The benefits of inbound marketing should not be understated.
The recent explosion of digital marketing in the B2B market has created an environment rich in competition. With a strong B2B digital marketing strategy the environment can be even richer in potential.
Whether you have committed to an agency or you have decided to take on the task internally, it is very important to be able to develop consistent B2B inbound marketing KPI metrics to judge your results.
Here are the top 9 B2B Inbound Marketing KPIs you can use to judge the success of your inbound campaign:
1. Sales Revenue
Starting with arguably the most import B2B marketing KPI, Business Directory defines sales revenue as “The amount realized from selling goods or services in the normal operations of a company in a specified period.”
If you see positive sales revenue from your inbound campaign, that means your campaign is successful.
In fact, even if your company’s overall number of leads and traffic decrease, yet the quality of leads improves to the point that you see increased revenue, then your campaign can only be described as a success.
2. Cost Per Lead (CPL)
The main goal of inbound marketing is to see leads come to you.
An effective inbound strategy should result in less expensive, but more qualified leads than a traditional outbound campaign. As good inbound content is evergreen, the work you put in now will continue to add value and bring in leads in the future. For this reason the longer you commit to inbound, the less expensive your CPL will become.
To determine your CPL, you first need to determine the cost of your B2B inbound marketing efforts. This can include — but is not limited to — the following:
- Human Resources
- Advertising (PPC)
- General Overhead
Once you have determined your costs for a given period, you would simply need to divide your total spend by number of Leads. For example, if you had $20,000 spend in a month and generated 100 leads your CPL would be $200.
To see how to calculate CPL, see the formula below.
Total spent on inbound / Total number of leads in the same period
Instead of CPL, many prefer the Customer Acquisition Cost (CAC) metric. CAC is a relatively similar statistic to CPL, but it uses customers instead of leads.
Using our same example as before, but assuming of that 100 leads 25 became customers, our customer acquisition cost would be $800.
To see how to calculate CAC, see the formula below.
Total spent on inbound / Total number of customers in the same period
3. Customer Value
To fully understand the value of a customer, you must take multiple factors into account.
- Are clients likely to make multiple purchases in a year?
- How long do customers go between purchases?
- If you charge on a subscription model are there opportunities for upsells, and if so, how likely are these upsells?
Once you have all this information we can effectively calculate the yearly customer value.
For this calculation, you would add the average sale amount per customer. For any business selling a product or service with a high range of value, you would need to average out the value per each sale.
Multiply that number by the average number of sales per year. This number represents the number of different times a customer purchases in a year.
The formula for yearly customer value can be shown as:
Average sale amount per customer X Average numbers of sales in a year
Once you have the yearly customer value, we can easily calculate lifetime value (LTV) by multiplying by the average number of years a customer is retrained.
This LTV formula can be seen as:
Yearly Customer Value X Average Number of Years Customer is Retained
4. Lifetime Value to Customer Acquisition Cost (LTV:CAC) ratio:
Using our previous two calculated numbers, we can now effectively determine how successful our marketing endeavors have been. The calculation here is simple: divide the Lifetime Value by Customer customer acquisition cost.
This will generate your formula for LTV:CAC ratio, which looks like.
Lifetime Value (LTV) / Customer Acquisition Cost (CAC)
As a standard rule a ratio of 3:1 is considered a good ratio. Anything under that and you would likely need to make a change in strategy, or you may be too early in your inbound journey.
If your ratio begins to exceed 5:1 then it likely means there is more potential and you should consider increasing spend on marketing.
5. Inbound Marketing ROI
At the end of the day, ROI will be the most important (at least tied with revenue) factor to determine the success of any marketing campaign.
A marketing campaign generating a low or even negative ROI would likely mean a change in strategy is required. While a positive ROI would point to signs that this marketing activity warrants further investment in time and money.
The traditional marketing ROI formula can be written as:
(Sales Growth – Marketing Cost) / Marketing Cost
To qualify this formula for inbound the simple solution is to relate the above terms to inbound.
Therefore we would only take the marketing costs associated with inbound, in addition, we would only use the sales growth from inbound customers.
This can be visualized as inbound marketing ROI formula:
(Inbound Sales Growth – Inbound Marketing Cost) / Inbound Marketing Cost
Learn more on how Jumpfactor’s inbound strategy will generate higher ROI and Revenue
Get your Consultations
6. Estimated Revenue from Leads
Estimated revenue from leads is a value Jumpfactor uses internally and with our clients. This formula attempts to generate a value for each incoming middle of the funnel and bottom of the funnel lead.
For example, if an average customer LTV is $100,000 we would attribute values on leads based on how likely this industry is to convert leads. For example, we may say
- A BoFu lead should convert ⅕ of the time; then this lead would value at $20,000.
- If a MoFu lead converts 1/20 of the time, then this lead would value at $5,000.
- If a Phone lead converts ¼ of the time, then this lead would value at $25,000.
Using these three numbers, we can calculate our total estimated revenue.
This formula would look like:
(Number of BoFu leads x Estimated value per BoFu lead) + (Number of MoFu leads x Estimated value per MoFu lead) + (Number of Phone leads x Estimated value per Phone lead) = Estimated Revenue from Leads
We can expand this formula to include other lead acquisition channels such as a live chat tool, social media, or in very specific cases even walk-in customers.
Estimated lead value has multiple uses.
Firstly, to determine how your successful marketing efforts have been without relying on the closing rate from the sales team.
Secondly, we can also use our estimated revenue in comparison to actual revenue to see how effective or ineffective the sales team has been in comparison to the industry standard.
7. Total Leads
CRO, SEO, content marketing — all of these inbound efforts correlate to generating leads.
Revenue can vary, especially for smaller companies and industries that don’t see a lot of sales.
Looking at total new leads as a whole helps determine how effective inbound campaigns are.
Revenue can drop by simply hitting a wall where a handful of potential customers choose to go another direction. Even if your company closes an average of 25% of leads that does not mean that if your company sees eight leads in a month, you will convert two customers.
Due to this, it is important to value leads individually to help determine a consistent level of growth. As they will be internally valued differently, it is important to keep track of both BoFu and MoFu leads.
8. Organic Growth
Further breaking down the idea of sample size is organic traffic.
While using organic traffic as a sole determining factor is flawed it is still a very powerful statistic to judge inbound growth.
Traffic can be artificially high from unrelated traffic due, such as poor blog ideation. This does not take into account onsite UX elements and conversion rate optimization strategies; traffic is still one of the most consistent stats to determine growth. Yes, seasonality certainly plays a part organic traffic and can skew data, it is still a very consistent factor for growth.
A 1000 sessions website may generate 20 leads one month and only 17 the next. This does not mean inbound efforts have weakened. The drop in leads represents just a 0.3% reduction in leads which can simply be a factor of bad luck or technical errors.
When we are looking at traffic numbers in the 1000’s, we now have a more reliable sample size to determine growth.
The most reliable traffic numbers come from Google Analytics. The below shows the organic growth from one of Jumpfactor’s clients.
This client is in the managed IT industry, which sees very sporadic month over month lead data we can determine that our campaign is going in the right direction due to the consistent traffic growth.
9. SEO Growth
The SEO growth represents the potential for quick organic traffic growth in the future.
As organic traffic will typically only come from keyword ranking on the first page of Google, there is still value in keywords ranked on pages 2 – 10.
This is because it is easier to push a keyword to the front page than to rank for a brand new keyword. To determine this organic potential, we use two main sources.
Using SEMRush’s keyword position tool, we can see how many keywords we have ranking and on which pages.
We can use this information to determine the total SEO growth. Also, this chart will not take seasonality into account as the total number of searches and clicks do not matter just position does.
Below we see the details for the same company we looked at earlier. We see that in addition to actual organic growth the total amount of keywords we are ranking for has gone up as well.
While SEMRush is a great way to see the total number of ranking keywords it also has its flaws.
By valuing all keywords the same, keywords with 10 – 20 impressions will share a value with keywords with 1000’s of impressions.
Google Search console shows us actual impression values. While clicks closely match total organic users, impressions represent your SEO growth and how much potential there is for historical optimization in the future.
Each time a keyword shows up in a search, even on page 10, you will gain one impression.
Therefore, as impressions go up, your visibility will as well.
By looking at SEMRush organic growth and Search Console impressions, we will see a good idea of SEO growth.
While these KPI’s can be confusing, they are equally as important. If you see consistent negative results from your core KPI’s that probably means your inbound strategy needs an overhaul.
Get your key B2B inbound KPI’s back on track with Jumpfactor’s success driven inbound strategy. Contact one of our Marketing experts today