Organisations that want to grow their business—and even sustain it—need to generate leads. The only way to know if your lead gen activities are effective is to track and measure your customer acquisition initiatives. Customer acquisition KPIs allow you to see what’s working and what’s not so you can adjust your strategy to be more effective. Here’s my recommendation for how to measure lead generation with customer acquisition KPIs that really matter.
Map out and optimise your sales funnel
In order to consistently have sales, your sales funnel must always be filled with leads. The first step in measuring your customer acquisition efforts is to be sure your sales funnel is optimised. A sales funnel is simply a series of steps that lead prospects toward a buying decision.
Every step in your sales funnel should be mapped out with specific offers for each step. For example, typically the first step in most sales funnels is to attract people into your sales funnel by activities such as SEO or online ads that build awareness of your brand among prospective customers. Assess each step and ensure that you have filled any gaps or breaks from one step to another such as the handoff from marketing to sales.
KPIs must be specific to the foundation of your organization
As with most KPIs, there isn’t one size that fits all. The right customer acquisition KPIs for your organisation will depend on its individual goals, target audience and processes. For example, a B2B company might focus on lead quality while a B2C might prioritise lead quantity. These different goals also mean the way they acquire leads will likely be different. Your product or service type and cost will also help determine what KPIs are essential for your organisation. If you have a higher price point, you won’t need the volume of leads that a company at a lower price point would require; however, your lead quality is critical.
The best KPI examples for lead generation
Here are some of the best ways my customers ended up measuring lead generation successfully, based on a simple sales funnel.
Measuring Impressions and Reach
At the most basic level you have impressions, which count the number of times your marketing message was displayed for someone to see. For example, impressions might measure:
- the number of times a page, which displays your ad, was visited,
- how many times a someone walked past your display at an exhibition,
- or how many times your content was delivered to someone’s social media feed.
The way impressions are often sold and measured is in Cost per Mille (CPM), which calculates how much it costs to achieve 1,000 impressions.
It is important to understand that impressions do not equal the number of people who saw your message.
If you are interested in the number of people then a slightly more meaningful metrics is measuring reach, which counts the number of people your marketing message was displayed to.
Looking at the same metrics as above, reach would measure:
- the number of unique visitors to a page, which displays your ad, was visited,
- how many times a unique person walked past your display at an exhibition,
- or how many times your content was delivered to a unique person’s social media feed.
By itself, impressions and reach are not actually that meaningful. For a start, you can’t really be sure how many people who visited a website with your ad on actually consciously registered your ad or engaged with it in any way. Also, you can’t trust the reach numbers completely because the same person can generate multiple counts by visiting the same page from different devices (phone, tablet, desktop) or IP addresses (home and work computers). And on top of that, it is hard to understand how many of the people who saw your ad are actually potential customers, i.e. among the population you are targeting. For example, you might get a high number of impressions by advertising on a popular website that is completely unrelated to what you are offering.
Having said all of this and given the caveat that these numbers might not be as exact as we would like them to be, as a business you have to nudge people somehow to become aware of what you offer in order for them to take a next step towards becoming a customer.
Impressions and reach are the first step in getting someone to act on your message and tracking those two indicators will give you some important baseline data to then help you assess the effectiveness of your lead generation activities.
Measuring Click-Through Rate
Click-through Rate (CTR) is the next step in your sales funnel, and as the name suggests, CTR is a ratio that is determined by the number of people who click on any call to action (an ad, email link, landing page, etc.) divided by the number of times your call-to-action is shown (impressions).
If the ratio is high, you can make the assumption that people find value in the message and are interested enough to click; lower click-through rates might indicate that the message should be adjusted to be more appealing or that your message is not targeting the right people.
Measuring Conversion Rate:
Conversion rate is an extremely important KPI to track and is calculated by taking the number of conversions divided by the number of clicks. This tells you how many people acted on your marketing message and then converted further along in your sales funnel.
Again, what actions you define as conversion will depend on your organisation’s goals, some common actions include:
- purchase of a product or service
- form submissions or request for proposals
- whitepaper or eBook downloads or newsletter sign-ups.
As you can see, these conversion actions can sit along a lengthier sales funnel where you might have intermediate steps (e.g. a proposal) before you might achieve a sale. This means that very stage of your sales funnel will have conversation rates you can track. In that case I suggest breaking your conversions into the following:
- Prospect conversion rate—These are the people who became aware of your business at the earliest step in your sales funnel and signed up for your newsletter or downloaded your eBook.
- Lead conversion rate—This number reflects those prospects that are asking for a proposal or are vetted as qualified leads and handed from marketing to sales.
- Sales conversion rate—This is the number of leads that turned into customers with a transaction taking place.
In addition to the KPIs outlined here, a robust marketing strategy will also capture several other metrics. For example, it would be relevant for most organisations to track the total number of inquiries, lead source and leads per channel in order to gauge the channel effectiveness, and the number of qualified leads versus wrong-fit leads. All of this data will help inform future marketing strategy.
Finally, calculating the cost per lead—including the cost per click and cost per customer acquisition—is important to determine your return on investment for your marketing activities.
Using the numbers outlined here will put you on the right track to understand, adjust and implement marketing strategies that result in success for lead generation and customer acquisition.