What do startups need to grow and prosper rapidly? A good product, a dream team, and the right timing are all essential for a successful venture. But the paramount task for any startup is finding, attracting, and retaining your audience. 

Establishing and tracking the right product marketing KPIs will help your sales team to interact effectively with the customer, closing the desired number of deals in time. 

Now, what are the key performance indicators for marketing and sales that help you keep your finger on the business’s pulse? Let’s shed some light on how to track your marketing and sales efforts, ensuring they don’t go down the drain along with your budget.

Why you need to track sales and marketing metrics

Key performance indicators (KPI) in sales are a yardstick that helps you assess how successfully your sales team closes deals. You want to make sure that you spend less money attracting new customers than the profit you expect to reap from those customers. A successful sales team ensures a five times higher return on prospecting expenditures.

Every marketing campaign must have a final desired goal/outcome, and it has to be quantifiable:

  • How many users interact with your ads? 
  • What is the reach of your marketing activities? 
  • How do you measure their efficiency? 
  • What’s the return on every dollar you spend on these activities? 
  • Which social or demographic group is more responsive to your messages?

Marketing KPIs will help to answer these questions and adjust your communication to achieve a higher number of customers at a lower cost. 

kpi

Marketing and sales efficiency metrics give essential insights about your target audience, including where to find it, what type of ads and calls to action produce higher conversion rates, which channels to expand, and which to cut.

Top sales and marketing metrics you need to track


Click-through rate (CTR)

One of the most valuable sales performance metrics is click-through rate (CTR), which refers to the percentage of individuals who click on an ad based on the number of times it was shown. 

The higher the click-through rate, the more efficiently the ad is bringing traffic to your website.

CTR

Cost per thousand aka cost per mille (CPM)

CPM is the digital advertising revenue model, where an advertiser pays for 1,000 ad impressions (views) on a webpage. This figure does not account for whether the viewer interacted with the ad or not.


Cost per click (CPC)

CPC is the price an advertiser pays for each click on the ad. The price can be either pre-determined (fixed) or flexible (auction-based) and depends on the amount of competition for the specific category/product or the geographic area in which you advertise.


Cost per action (CPA)

CPA is an advertising revenue model that bills advertisers only when visitors that come through the ad accomplish specific actions, such as the examples listed below:

  • Purchase a product or sign up for service
  • Sign up for a newsletter, trial period, or discount
  • Fill in a form
  • Create an account
  • Download an app


Cost per lead (CPL)

Cost per lead (CPL) is the amount of money you spend to acquire one prospect that could convert into a paying customer.

A lead is a potential customer who:

  • Saw your ad or email  
  • Clicked on it
  • Submitted personal details, filled in a form, created an account, or in any other way made it possible for you to pursue the lead and close the sale
CPL

For example, if you spent $2,000 on a LinkedIn Ad Campaign that resulted in 100 leads, the CPL would be $2,000 / 100 = $20. 

The lower the CPL, the better. However, when evaluating the efficiency of a marketing campaign, it’s important to travel down the road and take into account the opportunity-to-win conversion as well. The CPL might be higher for some campaigns, yet result in better customer conversion, which should be your ultimate goal.


Customer acquisition cost (CAC)

Customer acquisition cost refers to the amount of money you spend to acquire each new customer.

CAC


CAC payback

This is a vital sales productivity metric that reveals how long it takes for each new customer to bring back the amount of money you spent acquiring them. The shorter the payback period, the faster your customers start bringing revenue. For SaaS companies, the CAC payback benchmark is 12 months, and, for highly effective businesses, it is five to six months, though this can vary depending on the size of the target customer.

CAC-Payback-formula


Lifetime value (LTV)

Lifetime value, or LTV, is the amount of revenue you expect to obtain from your customer during his lifespan with your company. The lifetime value of the customer includes expenses such as additional purchases and subscription renewals.

LTV

Marketing ROI

Marketing return on investment (ROI) refers to the amount of revenue generated from a marketing activity relative to its cost. A high ROI signals that it generates high value for the money invested.

For example, an online cosmetics retailer spent $600 on a Facebook ads campaign, which resulted in 20 new orders worth $2,500 in total. The COGS is $500. The MROI would be ($2,500- $500 – $600 / $600) * 100 = 230%

Conversion rate

Conversion rate is by far the most important sales performance metric. It gives an overview of how many potential customers move one step closer to making the purchase. 

Here are the examples of conversions to track along the sales funnel: 

  • Visitor-to-MQL (Marketing Qualified Lead) Conversion Rate 

This refers to the percentage of visitors who have expressed a certain interest in your product or service. For instance, they may have scheduled a call with your sales representative, started a chat, or filled in the contact form.

Visitor-to-MQL-formula
  • MQL to SQL (Sales Qualified Lead) Conversion Rate

If MQLs are curious but not yet ready to make a purchase, sales qualified leads are one step further along your funnel; they have probably tried the demo version of your product, had a call with your sales representative, and, as a result, have a better understanding of the benefits and functionality of your product. 

SQLs are more interested in pricing details, requesting quotes, and live trials. In other words, they have higher buyer intent and are ready to become customers. The MQL to SQL conversion benchmark is around 13%, depending on the lead source.

MQL-to-SQL-formula
  • SQL to Win (aka Opportunity to Win) Conversion Rate 

It refers to the percentage of SQLs that converted into customers. 

SQL-to-Win-formula

Funnel leakage

Funnel leakage refers to a weak spot in your interaction with a potential customer. It’s a point at which the customer decides to opt-out of using your product or service. 

To find the weak link, map your customer’s journey and collect conversion stats at each step so you can determine which step results in that drop in conversion rate.

Common reasons for a leaky sales funnel:

  • Low-quality leads at the funnel entrance

In this case, you should revise your campaign parameters to make sure you are targeting the right audience. 

Think of your ideal customer profile (ICP) and make sure all the parameters match. For example, in B2B SaaS, relevant characteristics are industry, company size, and revenue. Your current customers can give you an idea of what your ICP looks like. 

Aссordingly, think of the most relevant source for attracting potential customers. Obviously, a Linkedin campaign is more efficient if you’re targeting top-level executives rather than pet owners, who are more likely to browse Facebook.

  • Confusing customer journey

If MQLs are regularly failing to convert to SQLs (i.e., at a rate below the industry benchmark), check how easy it is for a customer to get to know your product. 

Does it take one click to sign up for a free trial, get a demo version, or schedule a call with a sales rep? When your sign-up/contact form is cumbersome, long, or hard to find, you are losing precious leads.

Session recording, heatmaps, and user testing can help in identifying bottlenecks to fix. Collecting feedback from the runaway leads via follow-up calls or exit surveys can also give priceless insights on possible improvements.

Summary

kpi

Poking around in the darkness is not an efficient way of doing things. The same goes for doing business without keeping track of your key performance indicators for marketing and sales.

A strong understanding of what is KPI in sales allows you to easily adjust and optimize your processes, increase conversion rates, and build a successful business.

Here at Waveup, we can gladly assist you in reviewing your sales and marketing efficiency so that you have a good grasp on the metrics that matter.

4 posts

Marta Kurbanova

CONTENT WRITER

Hi there! I'm Marta, a Content Writer at Waveup. For the last 4 years, I've had an extensive experience in marketing research and analytics. First, working in startups, then helping with pitch decks here at Waveup. I am eager to share what I've learned in the articles.