How to use the metrics that matter in B2B marketing

At Infinity, we keep data close to the heart of everything we do. This focus enables conversations across the business to make sense; we’re speaking the same language and driving forward with the same purpose. We’re not alone in this, but how do marketers decide which metrics matter?

This was the subject of a pair of talks I delivered at the B2B Marketing Expo in London recently, lifting the lid on some of the analytical approaches to take in building a growing B2B business. If you missed it or would like a refresher, here are some of the key bits.

This is an approach to use as a growing SaaS business, but the principles hold for many other subscription and B2B businesses too.

What marketing metrics grow a business?

There’s a plethora of different marketing metrics we can monitor. It may be good to take a close look at them to see how your PPC, email, or other marketing activities are performing. But to help keep focus on the bigger picture, you need to understand how they affect the wider business. That way you can speak a language that makes sense to everyone else, including other senior figures.

Generally, SaaS businesses look at how to link activity to one of these three outcomes:

Attract - Gaining new clients. Retain - Keeping current clients successful and on board. Increase - Getting clients to use the product in new ways, or with more areas of their business.

These are good things to strive for, but need to be achieved in a responsible way rather than chasing them at any cost. A smart framework of metrics measuring how you’re achieving these goals will make sure you’re gaining these outcomes meaningfully.

Marketers are generally judged on the MQLs they generate, but to really understand where those MQLs fit into this framework it’s worth asking some more challenging questions. Here are three high level metrics to measure, and how they tie into a marketing strategy:

1) Customer Acquisition Cost

It’s no good getting a customer who pays you millions if you had to spend billions to acquire them. Customer Acquisition Cost (CAC) adds up all of the costs spent on converting a customer from the first touchpoint to closing the deal, including marketing, sales, staff hours, and other expenses that were incurred.

Total sales spend + Total marketing spend = CAC

You should aim to keep this number as low as possible, but what’s a reasonable target?

Ask yourself, how much are you willing to spend on acquiring a customer who pays £10,000 every year?

A SaaS business may be happy to spend £10,000 acquiring that customer for a CAC ratio of 1:1. This is because happy clients getting value from their investment will stay for a number of years. A good target tends to be 3-5 years minimum. However, if your customers tend to use you on more of a one-off basis then you may target a CAC that is substantially lower than the cost of your product or service.

This metric can be your marketing team’s best friend! You’ll have a better chance of getting your budgets signed off, and if you can demonstrate how your tactics perform within this framework then you’ll be showing your success in a language that speaks to the rest of the business.

2) Lifetime Value

Lifetime Value (LTV) is how much a client is worth over the course of your relationship with them. This is sometimes a more useful figure to look at than a simple sale value, as it incorporates the evolving nature of a good ongoing business relationship. A client may initially invest for one small local project, but end up rolling your service out to the whole business across multiple markets.

Marketers need to pay attention to what high LTV clients look like, and be willing to spend more in acquiring them. More average ones you can be more conservative about how much you spend on reaching them.

Using the targets laid out in the previous section, a common target for SaaS businesses is to aim for clients that have a LTV that’s at least 3x the CAC.

3) Be smart with churn rates

During this section of my talk, I asked a room full of B2B marketers how many of them did marketing to current customers to help with retention. Three hands went up, but this is a big win for marketers if you put the time in.

Most businesses offering a subscription model of some sort will monitor their churn rate. But what do you do with this information? The actual number or percentage isn’t very useful, to start making a real difference you need to dive in and look a tad closer. I’ll detail two ideas:

Churn propensity

Firstly, segment your audience and see which industries or personas have a higher propensity to churn. Is there something missing in what you offer them? Is there a particular reason they’re more likely to churn? Maybe there are problems you can solve, or perhaps you’ll conclude that it’s simply not worth spending your precious marketing budget chasing those types of clients when there are better opportunities to be found elsewhere.

Monitor positive behaviour

Secondly, by the time the client churns, it may be too late to learn what really could have saved the deal. Instead, look at earlier behaviours that are common among retaining clients but not churning ones, and think about how marketing could help. This could be:

• Logging in for ten consecutive days
• Setting up certain features
• Completing a training course
• Attending an event
• 100 hours of usage time

By measuring these, and working to improve them, the downstream effect will be a minimised churn rate and increased revenue.

Some questions to ask yourself

• How much are you willing to pay for each particular customer?
• What’s the churn rate of your three key customer groups?
• What’s the lifetime value of your three key customer groups?
• Are these insights included in your planning and execution?

All companies should constantly looking at how to make smarter insights with the data they have access to, and how they can get more useful data into their pool. A key part of it is having a full view of your customer journeys.

If you’d like to see how having this full view helps your marketing team deliver results that matter to the business, start a conversation with us today to find out what role call intelligence can play.