25 Metrics to Prove Marketing Drives Sales

by Roy Young

Driving sales is what B2B marketing is all about. Although the precise roles and responsibilities of Marketing may differ from company to company, your marching orders are the same: Help Sales produce more with less.

The most effective companies know that alignment of sales and marketing is a requirement for productive demand generation. The most enlightened CEOs and CFOs now understand that Marketing makes Sales more productive and a level of marketing spend is a better investment than an expenditure on more sales reps. And star sales reps know that Marketing helps them meet quotas.

All marketers want to know best practices and share experiences about driving sales. That's why the upcoming MarketingProfs B2B conference is titled "Driving Sales." (Whether your focus next year will be your Web site, email marketing, new media, search marketing, ROI measurement, integrated marketing, or customer insight, come to the October to learn how to drive sales in 2008.)

The conference sessions will cover a comprehensive range of marketing activities and choices, but one message will be consistent: Whatever your focus, you must apply specific metrics to demonstrate just how marketing improves sales productivity. Only with data can marketing be both accountable and empowered to add value to the organization. The purpose of this article, therefore, is to begin to help you do just that.

Here are 25 metrics you should select from to prove marketing drives sales and to track progress; they are categorized by the four stages of the sales (customer acquisition and retention) funnel:

1. Top of the funnel (lead generation—5 metrics)
2. Inside the funnel (lead management—7 metrics)
3. Bottom of the funnel (closing sales—9 metrics)
4. Retention funnel (customer retention, cross-sell, up-sell, and win-back—4 metrics)

The remainder of this article lists and briefly defines the metrics you can use in each of the four stages of the sales cycle. Relevant sessions for the upcoming "Driving Sales" conference are referenced throughout. To select the metrics most critical for marketing in your organization, consider sales goals and areas of greatest business leverage.

1. Lead generation to fill the funnel

The first phase of the sales cycle demands filling the top of the sales funnel with an adequate number of prospects.

1. Profile of best prospects and decision makers: Marketing clarifies with Sales and others just who is the target for products and services based on a needs-based segmentation of the market (to improve your segmentation approaches, access the recording of Allen Weiss's online seminar from August 2, 2007). Your target must include a company profile and a profile of decision-makers within target companies. This is the most important activity for establishing the definition of a "qualified lead."
2. Quantity of qualified leads: Only after the definition of "lead" is established, in terms of the type of organizations targeted and role of the individual contact name with budget and purchase decision authority, can the quantity of leads be considered. Are you keeping up with the competition?
3. Cost per qualified lead: The ratio of the marketing spend divided by the number of qualified leads produced. The ratio can be used for all of marketing spend as well as for individual campaigns and media. Jim Lenskold is the instructor for a three-hour intensive session on this subject during Day 1of the conference.
4. Leads to appointments: The ratio of Sales' success with setting appointments among leads generated.
5. Knowledge about leads: Depth and breadth of information on leads passed along to Sales.

2. Lead management to move leads through the funnel

The second stage in the sales funnel requires Marketing to help Sales shorten the sales cycle (time from first contact with lead to converting to a customer). Too often, Marketing just hands off leads to Sales rather than spending time with Sales to nurture prospects. John Coe is the instructor of a three-hour intensive session on the topic of managing leads to improve sales productivity during Day 1 of the conference.

1. Number of requests for proposals: From the pool of qualified leads, how many can Sales turn into requests for a proposal?
2. Number of proposals leading to presentations: Of proposals written, how many lead to sales presentations?
3. Time spent with prospects/customers: Sales is most successful in most businesses when spending time face-to-face with prospects; to maximize sales productivity, Marketing's job is to do all the behind-the-scenes work to ensure that Sales can maximize time out of the office.
4. Number of sales calls or meetings/number of valuable calls or meetings: Of the sales calls or meetings, what percentage is valuable in advancing prospects through the sales funnel?
5. Usage of marketing materials and messages: Many ways exist to track and document usage of marketing materials, but finding useful ways will document value of marketing materials and ways of making improvements in the management of messages and media. Tim Riesterer will discuss how to manage this effort systematically during Day 2 of the conference.
6. Leakage—percentage of leads leaving the funnel: What share of leads are leaving the funnel? Do those who leak share anything in common so we can alter the definition of a qualified lead accordingly? Tony Zambito will address new ways of knowing about customers during a three-hour intensive session on Day 1 of the conference.
7. Dollars invested to nurture leads: To maximize the effectiveness of marketing spend and sales resources, we want to keep prospects who will eventually close, and "leak" prospects who will never close. We don't want to waste valuable resources on poor prospects. This metric will track the effectiveness to determine which prospects to nurture and which to release from the funnel. Jim Lenskold will address this issue in his three-hour intensive on marketing ROI during Day 1 of the conference.

3. Closing sales at the bottom of the funnel

The third stage of the sales funnel makes all the prior marketing and sales efforts productive. All the lead-generation and lead-nurturing activity produces results—positive and negative—which will ultimately be measures for determining sales productivity.

1. Sales from high-margin products: Sale, and often Marketing, is focused on top-line revenue and not bottom-line profit. This metric is a proxy for an indication that focus is where it needs to be: on profit.
2. Sales from new products: This metric is an indication of future sales prospects.
3. Number of meetings to close: What level of sales time and effort is required to close? Is there a better way to conduct sales meetings and time spent with customers?
4. Time to close: A critical measure of sales productivity, influencing not just investment of resources but also cash flow.
5. Close ratios: What percent of leads entering the top of the funnel and prospects at various stages in the funnel are converted to customers.
6. Value of sales funnel: Management must have a forecast of future sales. Using close ratios, the forecast can be prepared.
7. Size of orders: Larger orders may be more desirable than an equal amount of sales revenue coming from numerous orders; indeed, the reverse may be true. Is there an 80/20 rule with 80% of the business being generated by 20% of customers? What does this mean for the use of marketing and sales resources? What does it mean for risk associated with losing a valuable account?
8. Marketing spend/sales: What level of marketing investment is required to meet the sales targets? What changes in marketing spend result in a different sales result?
9. Market share: Using a careful definition of the market and competitive offerings, what is the company's share of revenue? Are you keeping up with trends—growth rates—in the market?

4. Retention funnel

The fourth phase is the customer-retention funnel. Most companies have a good deal of sales leverage from customer relationships and reversal of relationships with former customers. Consequently, Marketing and Sales resources are directed to build loyalty, customer references (word-of-mouth) and increases in share of wallet (cross-sells and up-sells).

Common wisdom says it is much less costly for many businesses to generate revenue from existing and past customers than it is to generate revenue from new customers. These metrics will help you determine whether that's true for your business.

1. Breadth and depth of customer relationships: What is the level of customer loyalty, given the relevant measure of retention? What is the lifetime value (in terms of revenue and profit) of customers?
2. Net Promoter Score: Widely used as a meaningful gauge of the extent to which customers will refer you to others like them, which will drive future sales. Based on customer satisfaction survey data, the NPS is determined by asking customers the likelihood that they will recommend you to others they know.
3. Share of wallet (cross-sells and up-sells) among existing customers: How much do customers spend with you in the categories of your offerings? Are you meeting all their needs that you can meet? What are the revenue consequences of additional products and services sold to existing customers?
4. Win-back opportunities and successes: Are marketing resources effective at renewing relationships with customers who have lapsed or expired?

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The business case for marketing in B2B organizations is made with statistics that prove improvement in sales productivity.

While metrics should not be confused with the actual work required to achieve performance results, you must use quantitative data to demonstrate Marketing's progress to justify your budget, win additional resources, and help guide decisions for future impact in driving sales.

Select your key metrics from this list to elevate the power, influence, and business impact of Marketing in your organization.

Note: Roy Young, president of MarketingProfs, is leading a panel of three Marketing Champions on Day 2 of the Conference. They will tell their stories about how they have made a difference in their organizations by driving sales. Find out more or register for the event here.

Roy Young is president of MarketingProfs.com and coauthor of Marketing Champions: Practical Strategies for Improving Marketing's Power, Influence and Business Impact (Wiley, 2006). For more information about the book, go to www.marketingchamps.com or order at Amazon.

Published on September 4, 2007