Marketing-influenced revenue

Marketing influenced is a lead, account, opportunity, or revenue that interacted with any marketing program at some point in its journey after it was acquired through another source (eg, sales, channel, product). This number can be reported for net-new accounts, as well as expansion and retention.

Be cautious of mistaking correlational relationships for causational when attributing value to influenced pipeline and revenue. Just because a prospect or customer read your blog or registered for a webinar, doesn’t necessarily infer that the content helped drive the sale. However, you can’t discount it either.

3. Cost per qualified lead (MQL/SQL)

Cost per qualified lead allows you to report on both the quality of leads acquired by your demand generation efforts and the efficiency of your marketing funnel. For example:

• Higher conversion rate = lower costs
• Lower quality leads (the result of poor targeting) = higher costs
• Low quality leads + low conversion rate = sky-high costs
• High quality leads + high conversion rate = hyper growth

4. Account penetration & engagement

Over the past several years, B2B marketers have allocated more attention and resources on account-based marketing. Account-based marketing (ABM) closely partners sales and marketing to identify a set of key target accounts with the biggest revenue potential for your business. Once identified, these accounts then partner to purpose-build programs to engage and convert those accounts through personalized messaging and/or offers plus one-to-one sales outreach.

Penetration, sometimes also referred to as coverage, measures (a) the percentage of target accounts where you have reached at least one critical stakeholder; and (b) the depth, or number of unique buyers, you have reached within that target account. While engagement indicates if and how much targeted stakeholders are engaging with or responding to your outreach.

5. Marketing customer acquisition cost (CAC)

Leadership wants exponential YoY growth, but at what cost? To build a sustainable growth and demand generation engine, acquiring customers must be profitable over the long term. Marketing CAC is calculated by dividing the total cost of marketing by the number of closed-won opportunities. The total cost of marketing means everything, such as advertising, events, wages, vendors, software, and travel.

Secondarily, marketing CAC payback period predicts how many months it will take to recover marketing costs after the initial sale. Highly profitable and capital efficient businesses will capture this cost back in the first year, while others may take longer. In the case of the latter, more effort and investment may be required to reduce churn. Most SaaS businesses have a 12-month CAC payback period.

6. Sales velocity

Sales velocity measures how fast revenue flows in by calculating the average number of days between the first touchpoint and a closed won opportunity. If your sales cycles are long and/or marketing has little-to-no influence in the sales process, you may find it is more effective to track velocity at an earlier point in the lead lifecycle, such as when a marketing-sourced lead is accepted/qualified by an account executive as viable pipeline.