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Marketing KPI to measure your performance

Marketing KPIs To Help You Measure Performance and Stay Competitive

November 29, 2020
Analytics
Marketing Automation
Education

How do you know if your company’s marketing strategies and advertising are successful? What tools and metrics are you using to track your performance and conversion? These are important questions that every marketing professional should have the answer to without the slightest effort.

The fact is that not all tools or methodologies you implement are going to work. In fact, sometimes, you might be forced to rely on trial-and-error, especially if it’s a new component. As such, knowing what is working and what isn’t inside your marketing plan is an extremely important component for your business. This article details some of the most important marketing KPI’s you should be tracking inside your business in order to measure your marketing performance and stay ahead of your competitors. To determine this, you’ll need to have a way of assessing your performance regularly from top to bottom.


What are Marketing KPI’s ?

Marketing KPIs (Key Performance Indicators) are specific marketing measurement metrics which are used by businesses in order to track and measure marketing performance in specific marketing criteria. 

They help to establish performance benchmarks and allow you to track your progress in order to improve certain components of your marketing and advertising. If your business is primarily online, tracking your marketing KPIs is extremely important in improving your business performance. 

Let’s take a look at some of the most important marketing KPIs you should be paying attention to. 

Sales Growth / Sales Revenue

How to drive sales growth and sales revenue


The starting point in beginning to track your KPI’s includes knowing sales revenue. This is the amount of sales revenue that has been generated as a direct result of your marketing and paid advertising efforts.

Once you have established your sales revenue for the current period it’s important to compare your sales revenue to your previous period to see relevant changes that occurred. This brings us to the next staple of marketing KPI’s, the sales growth.

Tracking your sales growth is not only important for your business, it’s extremely valuable. It gives you a clear idea of your business performance periodically and it allows you to make adjustments in order to improve your operations.

Recommended Reading: 6 Best Marketing Tactics to Increase Conversions

It’s also important to get in the habit of anticipating sales growth and declines during certain periods or seasons. This allows you to accurately plan and adjust your marketing strategy in order to position your business for maximum growth.

Cost Per Lead

Cost per Lead(CPL)

Cost per lead is simply the amount of marketing and advertising dollars it takes your business to generate a qualified lead. If you are advertising online it’s very simple to track and manage your lead costs through a CRM provider. 

CRM providers allow you to integrate your advertising and marketing processes in order to help you accurately track and measure your marketing spend. The two most popular CRM providers that can help you track your cost per lead and other important marketing KPI’s are Salesforce and Hubspot. 

Recommended Reading: The 10 best Sales Management Tools

By tracking your cost per lead you can gain a better idea of the real costs it takes to get leads and acquire real customers. Once you nail down the source of your leads, you can work on lowering and improving your cost per lead.

Costs Associated with Lead Generation 

It’s important to know what costs are actually associated with lead generation when trying to figure out your true cost. Some of the relevant costs include:

  • Human capital ( this includes the cost of your employees) 
  • Software and technology ( CRM providers or platforms you use for your business)
  • Office space and relevant overhead
  • Advertising spend
  • Marketing material costs

These are some of the baseline costs associated with calculating your true cost per lead. This is an important marketing KPI that you need to know if you want to learn how to scale your business pipeline.

Lifetime Value of a Customer

Do you know your lifetime value of a customers

The lifetime value of a customer can be a difficult KPI to accurately measure without a specific system in place, but it is very relevant to know when it comes to creating a long term business. 

The following formula below is one of the most effective ways to measure the lifetime value of your customer. 

how to calculate the lifetime value (LTV) of your customers

The higher this number is, the higher the lifetime value of your customers. An effective way to  increase the lifetime value of your customers is by keeping in constant contact with them. This can be facilitated through email marketing strategies that keep your existing clients up to date on new deals, products and services that your business has going on.

Recommended Reading: How to Create Strong Customer Relationships

Having a strategy in place to increase your sales through your existing customers is a great way to increase your profit margins and provide further value to them. 

Cost of Customer Acquisition (COCA)

cost of customer acquisition (coca), also known as CAC

The cost of acquiring a single paying customer is meant to help you measure the cost of converting a potential lead into a customer. This marketing KPI is useful in helping your business determine profitability because it compares the amount of marketing dollars spent on acquiring leads vs the amount that were converted into paying customers. 

Coca is also known as Customer Acquistion Costs (CAC).

Below is how the cost of customer acquisition is calculated.

calculation of customer acquistion costs


Reducing the COCA value will help your business acquire customers more efficiently and at a lower rate. This in turn will help your profits increase and stretch your marketing dollars further. 

This requires constant monitoring and improvement inside your inbound and outbound marketing strategies. 

Sales Team Response Time

Sales team response time


Also commonly referred to as “lead response time”, the sales team response time is the average time it takes a sales rep to follow-up with a lead after it enters the sales funnel. A qualified lead is identified as: 

  • Submitting a sign up form
  • Filling out a quote 
  • Downloading a E-book
  • Requesting a call back
  • Etc

Calculating and measuring  the lead response time can be quite tricky for some organizations and maybe not even that useful to them. However, if you have a business which relies heavily on leads, follow up and constant client contact, this is an extremely important metric to pay attention to and know how to measure. It can have negative and positive impacts on your business.

Calculating Lead Response Time:

how to calculate lead response time for your business

It’s important to note that this may not be a valuable metric for your organization, but it can add value if your business model relies heavily on leads and follow up in order to generate sales. It’s especially important for salespeople in order to help them measure and improve their client communication. 

MQL to SQL Ratio

mql to sql ratio

MQL (Marketing Qualified Leads)

MQL stands for marketing qualified leads. MQL represents individuals who are considered qualified leads who are ready to speak with a salesperson, but are not quite ready to buy yet. For instance, someone who’s visited your website and has one or two questions regarding your products can be considered an MQL.

If you have a high volume sales organization and have a steady flow of leads, it’s important to have valid triggers in place to separate MQL leads from less interested leads. They tend to be considered a higher quality lead and as a result should be properly segmented into their own lead que. Of course, not everyone who falls under the MQL category ends up buying your products. However, there’s a higher chance of them doing so than other regular leads.

SQL (Sales Qualified Leads) 

SQL stands for sales qualified leads. These leads represent individuals that your sales team has already had previous contact with and are ready for additional follow up with a salesperson. They are considered even higher quality leads which tend to be further down the sales pipeline. The SQL allows your sales and marketing teams to align on the quality of the leads that are coming in. 

The MQL to SQL ratio on the other hand is the percentage of marketing qualified leads that get converted to sales qualified leads. It’s an important ratio for a high volume sales organization and it gives insight into the quality of leads that are being fed through the sales pipeline. The higher the number, the better your conversion rate and also the quality of your leads. 

It’s worth noting that these two aspects need to work together for you to have even higher chances of success. Having MQL vs SQL frictions within your business is a crisis waiting to happen. Your sales and marketing team might end up making poor decisions due to inaccurate results.

Calculating MQL to SQL Ratio

how to calculate your mql to sql ratio

SQL to Sales Ratio

SQL to sales ratio

The SQL to Sales ratio is a measure to track the conversion rate between your sales qualified leads that convert to actual paying customers. This is a good metric for your salespeople to use to access their own ability to close deals and work on their sales tactics

This marketing KPI is especially good for managers to pay attention to because it gives you insight into the performance of your salesforce. If you happen to see that specific salespeople have a very low SQL to Sales ratio it can be an indication that they are struggling and may not be the best deal closers.

It can also give you insight into the quality and relevance of your lead flow that is coming inside your pipeline. As a manager this is an important KPI that can give you some great insight into your sales organization and their ability to close leads. 

Calculating SQL to Sales Ratio

SQL to Sales Ratio calculation

MRR (Monthly Recurring Revenue)

Monthly Recurring Revenue = MRR


MRR stands for monthly recurring revenue. It represents the amount of recurring revenue that is coming in month and month to your business. This KPI is very relevant for SaaS style business because it does a good job of showing you how much you are growing revenue wise every month. 

For example, if you have 300 paying clients each paying $100 per month for a service, your monthly recurring revenue would be $30,000. The MRR is important in helping you predict your financial cash flows and it can be a great source for helping to value companies. 

Marketing ROI

Marketing ROI, return on investment

Marketing ROI is a simple measure of the amount of money you spent on marketing and advertising and how much revenue was generated as a result of that spend. When dealing with digital marketing tracking your marketing ROI is very easy. Platforms like Google Ads make the tracking process extremely easy through their state of the art conversion metrics. 

Recommended Reading: Sales and Marketing Techniques to Help Improve Your Conversions

There are a ton of different ways you can choose to measure your marketing ROI and that will depend on the sources you use for your marketing and advertising. Each specific component of your marketing strategy can generate a different portion of revenue to your company. 

It’s a matter of finding which components of your marketing are most relevant to your type of business in order to get an accurate idea behind your marketing ROI.

Final Thoughts

Staying competitive in the current business world is every entrepreneur’s dream. As such, it only makes sense to determine the right KPIs for your marketing campaigns. Keep in mind that some tools may work for your type of business, while others may not. So, it’s imperative that you do some research and consult the experts before making your final decision.

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