Why B2B Marketers Need Lead ROI Metrics
Welcome to the Why B2B Marketers Need Lead ROI Metrics webinar, sponsored by InsideUp.
My name is Omar Barraza and I will be your host and presenter today. If you have any questions during the
webinar, please enter then using the Questions feature and I will answer them at the end of the presentation. Let's begin.
About InsideUp- A Different Approach to B2B Lead Generation
InsideUp, our webinar sponsor, is an organization located in San Diego, California, that specializes in delivering business to
business leads to small and medium businesses and enterprise organizations.
They offer a different approach to B2B lead generation and provide their clients with a B2B marketing platform for performance-based lead generation. Their focus is to connect prospects actively looking to purchase business services with qualified providers using proprietary InsideUp
business lead generation technology and a comprehensive B2B marketing network. You can learn more about this by visiting http://www.InsideUp.com at the conclusion of this webinar.
About Omar Barraza- Marketing Advisor and Consultant
I am a B2B marketing advisor and consultant focused on collaborating with founders, owners, and executives plan, start, and grow their organization's marketing capabilities. At this time, I am also a strategic advisor to InsideUp and recently completed a project to define and implement a new B2B
marketing automation strategy.
My 20+ years of professional history includes marketing roles at B2B and enterprise organizations, including HireRight and Qlogic, implementing and improving B2B marketing processes that have supported more than $1 billion in profitable revenue. This work has included programs and projects related to branding, thought leadership, content marketing, demand generation, lead generation, lead nurturing, sales enablement, customer retention, launches, and events. You can learn more about me by visiting http://www.omarbarraza.com or connecting with me on LinkedIn.
Why Use Lead ROI Metrics?
The goal of this webinar is to demonstrate the essential value of tracking business leads using long-term ROI-based metrics rather than traditional event-driven conversion metrics alone.
During this presentation, you will see how to:
Understand campaign effectiveness.
Focus on Vital ROI Metrics
Calculate customer lifetime value.
Before we dive into lead nurturing, I want to share another key reason why it is an important to track lead ROI - it helps to reveal which leads matter and this is vital since most business leads do not convert.
According to Marketing Sherpa, a research firm specializing in tracking what works and what doesn't in all aspects of marketing, leads often disappoint organization leadership, marketing management, and sales teams. For example, Marketing Sherpa found that while marketers send 61% of all business leads to sales, only 27% of the leads sales receives are found acceptable. As a result, 5 in 6 leads qualified to marketing AND sales standards are wasted causing unpleasant surprises for the leadership team.
Tracking ROI is worthwhile because it improvesB2B marketing and sales performance over time. Relying on traditional event-driven metrics such as conversion rates significantly underperforms, making them poor alternatives.
In a third-party study comparing ROI versus traditional tracking, 70 percent of B2B organizations that rated their marketing as highly effective said that they regularly track and measure lead quality based on revenue as total customer revenue over time. Nonetheless, 31 percent of small businesses admitted having room for improvement in their basic ability to identify their most effective business lead acquisition strategies. The same study found ROI users are also 68 percent more likely to surpass their competition, compared with only 48 percent of marketers who use conventional methods to determine the success of their B2B marketing efforts.
Why B2B Marketers Need Lead ROI Metrics
A study by the Kellogg School of Management found that companies who do not measure their results from sales leads might actually experience lower closure rates. Measuring quantifiable data is the only way to effectively avoid such a scenario.
The study found the three most reliable, universal metrics are:
Contact Rate - This number applies to leads that demonstrated interest by giving valid contact information. The benchmark for this can be anywhere between 40% and 70%. This is the percentage of leads that respond to your call or email (even to say they are not interested).
Quote Rate - Determine what percent of your leads ask for a quote. This number should be between 10% and 40%.
Return on Revenue - Return on investment (ROI) should be your most significant metric to help you determine precisely how much to invest for each lead.
Calculate Customer Lifetime Value: Think of CLV as Marketing Profitability
Your customers' repeat purchases can translate into thousands of dollars in additional profitable revenue over the years of your business relationship.
Here's a simple example of how CLV intersects with lead ROI:
Imagine your average sale per customer results in $250 in profit in the first year. If you acquire 10 business leads at $25 each and assume a ten percent close rate, you'll create one new customer from these leads. But when you consider total long-term profits, that lead and customer will continue to generate $250 in profits during the second and third years.
With traditional event-drive metrics, a $250 spend for $250 profit indicates break-even results.
With ROI metrics, a $250 spend for $750 profit indicates a 300% ROI.
In this example, use of traditional conversion-based metrics mistakenly under-reports ROI by two-thirds and could result in the cancelation of an effective and profitable lead program that actually delivers a 300% ROI. I suspect if you measure some of your current lead program using ROI metrics, you might find they are more effective than you expect.
CLV Informs Marketing and Sales: Consider the Entire Customer Cycle
CLV goes beyond the obvious revenue. A comprehensive view includes revenue and profit contributions from initial sales (similar to traditional metrics), plus on-going direct sales over the customer's life cycle and indirect sales from referrals to other opportunities at the same company or other companies you would not typically find otherwise. As your ability to track CLV expands and improves, you can use CLV data to inform business decisions throughout a customer's lifecycle - including marketing, sales, retention, and support.
Pursue the Right Leads for ROI: Not All Leads are Active Ones
ROI-based lead metrics COMPLEMENT, rather than replace, traditional business lead metrics. When used together, these metrics help you to choose which leads are active and worthwhile of immediate pursuit.
Here are four basic indictors you should track to improve your lead success:
Matched to offer
Scored by engagement
Nurturing Improves Lead ROI Metrics: Don't Give Up on Leads Too Early
Here is another reason why lead nurturing should not be ignored.
A case study by Marketing Sherpa showcasing Infusionsoft found dramatic benefits from beginning a lead nurturing program. At Infusionsoft, the typical sales cycle is less than 1 month with the first two weeks being the most vital. This focused B2B marketing and sales activities on the short-term and effectively considered opportunities as lost after 30 days. Infusionsoft launched a business lead nurturing program and now experience 37% of new customers come from leads older than 3 months and 20% are from leads older than 1 year. In other words, lead nurturing doubled the number of new customers for Infusionsoft.
Imagine the potential impact on your organization's revenue and profitability from lead nurturing.
Tracking Lead ROI is Vital
Ultimately, tracking lead ROI is vital for B2B marketing teams and requires awareness of three factors:
Baseline metrics (where you are now)
An understanding of your customer lifetime value (you need fact driven data)
A commitment to ROI tracking as a program (a long-term view is required)
Even the smallest business can outline a simple ROI metrics program by dividing their total annual profits by total number of active customers to estimate annual CLV. Once this figure is determined, dividing annual CLV by lead-to-close percentage will establish a maximum budget for each acquired or generated lead.
Larger organizations or those with sophisticated B2B marketing automation, customer relationship management (CRM), and accounting systems might integrate them to create a dashboard continually displaying historical and forecasted CLV, lead contact rates, lead quote rates, and ROI.
The InsideUp Solution: High Quality, Qualified B2B Leads
Organizations like InsideUp specialize in delivering high quality leads and this reduces the need to further qualify these leads. In the case of InsideUp, they prospect, qualify and distribute leads directly into their client's CRM system, transfer leads via live phone calls, or deliver leads via email. Better sources of leads result in better outcomes, so it's important to consider organizations like InsideUp as a complementary lead generation channel.