B2B demand Generation Metrics Tech Startups Should Track
September 20, 2022 Edwin Kooistra
Sustainable growth is the dream of every B2B tech startup, allowing themselves to grow over time through consistent demand generation. Due to the competitive and quickly evolving nature of the SaaS sector, it is critical for B2B businesses, especially tech startups, to maintain observation over essential demand generation metrics.
Demand generation metrics that directly correlate to ROI growth must be regularly analyzed as they enrich areas including brand awareness, inbound marketing campaigns, sales enablement, and reducing customer attrition.
There are numerous metrics you can use to assess the effectiveness of your demand generation funnels, such as CPA and CLV. However, if you focus on the wrong metrics, delving too deeply into the numbers can do more harm than good.
Metrics and data are only useful if they are presented in the appropriate context and provide actionable insights into your demand generation operations.
What Are b2b demand generation metrics and why Is It Important to Track Them?
Are you accurately tracking the efficacy of each stage of your demand generation funnel?
Given that B2B organizations across various industries spend more than 11% of their annual budget on marketing in order to increase ROI.
B2B marketers must measure relevant demand generation metrics that can benefit their marketing efforts in some way.
To do so, you must first understand your demand generation funnel and goals in order to select the appropriate performance measurement metrics.
Follow this guide to learn about the top 10 B2B demand generation metrics and how to calculate them.
How to pick the best demand generation metrics?
The demand generation process ensures B2B startups have a consistent revenue generation pipeline, entailing a wide variety of activities to engage leads into marketing funnels.
From attracting new leads, nurturing them through marketing initiatives, converting them into customers, and increasing the lifetime value of existing customers.
The entire process must be streamlined by identifying the necessary KPIs that startups must monitor and analyze.
Demand generation metrics are directly correlated with the go-to-market strategies of tech startups and are an important measure of validating all product marketing efforts. B2B demand generation KPIs for tech companies is a fusion of marketing and sales metrics that offer insightful buyer behavior data that:
- Enables forming relationships with the right audiences
- Allows nurturing different buyer personas
- Build long-term customer relationships
- Enhance ROI based on data-driven strategies
- Identify the ideal content for different audiences
Popular demand generation marketing metrics that B2B tech startups should actively monitor and analyze can include:
- Marketing qualified leads (MQLs)
- Sales qualified leads (SQLs)
- Customer acquisition costs (CAC)
- Customer lifetime value
- Average order/purchase value
- Return on Investment (ROI)
- Content conversion rates
10 Essential B2B Demand Generation Metrics Tech Startups Should Track
Here you can read in detail about ten of the most important B2B demand generation metrics that tech startups should consistently analyze:
1 – Marketing Qualified Leads
Professionally defined, marketing qualified leads are potential customers who have filtered through the marketing funnel, satisfying essential criteria, and are passed along to the sales team for a formal approach.
MQLs are potential leads who have shown interest in your B2B products through different actions on your website, through an email, over a social feed, etc.
We must remember that the MQL is not ready to purchase instantly and wants to learn more about the brand, its products, and what benefits they will experience. Usually, marketing teams determine whether a lead is qualified for the sales funnel by analyzing:
- Different website pages visitors clicked through to
- The time spent by users on the website
- Number of return visits by visitors
- Sign-ups to newsletters, email lists, social feeds, ebooks, etc
- Views on a video demo or guide
- Attendance in virtual events and webinars
Marketing Oriented Customer Percentage is a ratio that shows how much new business was generated by marketing. Simply take the new customers from a given period and subtract the percentage of them who started as a lead generated by your marketing team.
Just to give you an idea of how effective it can be for a SaaS business to track MQLs, let us share an example with you:
Retail SaaS operating system provider StoreHub focused their MQL data to revise their entire go-to-market strategies and branding. This enhanced their brand awareness and market penetration in S.E.Asia.
To scale growth at the lowest cost, StoreHub’s marketing team focused on their unique propositions, aligning them with the daily pain points of small-scale retail businesses.
Analyzing their demand gen metrics StoreHub was able to identify the correct buyer persons, the stage of their customer journey, the correct marketing channels, and the ideal changes they needed to enhance their growth and market share.
Upgrading to a mix of activities including paid advertising (Google & Facebook), Landing page optimization and SEO, budget optimization, strategic geotargeting, and others, StoreHub was able to:
- Increase MQLs by 106.74%
- Reduce cost per MQL by 65.93%
2 – Sales Qualified Lead
Sales qualified leads are customers who have progressed through both the marketing and sales funnel and are now high-quality leads ready to convert.
As a very important B2B demand generation metric, SQLs data can determine crucial insights including the content they consumed, the time taken to convert the lead, the customer journey, and the sales pitch.
Determining if leads are qualified for the sales funnel can be difficult, therefore it is necessary to monitor important factors including:
- The frequency of visits to the pricing page
- Filling out contact us forms
- The download of a free trial of the product
- Left with items in the shopping cart
- Left during the subscription checkout process
- Talked to a live chat rep or chatbot
Phone, internet, and data management provider Atlantech Online Inc. had good traffic, but they were having issues either qualifying or identifying SQLs. The brand enacted a scoring system for leads to better identify and qualify them as sales qualified.
Using the historical demand generation data, Atlantech understood they needed to experiment with different techniques to identify SQLs at the right time. The provider integrated interesting tactics including:
- Website pricing pages – instantly identifying qualified and non-qualified audiences.
- Industry trend research – driving awareness about new technology solutions for communications, enhancing driving sales qualified leads.
- Testing CTA styles – ugly and Attractive CTAs were tested with content magnets to ascertain leads who qualified for the next stage.
- Built an SQL identifying machine – based on engagement, lists of SQLs were filtered to identify pure SQLs who will purchase.
Analyzing their MQL and SQL data allowed Atlantech to scale their monthly sale qualified leads from an average of 2 to averaging 10 within four months, a 355% increase.
3 – Cost Per Acquisition
The cost per acquisition or cost per lead is a popular B2B demand generation KPI for startups, as it calculates the average cost of onboarding a single customer for different marketing campaigns and channels.
The CPA is different from customer acquisition cost in the sense that it measures cost per customer on a granular level. The cost per acquisition can be calculated for different initiatives through this simple formula:
In the digital industry, CPA is a crucial demand generation metric that allows marketing teams to optimize, essentially, their paid marketing activities. CPA can be however used to calculate the per customer cost for almost all marketing initiatives including content, social media, PPC, affiliate marketing, display advertising, and other activities.
A leading financial business focused on targeting the ideal customer profiles and creating valuable content messaging to significantly decrease the CPA.
Using demand generation data to identify their target buyer personas and then identifying the right solutions for their pain points, the firm was able to:
- Filter its target audiences by over 53%, identifying only qualified leads
- Decrease its CPA by 62% in comparison to the previous campaign
4 – Close Rate Per Channel
The close rate is a highly analyzed demand generation metric that highlights the performance of sales teams. The close rate measures the number of leads converted into customers, alternatively measuring how many prospective customers subscribed to the service.
Close rates per channel simply indicate that you are calculating the purchases for a particular channel like a social profile, the website, the sales team, PPC, or other channels. The general formula to calculate the closing rate per channel is defined as:
Closing Rate Per Channel = Number of Closed sales through the channel / Total number of leads from the channel x 100
Tech startups must keep in mind that the closing rate alone is not the ideal measure of sales performance as it can be influenced by buyer personas, brand awareness, and other buyer dynamics.
A great example of optimizing closing rate comes from The Paint People, a 22-year-old business that usually sold through physical stores. A detailed analysis of their demand generation metrics identified that more than 45% of visitors exited from product pages.
The brand identified that its product category pages were the most popular and had both design and user experience shortcomings. The Paint People improved their content, design, CTAs, user flow, and added filters on pages to enhance the experience of visitors.
- The experiments paid off well, securing the following results:
- Transaction conversion rates increased by 87%
- Product page visits increased by 14%
- Mobile conversions increased by 110% and 54% for desktop
- New visitor conversion rates increased by 151%
5 – Payback Period Time
Professionals define the payback period as the time taken to recover the cost invested in acquiring a new customer. In simpler terms, the payback period measures the breakeven point of acquiring a new customer.
For B2B startups, it is crucial to monitor the payback periods for different subscription plans which can provide essential insights for pricing decisions.
Longer payback periods are generally unattractive since payback periods are generally known to ignore the time value of money. The metric is calculated by:
Payback Period = Customer Acquisition Cost / Monthly Revenue from Customer
Here’s an example of how the payback period works in practice. Assume that Company A invests $1 million in a project that will save the company $250,000 per year. If we divide $1 million by $250,000, we get a four-year payback period for this investment.
6 – Average Deal Size (ADS)
A popular metric for B2B SaaS startups, the average deal size is the monetary value customers spend on average on your solutions. This can also be termed as the average value of sales for tech startups from every closed deal.
The ADS is a known metric that allows B2B tech startups to analyze the performance of their sales teams, in addition to making critical pricing decisions. Average deal size is defined by the following formula:
Average Deal Size (monthly, quarterly, yearly) = Total Revenue Earned During Period / Total Number of Conversions During Period
For example, if your revenue goal is $1 million and your ADS is $50,000, you will need to close 20 deals to meet your revenue goal. Assume that 40% of the time, your sales representatives successfully close a deal.
That means your chance of winning is 40%. So, in order to meet your revenue target, you must pursue at least 50 opportunities.
7 – Customer Lifetime Value (CLV)
It is one of the most important and popular demand generation metrics and identifies the average lifetime value of customers purchasing from a B2B business. An increase in customer lifetime value indicates that your marketing and sales team’s performance is spot on.
B2B startups generally target audiences that offer longer CLVs. It is an important metric to measure the impact of your marketing efforts. This is because customers with shorter lifetime value will eventually not purchase again, leaving another gap for the tech startup to fill through demand generation activities.
Sainsbury supermarket introduced an interesting tactic on their renowned Nectar Loyalty Card, offering Ben & Jerry’s ice cream at discounted prices. This allowed the supermarket chain to build resolute loyalty within their existing customer base, enhancing their lifetime value and brand loyalty by offering more purchases compared to Tesco, Aldi, and others.
8 – Contribution to Total Revenue
The contribution to total revenue or contribution margin can be both a ratio or a number that indicates how much revenue is contributed after deducting all variable selling costs. The contribution to total revenue metric can be used by tech startups to measure revenue from different payment plans, buyer personas, or as a ratio of net sales.
The contribution margin is defined by marketers through the following formula:
Contribution Margin Ratio = Net Sales Revenue – Variable Costs / Sales Revenue
An interesting case comes from the Oklahoma State University Institute of Technology, who performed a strategic contribution margin analysis that allowed them to identify productivity issues, process inefficiencies, and recurring financial losses.
The university was able to clearly assess the profitability of their courses and revise academic service fees, instead of the tuition fees for students. They slimmed down courses by merging them or completely removing them from the curriculum.
9 – Performance of Content
A leading metric when analyzing demand generation is content performance. Several KPIs including visits, time on page, CTR, trial signups, etc. that can be directly attributed to content must be monitored to ensure value and customer focus within the content.
Using popular analytics B2B startups can easily analyze content performance quantifying results through likes, shares, comments, etc. Email tools like HubSpot also provide similar analytics for email campaigns.
When creating and marketing several content types like video, audio, blogs, infographics, and even multiform content tech startups must gauge this important metric to enhance their demand generation. As paid marketing becomes ridiculously expensive, content marketing must be optimized to ensure business continuity for SaaS businesses.
DigitalKnights, an information technology collaboration platform, focused most of their efforts on outbound marketing activities. This not only limited their reach, but also lowered organic traffic and no real value-driven inbound content marketing.
The company conducted workshops to determine the ideal buyer personas, market segments and customer journeys, finally leading to a strategic content creation campaign.
The campaign was aimed to generate maximum MQLs from target audiences, secure top SEO rankings, and increase website traffic. The brand managed to achieve the following simply by optimizing their content:
- 186% increase in marketing qualified leads
- 332% increase in SEO web ranking and keyword visibility
- 381% increase in year-on-year website sessions
10 – Brand Reputation
While gauging brand reputation can be a difficult process, depending on your startup’s marketing strategy brand identity begins building as soon as your business begins to deliver value to customers. Content is generally the most important element that builds the brand sentiment for B2B tech startups.
SaaS is an industry built upon delivering value and customer-focused products. Understanding pain points, showing empathy and providing solutions enhance a B2B tech startup’s ability to enhance its demand generation simply by associating with its buyer personas.
The ideal way to constantly know your brand reputation is through real-time customer feedback and audience suggestions. Conducting surveys to identify audience issues and publishing content to deliver instant value to these audiences is a popular technique SaaS marketers use to identify sentiment towards their brands.
Brand management has become a core element for every tech business, large or small scale. Ensuring your marketing teams develop valuable content, meaningful conversations, and lasting relationships is simply crucial to reduce customer attrition rates.
How To Measure Demand Generation Metrics?
Tracking your planned demand generation metrics can be performed either manually or through AI-assisted tools. Once a startup has identified their ideal metrics, they must now decide if they wish to dedicate resources to manually track and analyze the data, or they wish to automate this process.
The manual metric tracking process is a professional task that requires considerable data analysis proficiency and the ability to expertly operate excel sheets. Considered a cost-efficient way by professionals, this process does consume time.
Automatically measuring B2B demand gen KPIs can save precious time, delegating the data collection and analysis process to a SaaS based solution. A great aspect of demand gen tools is their ability to deliver meaningful reports in an organized manner, for example, a campaign breakdown by leads generated.
So, what tools are available to assist you with your demand generation strategy?
Several can be useful, such as those designed to help you automate, strategize, nurture leads, and provide valuable reporting for your efforts.
Each of these tools is unique and can help in different ways:
Identifying the right demand generation metrics remains critical for B2B tech startups, primarily due to limited investment and brand reach. Since all startup sales processes must be cost-effective, optimizing the sales pipeline for consistency requires insightful data.
In this blog post, we outlined 10 essential B2B demand generation metrics that every tech startup should track. Keep track of them on a regular basis, and make changes to your strategy accordingly. But if your business doesn’t have the time and resources to keep track of the crucial metrics, you can always seek professional consultancy.
At Chasm, we assist B2B tech startups to scale their businesses through data-driven product marketing solutions. We consult with your sales, marketing, and operations teams to develop winning strategies to offer your brand the ideal recognition it deserves.
Through strategically planned processes, a skilled team of marketing professionals, and data-based insights we enhance your digital footprint across the SaaS industry.