The 8 Most Important Marketing Operations KPIs

There is a near endless number of marketing operations KPIs. However, just about any marketing operations consultant can share that most don't gain adoption. In fact, they are downright ignored. They fail for two reasons. They are not the most important metrics, and they don't induce action.

Research performed for the Marketing Transformation Report revealed that KPI-rich dashboards achieve 30 percent utilization following a go-live event. But within 3 weeks utilization falls to 9 percent. Over time it falls further. The decline is due to metrics that do not provide real help to staff.

The key to successful analytics is to measure the few metrics that most matter. Too many metrics clouds what's most important.

The research also found that the most important metrics were financial measures and linked to the organization's most important objectives.

The table below shows the Marketing Operations KPIs that most matter.

8 Marketing Operations KPIs

1. Pipeline Contribution

Revenue growth is the top mantra for most companies. Not all marketers assume revenue accountability, but those that do are far more important to the company and get a seat at the C-suite table.

This revenue-focused metric measures marketing's contribution to the sales pipeline. Or more specifically, it measures the value of marketing-sourced sales leads in the sales funnel.

Pipeline contribution = Value of marketing-sourced leads in the sales pipeline

The sales pipeline is often the most viewed report by the most people. Showing marketing's impact to this report elevates its role. Also, nothing accelerates marketing and sales alignment better than the joint contribution to revenue results.

2. Revenue Contribution

This is the 'show me the money' KPI. It defines the percentage of closed sales that were sourced by marketing.

Revenue contribution = Value of marketing-sourced sale opportunities that closed during a period

This is a time-based metric that shows both prior period sales results and forecasted contribution as part of the sales forecast report.

A lead attribution model is needed to show which campaigns, touchpoints or interactions achieve conversions or have a measurable impact on the customers' decision to purchase. It's a requirement to accurately measure campaign performance reporting, customer acquisition costs and ROI.

3. Marketing ROI

Whether referred to as Marketing ROI or Return on Marketing Investment (ROMI), this measure is the ultimate testament to show how well the budget is converted into revenue.

Marketing ROI

When ROI is calculated by customer segment, market, campaign, channel and other dimensions, the budget can be dynamically allocated to rid poor investments and double down on techniques that are working.

Budgets are generally scrutinized and under pressure. If times get tough, they are often reigned in. However, when CMOs can show that every dollar that goes into the marketing budget creates more than a dollar in company profits, their budgets remain intact, or even get increased.

4. Customer Lifetime Value (CLV)

CLV is a predictive analytic and leading indicator of increased purchases and customer retention. It's influential because even a small increase multiplied by the number of customers creates large revenue growth.

It's equal to the present value of the future cash flows attributed to the average customer during the entire relationship with the company. Some companies will present CLV as a revenue figure. Others will deduct customer-related expenses, such as acquisition costs and cost to serve, and present CLV as a profit figure. We generally recommend the later. But either way, it is a projection for what each customer is worth to the company.

CLV = Average purchase value * average number of purchases for average lifespan

Its measurement also helps recognize customer as assets and reposition customer focus from short-term profits to long-term lifetime relationship value. It also complements other customer-centric measures such as customer satisfaction or Net Promoter Score.

Also recognize that customers may be worth more than just their purchase dollars. For example, referrals which result in new sales should be reflected in the customers' value.

Unless you know how much a customer is worth to the company, you don't know how much the company should spend to acquire that customer.

5. Cost Per Lead

A lead is a contact that shows some interest or action to suggest they may make a purchase from your company.

This measure divides the number of leads acquired from a campaign or similar demand generation event by the total cost to acquire them.

Cost Per Lead

Cost per lead is an important metric as it provides an early view of campaign effectiveness. However, it needs to be followed with some additional measures.

To know which leads are your best leads, and the sources that provide your best leads, you will need to track the cost per customer acquisition and lead-to-customer conversions.

Also recognize that not all leads are equal. Those that fit your Ideal Customer Profile (ICP) will achieve a higher conversion rate and be far more valuable to the company.

6. Customer Acquisition Cost (CAC)

CAC measures how much it costs to acquire a customer.

Customer Acquisition Cost

It shows the effectiveness of demand generation spend and is used to compare different types of campaigns.

So, what's a good CAC? That depends on your industry and CLV.

For example, a good CAC for a SaaS industry is 3:1.

7. Lead-to-Customer Conversion Rate

This measure shows the percentage of leads that convert into paying customers.

Lead to Customer Conversion Rate

Some companies start the calculation with unqualified leads. That's helpful in analyzing an end-to-end revenue funnel. Other companies measure from MQLs to closed sales. That puts the emphasis on sales performance and largely ignores marketing results.

We recommend this metric measure the entire revenue funnel. You can then make performance improvements by analyzing the conversion and duration at any stage of the funnel.

8. Marketing Efficiency Ratio (MER)

This big picture measure is sometimes called the marketing efficiency rating. It calculates the overall success of your campaigns or other demand generation programs.

Marketing Efficiency Ratio

It's a holistic measure that reveals how much money marketers spend to get results.

It shows both your entire investment and earned revenue from all campaigns across all channels.

It's an efficiency metric that shows the organization's ability to transform investment into revenue. But it's also a predictive metric that can be used forecast how much future revenue will be sourced with the remaining budget.

One Last Point

Notice that this marketing operations KPIs list did not include measures for open rates, click-through-rates, bounces, likes or other tactical engagement.

That's because by themselves they are neither financial nor aligned with the company's most important goal.

It's not that they are worthless. Just that they are worth less than the measures that drive the company's revenue and profit.

Marketers demonstrate their greatest contribution when they put aside the many activity and vanity metrics and focus on the few financial measures that most impact the company's priorities.