Annual indicators are particularly relevant in B2B businesses, where sales processes are longer, and the contribution of marketing activities is more difficult to measure. For example, if the sales process to a customer takes an average of three months, and there are hundreds of customers, many common marketing metrics are not meaningful to evaluate on a monthly or even quarterly basis.
I do not refer to annual indicators as KPIs on purpose. We evaluate annual indicators in order to discover valuable insights that would allow us to make decisions for changes and adjustments in operations. KPIs are typically used to evaluate departmental activities and motivate employees based on them. KPIs are agreed upon at the beginning of the period and evaluated at the end. We strive to establish as few KPI indicators as possible to make it easier to evaluate the value created by the department or employee, while we measure more annual indicators to gain more valuable insights, but at any time we can supplement the list of annual indicators if it helps to achieve better results in the future.
I’m sharing the indicators that we most commonly evaluate with customers this year: what we measure, what insights can be gained from it, and what useful marketing/sales decisions it helps to make. Naturally, short-term indicators are also measured in B2B. For example, conversions, their average cost, website traffic, number of leads, number of complaints, sales activity, and others. The fact that these indicators can be measured and evaluated in the short term sometimes even leads to a mistaken view that they are not worth comparing. And we already know what’s going on since we measure it every month. This way, we might not notice that the cost per conversion in the channel has dropped by half over the year, and it’s worth budgeting different amounts for the channel.
I’ll leave the short-term indicators for another time, as we ended up with 11 annual ones – perhaps even a bit too many for a single article.
New customers. The influx of new customers to a company is like fresh blood. It not only compensates for lost revenue but also helps the company evolve and expand its experience. We analyse through which channels new customers come and what motives influence their decision. Accordingly, we strengthen those channels that attract more new customers and refine the composition of the value proposition.
New targeted vs. random customers. Broader reach communication generates more leads, but often their quality decreases, and the sales pipeline gets filled with more inquiries burning sales time without turning into profitable sales. If the share of targeted customers is declining or not growing, we analyse the characteristics of channels, their behaviour, and motivation typical for targeted customers and those for random customers’ decision-making. We adjust investments in channels and value propositions to improve lead quality – attracting more targeted customers. Meanwhile, we try to redirect the flow of random (low-value) customers into a more automated process.
Lost customers. When the number of customers is small, we are sensitive to each loss. As a result, we make reactive decisions, but not necessarily systemic ones that would help reduce the number of losses in the future. It’s worth calmly conducting a lost customer analysis once a year, identifying the reasons, and adding one or two points to the annual initiative plan.
NPS (Net Promoter Score). Often, managers see NPS only as a thermometer, i.e., as a general NPS indicator that needs to be measured because everyone measures it. Furthermore, if it’s high enough, it’s used as an opportunity to showcase on LinkedIn or on the company’s blog. Less frequently, detractors are scrutinised more thoroughly, meaning those who are not inclined to recommend, allocating more time to understand their issues and needs, and devising a plan to improve the customer’s experience. Even less attention is paid to promoters – those who would recommend the supplier – because everything is already fine with them. However, the actual goal of NPS is to strive for more customers recommending the company. Therefore, we take the list of intending-to-recommend customers and appoint them as ambassadors of the company.
Growing and declining customers based on sales, similar to NPS, provide insights into areas in customer relations that need improvement and what drives success. Unlike NPS, we see how customers vote with budgets. By comparing the data, we see how NPS rating correlates with customer actions. Unlike the indicator of lost customers, growing and declining customers allow us to prevent problems from happening in the first place.
Sales by segments (segment dynamics). The simplest example is that sales to small customers are increasing, while sales to corporate customers are decreasing, and forecasts indicate the risk of a downturn. Those who are strong are more likely to survive than small ones, so the solution suggests more training and energy for key account managers, more attention to the top 20% of customers, gradually raising base prices for others.
Efforts vs. revenues by segments. The aim is to evaluate which segments to focus efforts on next year. For example, we worked intensively with customers in the retail sector – with 20 meetings per customer – but due to fierce competition, the revenues barely made up for the efforts. Meanwhile, in the services sector, we operated calmly (10 meetings per customer), but achieved success with good margins. This provides a good foundation for decisions on how to position ourselves further, manage sales resources, and improve offerings. If we have a good CRM, quality data, and segmentation across various dimensions, we can more clearly identify the gold mines and pitfalls.
Sales to customers vs. potential – Share of Wallet (SOW). This is a rather tricky indicator because accurately determining the customer’s purchasing potential is often not easy, especially if we sell different services. However, if we use a consistent methodology, it’s beneficial to assess the change in SOW on a year-over-year basis. At least with the top 20% of the largest buyers. Why is this needed? To direct efforts where growth opportunities are greatest and not waste too much energy where we have already reached the customer acquisition targets.
Order intensity. More frequent contact with the customer increases loyalty. The most effective way to increase loyalty is to enable the customer to buy more often. Then, customer contact not only strengthens relationships but also generates direct revenue. Depending on the nature of the business, we look for ways to increase order intensity. For project customers, we offer maintenance, for hard buyers – a soft subscription, for annual conference attendees – monthly breakfasts, and we do upsell and cross-sell.
Sales: Digital vs. physical channels. It is important not to get caught up in the division of the pie between marketing, sales, and products. Measurement should not be used for bonus distribution between departments – there will be no truth here. The indicator is useful for deciding how much it is worth developing individual departments or channels. How much is it worth increasing investments in digital tools, how quickly to restructure sales, for example, how many hunters to change to farmers. Most B2B businesses are just beginning their systematic digital communication journey. In order for the customer to get used to new tools for working with suppliers, the help of salespeople is also needed. Therefore, it is very important not to oppose digital and face-to-face departments.
Marketing ROI. One of the “funniest” B2B indicators, especially in businesses where sales are impossible without the involvement of a live salesperson. How the B2B marketing contribution to actual revenue generation is evaluated really depends on the agreement of the managers. When negotiating, sales, marketing, and product contributions are inevitably compared, thus raising the classic conflict. The easiest way is not to divide the pie but to enjoy it together. That is, to calculate marketing ROI based on total sales, even if the CEO harvested the largest sale of the year with his bare hands. In this case, the problem of accountability arises. Another simple way is to evaluate only directly related revenues. Then, usually, revenue from leads coming from digital channels and events is considered. It is clearer with accountability, but the company begins to understand marketing only as a lead generation discipline. Justifying a budget for long-term programs like trendsetter, social responsibility, or customer community is becoming increasingly difficult, so the company limits its capabilities. Then a few years pass, and the CEO no longer finds it so easy to harvest that year’s sales. The impact of marketing on brand awareness, customer loyalty, or reliability can be assessed, but common research methods in Lithuanian B2B markets are expensive and unreliable due to small sample sizes. Thus, although tricky, a consensus among leaders is probably the most rational path. Of course, this issue is worthy of a separate discussion.
One might ask – if more than half of these metrics are about sales, what does marketing have to do with it? In the B2B customer journey, marketing and sales intersect several times. Money is wasted inefficiently in B2B marketing when company communication and sales go different ways. For example, social media and value-based video content talk about quality and competence, while salespeople focus only on lower prices; we attract medium-sized customers to conferences, but sales only pay attention to the largest ones. Assessing any of these metrics provides insights for both marketing and sales. Even better if both teams understand them and make decisions together.