From generating awareness to brand advocacy, high-performing marketing teams drive revenue and customer acquisition throughout the customer lifecycle. But how do you measure the success of those investments? The right benchmarks will provide clarity of functional and financial discipline while navigating the balance between storytelling and spreadsheets.

If past performance is not indicative of future returns, then why waste marketing dollars by employing tactics that used to work yesterday but will put you out of business today?

 

If marketing is becoming more agile and personalized, how can you normalize best practices and benchmarks across the portfolio for different industries, company size and maturity? 

 

Today’s marketing execution requires social media savvy, analytical rigor, and messaging swagger to drive revenue and quantifiable opportunities.  Simply measuring leads & impressions is SOP.

 

Measuring opportunities and revenue is the gateway to calculating ROMI (Return on Marketing Investment).

 

Download the Marketing Benchmarks and KPIs Tool for a prioritized, operational contrast between traditional vs. revenue marketing, 5 metrics and additional KPIs to ensure marketing is driving revenue across your portfolio, and key benchmarks on how to maximize allocation of marketing spend (Headcount vs Program).

 

Shift the Infield: The Evolution of Revenue Marketing

 

 The best performance metrics look at the total cost of marketing, combining overall program spend and salaries to measure against what investors care about the most: revenue and customer acquisition. 

 

Top performing organizations apply the discipline of revenue attribution to marketing. Why?

 

CEOs, CMOs and CROs need to understand what marketing activities most effectively influence bookings.  This clarity will allow you to make sound, efficient investments in sales & marketing which will ultimately make a material, measurable impact on the business.

 

Once quantified, you can then attribute revenue to specific activities and better assess their value to the organization. ROMI is not a destination, it’s an evolving journey that needs precise metrics and revenue attribution driven by data and optimizing touchpoints, sequencing and duration along the buyer’s journey.

 

 

Put Your Money Where Your Metrics Are

 

Investors often undervalue how strategic investments in marketing serve as a lever to increase sales productivity.  The standard marketing charter operates to support the customer lifecycle journey from awareness to advocacy.  However, finding the right metrics that yield credibility while clearly showing how marketing contributes to the bottom line is especially challenging.

 

Thanks to the evolution and maturation of the internet, marketing has become far more measurable and accountable, and thus must be fluent in metrics, analytics, and spreadsheets.

 

As a best practice, whether you’re above or below benchmark, a zero-based budgeting exercise should be done for marketing spend every year, including advertising, agency and marketing programs to ensure maximize efficiency in ROMI.

 

Here are the Top 5 Metrics you should care about when measuring the impact of Marketing across a diverse set of companies in industry, size, maturity and hold period:

 

 

Click here for a downloadable summary of benchmarks and KPIs.

 

Marketing Percentage of Customer Acquisition Cost (M%-CAC)

 

MCAC as a percentage of the overall CAC should be measured YoY at a minimum for visibility and proper resource allocation.  Any spikes or dips in the ratio may signal that the strategy or effectiveness needs tweaking.

 

For example, an increase in MCAC may indicate:

 

  • Sales missed the number, resulting in a decreased compensation costs were less
  • Overspending on marketing programs or events
  • A strategic shift in budget allocation towards marketing to increase overall effectiveness

     

     

Marketing-Originated Customer Percentage

 

How much of your customer base can be attributed to marketing efforts?  This ratio may be difficult to track & measure, but determining the portion of the overall customer acquisition that originated in marketing can yield substantial dividends.

 

Another best practice exercised by leading organizations to capture marketing’s value, is to take this metric to the next level.  Rather than only tracking the leads that originate in marketing, these firms are tracking any opportunities that marketing nurtured at any point during the sales process.

 

Time to Payback CAC

 

Mostly for companies that have a recurring revenue model, this is metric measured in the number of months it takes to earn back the CAC, either by customer or by specific product/revenue stream.  Higher payback times may indicate issues ranging from customer onboarding to something more troubling hiding in the margins; lack of pricing discipline or disproportionate sales & marketing compensation.

 

However even with a benchmark range of 9 to 18 months, you still want to keep this average under 12 for health and sustainability, whether your portfolio is chock full of high growth or mature firms attempting to buy back market share.

 

 

Ratio of Customer Lifetime Value to Customer Acquisition Cost (LTV:CAC)

 

Most investors and board members are looking for this ratio to be in the range of 3:1 to 4:1, since a higher ratio typically translates to a higher ROI on sales & marketing, especially for high-growth SaaS organizations.

 

If the ratio is too low, then you have a serious flaw in the business model.  However, higher is not always better and can be misleading, since you maybe stunting growth with unreasonable investment constraints.  If you’re in the high-single to double-digit range, you may want to consider spending more on Sales and Marketing to accelerate growth.

 

To read more on resource allocation and LTV-CAC best practices: Allocating Capital Using LTV/CAC Analysis: It’s Not Brain Surgery – or Is It?

 

Download the Marketing Benchmarks and KPIs Tool for a prioritized, operational contrast between traditional vs. revenue marketing, 5 metrics and additional KPIs to ensure marketing is driving revenue across your portfolio, and key benchmarks on how to maximize allocation of marketing spend (Headcount vs Program).

 


 

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