13 Demand Generation Metrics You Should Track

Every business wants to grow, but many owners struggle with attracting more leads and customers. Demand generation is the first step to growing your customer base by bringing your business in front of prospects.

Knowing the right demand generation strategies to use can help you reach your target audience. To measure how well your campaigns are doing, tracking key demand generation metrics, like MQLs, SQLs, cost per lead, and CAC is crucial.

1. Marketing Qualified Leads (MQLs)
2. Sales Qualified Leads (SQLs)
3. Cost Per Lead (CPL)
4. Customer Acquisition Cost (CAC)
5. Customer Lifetime Value (CLV)
6. Return on Investment (ROI)
7. Close rate per channel
8. Marketing cycle length
9. Average deal size
10. Marketing-sourced pipeline
11. Content engagement
12. Net Promoter Score (NPS)
13. Churn rate

1. Marketing Qualified Leads (MQLs)

Marketing Qualified Leads (MQLs) are leads that have shown enough interest to be worth nurturing further. These leads are often at the early stage of your sales pipeline. They've engaged with your website through actions like downloading a guide or subscribing to your newsletter but are still thinking about purchasing.

For small business owners, tracking demand generation metrics like MQLs is key because they tell you that your marketing efforts are working. They show that your content resonates with your target customers, and they help your sales team focus on leads that have a higher chance of turning into customers.

The ideal rate for leads to become MQLs falls between 25% to 35%. So, if you have 50 new leads, having around 12 to 18 web visitors converting means your marketing campaign is getting the attention of the right audience.

To boost the number of MQLs, focus on improving your website content and its elements, especially landing pages. Try A/B testing different designs, like the color of your CTA buttons, or offer different downloadable assets.

For example, home cleaning service providers can experiment with two versions of an ultimate guide to see which one captures the pain points of your target audience more accurately.

2. Sales Qualified Leads (SQLs)

Sales Qualified Leads (SQLs) are the next step after MQL in the funnel. They're the ones who've shown strong buying signals, such as requesting a product demo or pricing information. These leads have moved beyond initial interest and are actively considering your solution.

When your sales team gets these SQLs, they know they are working with leads that have a higher conversion chance, which is vital for your business success.

Let's say an MQL downloads a guide from your website. Later, the same person books a product demo and visits your pricing page several times.

Because of these actions that signal strong purchase intent, you can tag them as an SQL. Monitoring how many leads move from MQL to SQL gives you an idea of how well your lead nurture and demand generation efforts are.

Nurturing SQLs through targeted content can lead to as much as 50% more sales and at around 33% less expense. Enhance the lead handoff process between your marketing and sales teams to make sure only the highest quality MQLs enter the pipeline as SQLs.

Once you have your SQLs, nurture them through targeted email sequences or direct outreach. For example, a software company might develop an email sequence that showcases how their solution solves specific pain points for each SQL.

These emails might include case studies, testimonial snippets, and direct comparisons to competitors. The goal is to demonstrate clear value and move the potential customer closer to making a purchasing decision by addressing their unique business challenges and showing tangible ROI potential.

3. Cost Per Lead (CPL)

For small business owners, tracking cost per lead (CPL) helps you see if your ads and content are cost-effective. When you review your data, compare the CPL across different channels like your website and social media to improve your demand generation success.

If your company has a CPL of $20, it means you are spending $20 on average to bring a new prospect into your funnel. For instance, if you launch a new advertising campaign and your CPL drops from $25 to $20, it shows that your campaign is becoming more efficient at getting qualified leads.

Paid and organic CPL

CPL is also categorized into two: paid and organic. Paid CPL involves direct advertising costs like Google Ads or social media campaigns, while organic CPL tracks leads generated through content marketing, SEO, and unpaid channels.

The higher education industry has the highest average CPL, amounting to $982. Meanwhile, industries in oil and gas as well as financial and legal services fall in second place with $600+ cost per lead.

To lower your CPL, focus your demand generation budget on channels that deliver the most qualified leads at the lowest cost. Social media platforms offer great value for money. In fact, the average CPL for Facebook is just around $20, while it's just below $10 for Instagram.

4. Customer Acquisition Cost (CAC)

Customer Acquisition Cost (CAC) is the cost you pay to gain a single paying customer. Most businesses compare CAC with CPL to see the extra investment needed to move from an interested MQL to a finished sale.

If your CPL is $20 but your CAC is $100, it means that while generating a lead is relatively inexpensive, converting that lead into a paying customer requires more money. This shows that your marketing is doing a good job of bringing leads into your funnel, but your sales team needs to work a bit more on turning those leads into paying customers.

Ideally, you want a Customer Lifetime Value (CLV) to CAC ratio of 3:1 or higher. Companies that maintain this balance can reinvest profits to expand marketing efforts and improve their sales processes.

Lower your CAC by making it easy for buyers to complete the purchase. Minimize form fields, offer guest checkout options, and accept multiple payment methods.

You can also implement retargeting strategies, such as sending targeted ads to users who have previously visited your website or abandoned their shopping cart.

Doing so can remind potential customers about your product and address their hesitations. It also helps to provide additional incentives like limited-time discounts or free shipping.

5. Customer Lifetime Value (CLV)

CLV estimates the total revenue a customer brings to your business during their entire relationship with you. This metric gives you insights into long-term profitability and helps you understand whether the money you spend on demand gen is paying off over time.

Let's say a customer spends $50 per month and stays with your company for 5 years, their CLV is around $3,000. It shows that your investment in getting a new lead is worthwhile since the CLV is much higher than your CPA.

As mentioned above, a good CLV is typically three times higher than your CAC. To boost your CLV, focus on customer retention strategies such as upselling and cross-selling.

You can do so by offering personalized product recommendations based on past purchases or creating loyalty programs and special deals that reward repeat customers.

6. Return on Investment (ROI)

Return on Investment (ROI) tells you how much revenue you earn for each dollar spent on marketing and demand gen efforts. Basically, this metric helps you understand if your investments are paying off and is a key factor for business success.

Imagine you run a campaign that costs $2,000. If this campaign generates $10,000 in revenue, then your ROI is 400%. This tells you that your demand generation efforts are producing strong returns and that you might want to invest more in similar marketing channels.

Boost your ROI by reviewing which channels help you reach as many people as possible. For instance, social media platforms like LinkedIn can be highly effective for B2B marketing, providing 80% of all leads coming from social channels.

7. Close rate per channel

Close rate per channel measures the percentage of leads from a specific channel that turns into paying customers. It gives you exactly whether your target audience resonates more with your social media or email campaigns.

If your email campaign has a close rate of 20% compared to a 10% close rate for social media, it means your email channel is doing a better job at turning leads into customers.

As such, you may want to shift more resources to your email efforts since they deliver higher quality leads for your demand generation strategy.

Let's say your LinkedIn channel generated 100 total leads, with 15 people converting to customers. Using the formula above:

In this example, your LinkedIn close rate is 15%, which is slightly lower than the ideal close rate of 20% to 40%.

Find the channels that deliver the best demand gen results. Afterward, double down on these channels by testing new messaging or special offers that appeal to your target customers.

For channels with lower performance, experiment with different content and tactics. If social media isn't converting well, consider fine-tuning your targeting and creating more engaging visuals, especially videos.

8. Marketing cycle length

Marketing cycle length measures the average time it takes for a lead to become a paying customer. It starts from the first touch on your website and goes all the way to closing the sale.

Let's say you tracked the conversion journey for 5 different leads:

1. Lead A: 25 days from first touch to conversion
2. Lead B: 35 days from first touch to conversion
3. Lead C: 20 days from first touch to conversion
4. Lead D: 45 days from first touch to conversion
5. Lead E: 30 days from first touch to conversion

Calculation:

• Sum of Days: 25 + 35 + 20 + 45 + 30 = 155 days
• Total Number of Conversions: 5 leads

Shorter cycle lengths suggest more efficient processes, while you might need more targeted nurturing for longer cycles. Use email automation to follow up quickly with new leads from your website and monitor CRM insights to see which parts of your demand generation funnel are slowing down the process.

9. Average deal size

Average deal size tells you the average revenue you earn from each closed deal. This metric is critical for understanding how much value you get from every customer.

If one channel generates 100 leads and the total revenue from those leads is $50,000, then the average deal size is $500. You can then compare it with other channels to see which ones bring in higher-value customers.

Knowing your average deal size helps you understand where you can reach customers who are willing to pay a premium to solve their problems. These consumers also tend to be more loyal and have a CLV when you deliver the best quality product or service.

You can increase your average deal size through upselling and bundling products. For instance, you can offer package deals or loyalty discounts to encourage customers to spend more. Combine it with tactics like personalized recommendations based on their past purchases or the products and services they viewed.

10. Marketing-sourced pipeline

The marketing-sourced pipeline metric counts all the leads your marketing efforts bring in before they are handed off to your sales team. It gives you a clear number of prospects generated through your website and content efforts.

By tracking this metric, you can see exactly how your demand gen activities are filling your overall pipeline with potential customers as opposed to other lead generation methods, like referrals or cold calling.

For example, if your marketing team generates 500 leads through content marketing, social media campaigns, and targeted ads, those 500 leads would represent your marketing-sourced pipeline.

Calculating your marketing-sourced pipeline involves counting the total leads generated from each of your marketing channels.

Let's say a software company tracks its marketing channels and finds:

• LinkedIn Ads: 150 leads
• Google Search Ads: 100 leads
• Blog Content: 75 leads
• Webinar Registrations: 50 leads
• Email Marketing Campaign: 25 leads

Calculation:

In this scenario, the marketing team has generated 400 leads through different marketing channels, which they can send to the sales team.

Bring your brand in front of your target audience by creating engaging content that shows how you can help with their needs. Experiment with your demand generation tactics to improve engagement and drive more revenue to your business.

11. Content engagement

The level of engagement your content receives is also a great indicator of how well your target audience enjoys your demand generation campaigns. Through actions like page views, downloads, shares, and comments, you can gauge whether your website or social media content is interesting enough to attract leads and move them through the pipeline.

For instance, if your blog posts have high page view counts and long reading times, this suggests that your website content is engaging and useful. This can eventually help in generating more leads and boosting your demand-gen efforts to convert those leads into paying customers.

For website content, track content engagement through metrics like page views, time spent on page, bounce rate, and scroll depth. For social media content, look at likes, shares, comments, and click-through rates.

Then, calculate engagement rates by dividing the number of interactions by total reach or impressions.

For example, let's say a blog post got:

• Total page views: 1,000
• Likes: 50
• Shares: 25
• Comments: 15

Experiment with different content formats, such as videos, infographics, or podcasts, to see which ones drive higher engagement. Take a look at what types of content are working for your competitors, and find ways to improve on those.

12. Net Promoter Score (NPS)

Net Promoter Score (NPS) measures how likely your customers are to recommend your brand. It's a simple yet powerful way to understand how people feel about your business.

92% of consumers trust recommendations from family and friends. That's why it's important to understand how your current customers see your brand and how they can serve as ambassadors in your demand generation efforts.

Measure NPS by surveying your customers and asking them to rate, on a scale of 0 to 10, how likely they are to recommend your products or services.

A high NPS means many customers are happy with your marketing and demand gen efforts. This can drive grassroots marketing where satisfied customers share their positive experiences with friends and family.

On the other hand, a low NPS may show that your brand needs improvement in customer service or product quality.

Gather NPS data by using simple surveys right after a purchase or service experience. You should also use social listening tools to track what people are saying on social media and review sites about your brand.

13. Churn rate

Churn rate tracks the percentage of customers who stop using your services over a set period. More than checking how many people you reach, you should also monitor how many customers you're losing. Knowing this metric can help you create more targeted demand generation strategies to reduce customer attrition.

If you have 100 customers and 10 of them stop using your service in a month, your churn rate is 10%. For software companies, the average churn rate is 14%, while it's 17% for industry services.

Let's say you run a software-as-a-service (SaaS) company with the following scenario:

• At the beginning of January, you have 500 customers
• By the end of January, 25 customers have canceled their subscription

Calculation:

• Number of customers at the start: 500
• Number of customers lost: 25

A high churn rate is a major warning sign for your business. It indicates problems with quality or customer satisfaction. To address churn, start by gathering data on why customers are leaving.

Use surveys, online reviews, or social media feedback to find out their concerns. Then, analyze this data for insights on which aspects you can improve. Consider implementing regular check-ins and support follow-ups to boost customer loyalty.

Demand generation metrics is your way to success

Each metric is part of your demand generation's bigger picture. They offer clues on how you can reach more interested customers and fine-tune your marketing and sales processes. By understanding and acting on these insights, you can boost lead quality and increase revenue.

What if we told you there's a simpler solution? Avoid countless hours analyzing data, tweaking strategies, and trying to optimize each step of your demand generation funnel.

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