3 Essential KPIs for Demand Creation Efficiency

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Public domain image from pixabay.com
Public domain image from pixabay.com

"How many people do demand marketing?" Adam Needles, Chief Strategy Officer of demand-generation strategy firm ANNUITAS, asked an audience of dozens of marketers at ITSMA Marketing Vision 2016 in Cambridge Massachusetts last week. Several hands from the audience went up.  

Needles followed up with, "How many of you would say you are just killing it?" 

Not a single hand went up. The audience laughed. 

From there, Needles launched into his presentation, "Optimizing Demand: The CMO's Next Frontier."  The crux of his message was that marketing organizations are leaving piles of money on the table by not focusing on demand generation. Most organizations, according to Needles, rely upon push-based marketing—where buyers must be actively courted. Perpetual demand generation, on the other hand, allows vendors to enjoy better and more sustainable results from inbound-oriented marketing—constantly pulling buyers in. 

"Having a demand process in place...your people, process, content, [and] technology are fully focused around the buyer," said Needles. "We've been doing consulting with a lot of organizations, and we find that our organizations who have mature, optimized perpetual demand generation programs deliver lead-to-revenue results that are four to ten times industry averages."  

Needles pointed to the results of an annual survey conducted by ANNUITAS that found that, as of earlier this year, only 26.5 percent of B2B enterprises have mature, "very effective" demand-generation programs. This represents an improvement over the past few years (in 2013, this described only 8 percent of B2B enterprises surveyed), but still leaves a lot of room for improvement. 

"How can we be sure of the quality and sustainability of our demand-generation efforts?" asked Needles. "We want to look at demand-creation efficiency, and that's saying, 'How do we get more out of the mix of things that we're doing?'" 

To help marketing organizations answer these questions, Needles presented three "core" KPIs for measuring and maintaining demand creation efficiency. 

1. "Engaged to Qualified Lead" Conversion Rate  

According to Needles, a lead is converted from engaged to qualified once that engagement becomes sustained over time, across multiple touchpoints. "A 'qualified lead' in this model is not someone who just found something; it's not just a single interaction," said Needles. "I don't want just a one and done—unless somebody was actually a hand-raiser, and that's somebody we call an accelerator." 

2. "Qualified Lead to Opportunity" Conversion Rate  

Needles went on to tell his audience that measuring the percentage of those qualified leads that are being converted into genuine sales opportunities is critical because of how effective an indicator that measurement is of:  

  • The quality of the marketing organization's touchpoints
  • The level of actual engagement of the salespeople, and
  • The quality of marketing-to-sales integration.

"It's a really good indicator of whether or not your salespeople are actually engaging in the process," said Needles, who went on to note that this metric can help marketers "diagnose" problems with their sales teams and collaboration efforts. "You want to see if you have good marketing-to-sales integration."

3. "Engaged-to-Closed Won" Ratio

For Needles, this is perhaps the most critical KPI for demand-creation efficiency: How many of your engaged leads are actually being closed? 

"Even if you've got the best [account-based marketing], you still have to drive a lot of traffic to get people on outcomes. It's so critical for you to take that all the way to the end."

Indeed, according to Needles, this is the KPI that demonstrates that most marketers are tremendously underperforming—even considering that a mere one to four percent on this metric indicates good performance. Underscoring the point, when Needles asked his audience of roughly 75 to 85 people (almost all—if not all—marketers) how many of them actually measure their end-to-end numbers, only a half dozen hands went up. 

"The average end-to-end is about 0.3 percent, and that's really bad," said Needles. "A lot of people who are average [on this metric] are actually underperforming, so there's a huge opportunity to grow it...I do believe that by driving real optimization, you can get this to a really respectable number."

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