Key Performance indicators (KPIs) are basically numerical data points which are specific, which can be tracked to measure your progress towards a specific goal. For inbound marketing, the major KPIs are leads, cost per acquisition and sales revenue.While these are all key indicators to watch, there are many other KPIs you should be tracking to improve the success of your marketing efforts.
Let's look at a few KPIs you can track that will help you to make informed decisions regarding your marketing strategy and budget.
5 key indicators to watch when developing and tracking your inbound marketing plan
1. Lead generation - lead quality
Lead quality is one of the most important KPI for lead generation. While generating leads, there is a significant difference between the quality and quantity of leads. You can generate 10,000 leads which are at US$1 per lead, but if these are not quality leads, it is better you might not have leads at all. You can determine the quality or scoring of the lead through Hubspot’s lead scoring tool, which helps you with a score for a lead as the leads moves through the lifecycle stages in the buyer’s journey.
2. Lead to customer ratio
Once you have done with your inbound marketing efforts, it is quite important to know how many leads your sales team has closed. You need to calculate your sales qualified lead conversion rate and also the sales accepted lead conversion rate.
Sales accepted leads are those whom your sales team considers opportunities and have contacted directly or scheduled a call.
Sales qualified leads are generally leads which considered to be sales ready based on the lead score. For eg. - A technology software company with a lead who filled out a form need to use SaaS would be considered a SQL.
You need to compare both the ratios and find out whether your campaigns are capturing leads or whether you have a high close rate. If not, you need to rework your strategy with your sales team and get things moving.
3. Customer value (by campaign and lifetime value)
When it comes to customer value, inbound marketing provides you the metrics to calculate it for individual services or products and also lifetime value for each customer. This further helps you in targeting your marketing to stay in touch with leads, reduce churn rates and helping expansion of customer lifetime value. Lead nurturing campaigns can also be developed to increase lifecycle to reach out to your existing customers.
Customer value can be determined with this formula:
(Average sale per customer) x (average number of annual purchases per customer) x (average retention time in months or years per typical customer)
4. Sales revenue
You need to first track how much revenue your inbound efforts have generated. Finding out your revenue is an essential key metric which determines the success of your efforts. It's the bottom line to any marketing program. Once you understand what is working and what it isn’t, you can shift your focus accordingly.
Try the below formula to determining the sales effort from inbound marketing.
Total sales per year - Total revenue generated from customers acquired through inbound marketing
5. Social media traffic and conversion rates
Growth of followers is usually a good sign for your company because it increases the reach of your brand and messages. The following are the metrics which can help you measure them:
- No. of lead conversions generated via each social media channel
- Percentage of traffic associated with social media channels
- Link clicks is also a good indicator
There are many social media sites and you may not have all the time to effectively make use each and every platform. If you break them down by the number of customers, leads and percentage of traffic coming from each of the media site will help to focus your efforts.
KPIs really help improve results – traffic generation methods amplify overall performance. Apart from the 5 important metrics mentioned, there’s no doubt that there are lot more metrics to base your inbound marketing strategy on, but the above mentioned ones provides a good start.