CHEAT SHEET Key Metrics to Report to Your B2B Company’s C-Suite

The success of an organization’s marketing team is now more measurable than ever.

Through various analytics and reporting tools, CRMs to track lead generation, ability to differentiate MQLs and SQLs, social media engagement or email campaign open and click-through rates, it’s possible to measure the ROI of almost every marketing initiative in at least some way.

What does that mean for you as a marketer? Well, it makes you more accountable for every campaign you run, but it also enables you to quantitatively show the leaders of your how effective a marketing strategy can be -- and how marketing can contribute to the overall success of your company.

Over the years we’ve collected a lot of feedback from key business stakeholders about what marketing metrics are most important to them in helping understand the true value of a marketing campaign. We’ve used that feedback to put together a reference guide which will help anyone in a marketing role measure the success of their work against overall business goals.

Monthly Unique Visitors

Tracking monthly unique visitors, which is the count of new, unique visitors who visit your site, is the best indication of your website’s overall traffic. Thus, it’s important to set up analytics to track the difference between returning visitors who are already customers, and new, unique visitors -- especially by source.

How can you calculate this metric?

Monthly unique visitors is an easy number to grab from your Analytics data, and measuring by source will allow you to track the success of each of your marketing campaigns, and accurately track your unique traffic growth month over month

Customer Acquisition Cost (CAC)

Customer acquisition cost (CAC) measures the total expense that a company must incur to acquire each new customer, and how long it will take the company to recoup that investment. This metric is very useful in that it can help managers decide if they have the spend capacity to ramp up and marketing efforts, or if they need to scale back.

How can you calculate this metric?

Simply put, CAC can be calculated by taking the total costs of acquisition and dividing it by the total new customers acquired in a given period. For example:

Total Sales & Marketing Spend for 2018: $100,000 Total Customers Acquired in 2018: 250 Average CAC (Cost per Customer) for 2018: $400

This calculation may differ based on your sales cycle and how longit typically takes to close a deal. If, on average, it takes 3 months to close each new customer, then you may choose to divide the total customers acquired in one quarter against the total sales and marketing spend for the prior quarter. What’s important here is being able to accurately calculate just how many inputs are required to earn one customer, which will help understand what is required to be successful.

Marketing Percentage of Customer Acquisition Cost (M%-CAC)

Computing the total marketing spend as a percentage of your Customer Acquisition Cost (CAC) is what’s known as (M%-CAC). An increase in this calculation is not necessarily a bad thing: on one hand, it could mean that either you’re spending too much on marketing, or that comparatively speaking, sales costs are too low (ie: perhaps you have unqualified sales reps who are making less compensation due to not being able to hit their sales targets or quotas); but on the other hand, it could mean that you are focusing on an increase in your marketing spend to provide higher quality MQLs to your sales team.

How can you calculate this metric?

M%-CAC can be calculated by taking the total marketing costs, and dividing that by the total Sales & Marketing spend you used to calculate your CAC. For example, using the data from the CAC calculation:

Total Sales & Marketing Spend for 2018: $100,000 Total Marketing-only Spend for 2018: $40,000 M%-CAC for 2018: 40% Customer Lifetime Value (CLV)

Customer lifetime value (CLV) is the average amount a customer will spend during their time with your company. CLV calculates what your average customer is worth and is an extremely valuable KPI in the modeling and forecasting of your business.

How can you calculate this metric?

The calculation of it involves a few steps: 1. Calculate Customer Lifetime Rate by dividing 1 by your churn rate. So for example, if your monthly churn is 2%, then your customer lifetime rate is 50 (1/0.02 = 50). 2. Calculate Average Revenue per Account (ARPA) by dividing the total revenue earned in a period by the total number of active customers in that same period. For example, if your total revenue was $200,000 and your customer count was 250, your ARPA would be $800 ($200,000/250 = $800). 3. Calculate CLV by multiplying your customer lifetime rate by your ARPA. In this example, your CLV would total $40,000 (50 x $800 = $40,000).

CLV-to-CAC Ratio

The CLV-to-CAC Ratio is a calculation using the formulas above for CAC and CLV. It computes the lifetime value of your average customer, and the average cost you spent to acquire them.

How can you calculate this metric?

In the CAC and CLV calculations above, the example company spends an average of $400 to acquire each new customer, and in turn generates $40,000 in lifetime revenue...which is a pretty positive ROI! Any CEO would be happy to see those results :)

Typically, most SaaS companies should aim for a 3:1 ratio for (ie: CLV is 3 times higher than CAC) as a sign of company health and profitability.

Time to Pay Back CAC

The Time to Pay Back CAC is a metric that calculates how long it takes for you to earn back the CAC investment you spent to acquire a new customer.

How can you calculate this metric?

Take your average CAC for a given customer, and then divide it by the net revenue you receive from that customer on an average month to get the total number of months it will take for you to earn back that CAC. For example:

Average CAC (Cost per Customer): $400 Average Monthly Net Revenue for 1 Customer: $100 Time to Pay Back CAC: 4 Months

Marketing-Originated Customer Percentage

Of all new customers you get in a given period, it’s important to understand how many of them originated with Marketing, so you can understand your team’s input in generating new customers.

How can you calculate this metric?

In a given period, calculate the number of total new customers, and then determine how many of these customers started off as an MQL (Marketing Qualified Lead). Divide the two (MQL / Total New Customers) to get the % of customers who originated with Marketing.

To look at this calculation a different way, you could also add up all new revenue in a given period, and look at what percentage of revenue first started as MQLs. This is just a different way to quantify the value of an MQL.