The 7 Most Important Demand Generation KPIs

Demand Generation KPIs

With the right demand generation strategy, your B2B business is going to grow – fast.

You’ll have plenty of inbound and outbound prospects ready to buy.

A demand generation campaign is much more than just creating awareness around your business. It’s about creating content, informing the audience about your business, and moving them down the sales funnel. Demand generation is hard work and should be implemented in the long term. 

When the strategies are in the long term, B2B marketers need to define strong KPIs. You’ll gain more credibility as soon as you present how the demand generation strategy has contributed to the growth of the business.

The year 2020-21 proved that brands that engage actively with their customers get a better ROI than those who don’t, and demand generation can help you achieve that. 

What is Demand Generation?

From the term, it’s easy to confuse demand generation with creating demand for a product. But demand generation is far more than that.

It’s an umbrella term for a range of marketing activities that drives long-term customer engagement – including lead generation, demand capture, and sales pipeline acceleration.

The long-term element is essential. If done right, demand generation positions your brand as a trusted advisor, generates leads, boosts sales, and creates genuine brand loyalty.

The 7 Most Important Demand Generation KPIs

How effective are your demand generation campaigns? Is your content giving you expected returns? If you are like most marketers, you are struggling to determine the metrics that can give you a clearer picture of your campaign’s performance.

If you are using demand generation initiatives to attract leads, then how are you tracking initiatives to determine success?  As with any marketing campaign, tracking the right KPIs is really crucial.

We put this blog together to help you identify and track the right demand generation KPIs. So let’s dig in.

1) Closing Percentages

So your strategies are driving prospects to the landing page, but how well are they turning into sales? The best way to determine is to track the closing percentage rates. This tells you how many prospects are turning into your customers.

The higher the percentage, the better your sales strategy is working. If it’s low, it means you are not attracting the right people to your product. Maybe your content is not relevant or maybe your sales cycle is too long.

To calculate your closing rate, you just need to use this formula:

# of Opportunities Closed / # of Total Opportunities =% of Win Rate

2) Number of Leads Moving through the Funnel 

Getting leads into your funnel is great. But it’s just the beginning of a demand generation campaign. To close deals, you need to make sure they are moving down the sales funnel.

The middle of the funnel ensures whether your nurturing camping works well. For example, you can check the email’s open rates, link clicks or completed CTAs like visiting a website. 

To determine this, you need to check what percentage of marketing qualified leads turn into sales qualified leads.

To calculate your funnel conversion rate, just use this formula:

# of Leads / # of Conversions =% of Funnel Conversions

If the number is low, you may need to change your nurturing tactics.

3) Customer Acquisition Cost

The cost to acquire new leads will determine if your demand generation efforts are viable or not. To calculate this, you need to calculate whether the lifetime value of a customer is greater than the cost of acquiring them.

The formula: Total Cost for demand gen campaign or channel / # of New Customers Acquired through that campaign or channel = CAC

The total cost of the campaign may include Ad budget, martech investment, creative investment wages, etc.

To improve the result, you’ll need to focus on the right channels and optimize for better results.

4) Sales Velocity

When you start a demand generation campaign, you want your leads to move quickly down the sales funnel. The sales velocity metric helps you measure how fast your business is acquiring new customers.

This is challenging with the B2B scenario since the sales cycle typically spans over a month. The sales team dedicates countless hours in convincing the customers until the client finally closes. 

But wouldn’t it be good to have customers who are already convinced with your product? This way the sales team can close deals faster.

The key here is to build trust with your customers right from the beginning of the funnel.

The formula for calculating sales velocity is:

# of Opportunities x Amount x % Win Rate / Length of Sale = Sales Velocity

5) The Cost of Sales Qualified Leads

The B2B buying process isn’t linear. It’s difficult to attribute sales to one particular platform.

Getting marketing qualified leads is easy, but converting them into sales qualified leads is the real deal. That’s where your lead nurturing campaigns can show their merit.

The goal of nurturing campaign is to convert maximum MQLs into SQLs. The more the conversions, the lesser is the cost of individual sales qualified leads.

This will help you identify what is the cost of acquiring relevant leads against the marketing costs.

Cost of Marketing / # of SQOs = SQO Cost

6) Customer Lifetime Value

Initially, when you start your demand generation campaign, you cost of acquiring a customer might be more than the actual amount spent by the customer.

This doesn’t mean that your campaign was a failure. You just need to calculate the customer lifetime value of a prospect. Over the years, the customer might turn into a loyal follower of your brand and end up making repeated purchases.

With this number, you will know whether you are targeting the right customers. For instance, if your leads are converting but aren’t making any repeated purchases, you are targeting the wrong people.

You’ll need to find out why they are leaving and create a plan to promote customer loyalty.

The formula: Yearly Revenue per Customer x # of Years as a Customer) – Customer Acquisition Cost (CAC) = CLV

7) Return on Investment

In the end, demand generation is all about generating revenue. So it makes sense to track the revenue you generated from each campaign.

If you are running multiple campaigns, you need to track each one of them and see which campaign is giving positive ROI.

To calculate the overall ROI from all your demand generation campaigns:

# of Sales x Average Sales Price = Revenue 

Conclusion

KPIs are used to measure performance. Demand generation KPIs go deep into sales and customer engagement over a long period of time. The metrics mentioned above will help people outside of marketing understand the results. Using these KPIs will give clarity to your team and help them build better demand generation campaigns. 

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