Every savvy business owner knows that having good data is critical to their business success. Whether it’s return on investment or customer acquisition cost, key performance indicators (KPIs) shed light on areas of business that we need to be aware of in order to make informed decisions.
But with the explosion of internet technology and the vast amounts of data and metrics at our fingertips, it’s easy to get lost in deciding what you should (and maybe even shouldn’t) be measuring. Of all the KPIs available, which ones should you be tracking on a consistent basis? Which metrics are the most valuable to your business?
No matter what kind of business you run, your clients and customers are your most important assets. To that end, your business’s success depends heavily on how well you understand lead tracking and know how to measure lead acquisition, nurturing, and conversion metrics. Without those numbers, your sales and marketing efforts are truly shots in the dark.
Lead tracking improves sales and marketing effectiveness
Put simply, lead tracking means following an individual as they progress through your sales funnel from visitor to lead to paying customer. Every action they take, from viewing your website to talking on the phone with a sales rep, is documented to help sales teams move the individual to the next stage of the sales funnel.
Each action they take — such as engaging with marketing material, viewing your website and social media channels, clicking your calls to action (CTAs), talking on the phone with a sales rep, etc. — is documented. This helps the sales teams effectively provide the next steps to move the visitor to the following stage of the sales funnel.
While it might seem like sales teams have the most to gain, a healthy lead tracking system provides benefits to the entire business:
- Marketing teams can see which channels and marketing materials are the most effective at moving visitors through sales pipelines;
- Sales teams have access to detailed information about the leads in their sales pipeline and can craft custom sales messages to increase conversion rates; and
- Business owners can evaluate their sales and marketing teams’ effectiveness, their operating costs, and how their marketing contributes to their return on investment (ROI).
As more and more businesses experience rising customer acquisition costs, it’s increasingly important that they capitalize on lead tracking to maximize their ROI.
Unfortunately, it seems many businesses are missing out on these benefits. A 2017 study by Drip showed that 60% of small businesses were either 1) unhappy with their marketing ROI or 2) unsure if their marketing had any effect on their ROI in the first place.
So how can you take advantage of lead tracking? Which metrics should you be monitoring? Here are five lead tracking metrics that will give you a better picture of how your sales and marketing pipelines are performing.
The 5 essential lead tracking metrics your business needs to monitor
1. Traffic-to-lead ratio
One of the most basic lead tracking metrics, your traffic-to-lead ratio measures the effectiveness of your marketing material (website, landing pages, social media channel, content marketing, etc.) in converting traffic to leads. A high ratio signals your marketing material is proving effective, while a low ratio indicates your marketing material needs to be improved. Additionally, if you rely on pay-per-click (PPC) advertising, a low traffic-to-lead ratio indicates poor ad performance, resulting in lost revenue.
Here’s how to calculate your traffic-to-lead ratio:
(# of visitors per week/month/year) / (# of leads per week/month/year)
2. MQL-to-SQL ratio
A marketing-qualified lead (MQL) is someone who has interacted with your marketing materials and shown interest in your business. They may have filled out a contact form requesting more information, but they might not be ready to talk to a sales rep just yet. A sales-qualified lead (SQL), on the other hand, has indicated a direct interest in your offer and is ready to talk to a sales rep. Knowing your MQL to SQL ratio helps sync your sales and marketing teams on what qualifies a good lead and shows how well your marketing team is doing in moving leads through the sales pipeline.
Here’s how to calculate your MQL-to-SQL ratio:
(# of SQLs) / (# of MQLs)
3. Time to conversion ratio
This lead tracking metric measures the amount of time it takes for a visitor to progress through each stage of your sales pipeline. It also provides insight into the stages of your pipeline that might be acting as a bottleneck for your visitors. You can target each stage of your sales funnel for greater insights. For example, you can tweak this equation to understand how quickly it takes for a visitor to become a lead or how long it takes for an MQL to become a customer.
Here’s how to calculate your time-to-conversion ratio:
(total time spent by all your visitors before they became a lead, MQL, SQL, or customer) / (# of total leads, MQLs, SQLs, or customers)
4. Source and cost attribution
The beauty of the source and cost attribution metric is that it allows you to get crystal-clear insight into which marketing channels provide the greatest number of qualified leads, MQLs, and SQLs. For example, you can measure the effectiveness of your content marketing, your social media channels like Facebook, your paid advertising, etc. Armed with this information, you’ll be able to determine which channels provide the greatest ROI while cutting down on those channels that aren’t getting you results.
Here’s how to calculate your source and cost attribution:
- Cost per lead: (total cost of marketing channel) / (total # of leads)
- Cost per MQL: (total cost of marketing channel) / (total # of MQL)
- Cost per SQL: (total cost of marketing channel) / (total # of SQL)
- Cost per sale: (Total cost of marketing channel) / (total # of sales)
5. Monthly recurring revenue per lead, MQL, or SQL
Many businesses place a high emphasis on the number of leads produced while often neglecting the quality of those leads. This handy metric allows you to look past the numbers and view the quality of your incoming leads. When used with the source and cost attribution metric, you can help you get further insights into profitable marketing channels.
Here’s how to calculate monthly recurring revenue per lead, MQL, or SQL:
- (monthly recurring revenue) / (total # of leads)
- (monthly recurring revenue) / (total # of MQL)
- (monthly recurring revenue) / (total # of SQL)
Achieve higher efficiency with these key lead tracking metrics
There’s a near-infinite number of metrics and KPIs you can track to measure and analyze your sales process, and it’s tempting to want to focus on them all. Only a handful, however, really show how well your sales and marketing pipelines are working in tandem to increase operational efficiency for your business. By honing in on these lead tracking metrics and working to improve your marketing and sales team processes, you can create a well-oiled machine that consistently converts new visitors into closed deals.