Metrics matter. As marketers, there are multiple numbers and reports we need to validate our efforts. After all, if a marketing team isn't helping a business generate new customers and creating better relationships with current ones, they often won't be considered as successful as they could be. A Hubspot cheat sheet shares the 6 of the most important marketing metrics. We've broken them down just for B2B marketers.
Customer Acquisition Cost (CAC)
The Customer Acquisition Cost (CAC) is a metric used to determine the total average cost you spend to acquire a new customer or lead. Businesses want a low average.
Why You Should Care: An increase in CAC means that you are spending comparatively more for each new customer or lead, which suggests there's a problem with your sales or marketing efficiency that needs to be resolved.
Marketing Percent of Customer Acquisitions Cost
The Marketing Percent of Customer Acquisition Cost is the marketing portion of your total CAC, calculated as a percentage of the overall CAC. This number can show you how the marketing teams performance and spending impact your overall Customer Acquisition cost.
Why You Should Care: An increase here can mean a number of things: Your sales team could have underperformed (and consequently received) lower commissions and/or bonuses, your marketing team is spending too much or has too much overhead or you are in an investment phase, spending more on marketing to provide more high quality leads and improve your sales productivity
Ratio of Customer Lifetime Value to CAC (LTV:CAC)
The Ratio of Customer Lifetime Value to CAC is a way for you to estimate the total value that your company derives from each customer compared with what you spend to acquire that lead or new customer. While reaching new customers is always important, so is total company growth.
Why You Should Care: The higher this number, the more ROI your sales and marketing team is delivering to your bottom line. A ratio that is too high could indicate you aren't reaching enough new customers or connecting with enough leads. Spending more on acquiring new customers or leads to reach out to will reduce your LTV:CAC ratio, but can help speed up total growth.
Time to Payback CAC
The Time to Payback CAC shows you the number of months it takes for your company to earn back the CAC it spent acquiring new customers. In industries where your customers pay a monthly or annual fee, which many B2B businesses do, you normally want your Payback Time to be under 12 months.
Why You Should Care: The less time it takes to payback your CAC, the sooner you can start profiting from the new customers. Most businesses aim to make each new customer profitable in less than a year, though new customers in the B2B industry can take 12-24 months to make a purchase.
Marketing Originated Customer Percent
The Marketing Originated Customer Percent is a ratio that shows what new business is driven by marketing, by determining which portion of your total customer acquisitions directly originated from marketing efforts. It's based on your sales and marketing relationship and structure, so your ideal ratio will vary depending on your business model.
Why You Should Care: The impact of your marketing team's lead generation efforts have on acquiring new customers is reflected in this percentage. A company with an outside sales team and inside sales support may be looking at 20-40%. A company with an inside sales team and lead focused marketing team might be at 40-80%.
Marketing Influenced Customer Percent
The Marketing Influenced Customer Percent takes into account all of the new customers that marketing interacted with while they were leads, anytime during the sales process. This percent takes into account the impact marketing has on a lead during their entire buying lifecycle.
Why You Should Care: This metric will indicate how effective marketing is at generating new leads, nurturing existing ones, and helping sales close the deal. It gives your CEO or CFO a big-picture look into the overall impact that marketing has on the entire sales process.
To find out how to calculate these numbers, visit the HubSpot cheat sheet.
Which of these metrics matters the most to your business?