B2B Lead Generation Step #3: Identify the Metrics that Matter
If you haven’t addressed the first two steps in the lead generation planning process – establishing the right mindset and building a strong roster of stakeholders – you may want to go back and review those before you read this. After all, if you’re a smart lead generation marketer, you know (or you’ll find out) that process is critical. Skip a step or ignore part of the process, and you can expect a weakened lead generation program.
Next up is identifying the metrics that matter. Note I am using the phrase “that matter.” Simple, but important. Many marketers make 1 of 2 mistakes during this phase. Either they don’t address metrics at all, or they identify a long list of metrics that don’t really matter or ones they’ll never ever track.
As an individual in charge of this program, you should discuss lead generation metrics with the person you report to, or the person that represents the most important stakeholder in the program. Don’t be surprised if you get responses like some of these:
“I don’t care you how you do it or what the metrics are; we just need more leads for the sales team. Focus on volume.”
“As long as we don’t spend over $XX,XXX, we’ll be ok. Focus on using that budget wisely.”
“We just need to get our name out there more. That will help our guys prospect, give them the confidence, and likely get some more deals closed.”
All of these examples represent what I call Metrics Avoidance Disorder (MAD), a common condition that affects approximately 75% of those asked to discuss marketing metrics. Symptoms include:
- Cancellation or rescheduling of metrics-related meetings
- Desire to focus more on creative execution than metrics
- Making irrational statements regarding the expected results of a lead generation program
The good news is that there is a cure for MAD. Persistence, the ability to educate key stakeholders, and some clear and concise reporting visuals can lead to MAD-free living.
The easiest path to MAD-free living is to ask, and get concrete answers to, some of the following questions:
- How much revenue does the average customer generate in 1 year? How about over the lifetime of the relationship?
- What percentage of that annual or lifetime value is the company willing to give up in order to acquire that customer? [This is where some type of financial stakeholder needs to get involved]
In theory, if you get accurate answers to these questions, then you’ve just identified your target customer acquisition cost. You now know how much you can spend to acquire a new customer. A lot of folks never even get this far, so pat yourself on the back. Now we move on to the questions related to lead generation:
- What is our anticipated cost per qualified lead? You may have to guesstimate here if you haven’t run a lot of lead generation programs, but there are plenty of ways to get to this number.
- Based on either historical sales performance or anticipated sales performance, what % of qualified leads turn into customers?
If you have these three numbers – target customer acquisition cost, cost per qualified lead, and lead-to-customer conversion rate -you can create different scenarios. Usually, I create simple low-middle-high projections, and then move those three “levers” around based on levels of confidence in each number.
Now, before anyone gets too excited, this is a very simple way to address metrics. There are plenty of other metrics that might matter. Inquiry-to-lead ratio, lead-to-opportunity ratio, volume-related numbers, etc. That being said, if you can get a handle on these three simple metrics, you can begin planning your lead generation with some baseline goals in mind.