Four Ways to Measure B-to-B Marketing Performance
Accountability is essential to the success of any business. Fortunately, direct marketers have the advantage of being able to measure how well their marketing programs are performing and if their sales efforts are reaping results. To get a good sense of how well your B-to-B direct marketing efforts are performing, Russell Kern, president of Woodland Hills, Calif.-based direct marketing agency The Kern Organization, suggests you look at the following four metrics.
1. Expense to revenue (E/R). “This is an accurate measure of marketing investment return,” says Kern. “This is important because it tells you if your investment actually generated revenue. … The higher the expense to revenue number, the better the performance. For example, a 1-to-10 E/R means that for every dollar invest[ed], $10 of revenue were generated.”
2. Percentage of leads accepted by the field. This is the measure of opportunity as defined by the sales team that does the follow-up. This measure is important, notes Kern, because it is a measure of the perceived value of a lead. This means the sales person believes from the data he or she has received that this lead has enough sales potential to justify the time required to make phone calls and set-up a meeting to advance the sales process, Kern explains.
3. Cost per qualified lead. This is the measure of short-term program performance. “This is a simple measure to know how much it costs to get a lead ready to pass to the field,” describes Kern. “If you have a cost per lead of $1,000, and you are selling a $500 product, you’re in big trouble. If you have a cost per lead of $1,500 but you are selling a $50,000 B-to-B solution, your program is financially viable.”
4. Gross response and cost per gross response. This is a measure of campaign performance, and how well the message and offer generated response. According to Kern, this metric is important because you want to know if your campaign investments are generating response, and at what cost. These numbers “also allow you to compare the cost per gross response against the cost per qualified lead. This comparison shows you how much fall off there is between initial response and lead qualification,” he adds.