Marketing shouldn’t be a drain on your bottom line. It shouldn’t be a bunch of creatives sipping oat milk lattes. It should make you money.
Or, in the words of Dr. Debbie Qaqish, marketing should be transformed “from a cost center to a repeatable, predictable, and scalable revenue machine”.
That’s where revenue marketing comes in.
But there’s a problem: revenue is notoriously tricky for marketers to track. Even highly successful marketing teams find it harder to measure than any other metric, according to research from Oracle:
That’s why so many marketers continue to focus on meaningless vanity metrics instead.
“No, we don’t know if we’ve helped close any deals or generate any revenue. But look, website traffic go brrrrr!”
So should you just forget about turning your marketing team into a lean, mean, money-making machine? Absolutely not.
In this article, we’re going to:
- Explain why revenue marketing metrics matter.
- Talk you through six types of revenue marketing metrics you should start tracking right now.
Contents
Why are revenue marketing metrics important?
Revenue marketing metrics are the best way to ensure your sales and marketing teams work in unison, rather than blaming one another when things don’t go to plan.
Think about it. When marketers are involved in the entire sales process — rather than just generating marketing-qualified leads and tapping out — they feel directly invested in and able to contribute to your sales success.
When sales and marketing play nice together, everyone benefits. And when they don’t, everyone suffers.
Indeed, research from Freshworks found sales and marketing teams that weren’t “highly aligned” in 2020 were twice as likely to see year-on-year revenue declines of 20%+.
For that reason, marketers are becoming increasingly revenue-focused, with HubSpot revealing that 75% of marketers now use their reports to show how their campaigns are directly impacting revenue.
But you can’t truly determine the success of your revenue marketing strategy unless you’re focusing on the right metrics — those that really shift the dial.
This brings us neatly to…
6 types of revenue marketing metrics you should start tracking
1. Top-level revenue marketing metrics
Let’s start by considering the revenue marketing landscape from 10,000 ft.
These metrics won’t tell you a whole lot about the good, bad, and ugly of your revenue marketing strategy.
But they will give you a clear indication of whether or not things are working at all.
Deal-tracking metrics
These metrics help you measure the number of deals closed within a given period.
While they aren’t granular enough to help you assess the reasons behind your performance, they can give you a useful at-a-glance view of how well (or how poorly) your revenue marketing plan is working.
Examples of deal-tracking metrics include:
| Metric | What it measures | How to calculate |
|---|---|---|
| Marketing-qualified leads (MQLs) | The number of potential customers that have been reviewed by the marketing team and passed to sales after satisfying the necessary criteria such as industry, size of organization, available budget, or user behavior like pricing page visits. | Volume of MQLs within a given reporting period. |
| Sales-qualified opportunities (SQOs) | The number of qualified prospects who are likely to buy your product. That means they must have an immediate need for it, plus the budget (and authority) to sign off on the deal. Usually qualified manually by the sales department. | Volume of SQOs within a given reporting period. |
| Closed-won deals | Closed-won opportunities that have made it to the final stage in your sales cycle. At this point, the customer has made a firm commitment to buy, meaning purchase probability has climbed to 100%. | Volume of closed-won deals within a given reporting period. |
| Monthly recurring revenue (MRR) | Is the predictable total value of all revenue generated by a business from all active subscriptions in a given month, taking into account recurring discounts and add-ons but excluding one-off fees. | Multiply the number of monthly subscribers by the average revenue per user (ARPU). |
| Average deal size | Like it sounds, average deal size measures the size of your average deals. | Divide total revenue won in a set period by the number of closed-won opportunities. |
| Average sales cycle length | Also known as average deal cycle, this is the number of days (or months) it takes to close a deal, on average. This is useful for creating forecasts, planning recruitment or investment drives, and measuring sales efficiency. | Add up the total number of days or months it took to close every deal within a reporting period, then divide that total by the number of closed-won opportunities. |
Efficiency metrics
What’s the best way to close more deals?
You could slash your prices, but then you’ll eat into your revenue. You could improve your product, but that can be expensive, and there are no guarantees. What if someone else introduces the same feature before you?
Or you could make your sales cycle more efficient. That way, you generate more sales without requiring any additional resources.
That’s why efficiency metrics are so important. They go beyond deal-tracking metrics by measuring the cost of achieving your sales objectives.
Examples of efficiency metrics include:
| Metric | What it measures | How to calculate |
|---|---|---|
| Cost per MQL | How much it costs your business, on average, to generate a marketing-qualified lead. | Add up your total marketing spend and divide it by the total number of new MQLs generated in a given period. |
| Cost per SQO | How much it costs your business, on average, to generate a sales-qualified opportunity. | Add up your total sales and marketing spend, and divide it by the total number of new SQOs generated in a given period. |
| Cost per booked meeting | How much it costs your business, on average, to book a sales meeting. | Add up your total sales and marketing spend, and divide it by the total number of booked meetings in a given period. |
| Customer acquisition cost (CAC) | How much it costs your business, on average, to sign up a new customer. | Add up your total sales and marketing spend, and divide it by the total number of new customers acquired in a set period. |
Pro tip: To get the most value from efficiency metrics, get your finance team onboard. That way, they can understand why things happen the way they do, which makes it easier to ask them for additional budget down the line.
2. Cross-funnel conversion metrics
Under a “traditional” (i.e. non-revenue-based) marketing strategy, marketers often look no further than the number of MQLs they generate.
If lead volumes are up, everything must be good — even if the quality is terrible and none of those leads turn into anything meaningful.
Hint: Don’t do this.
It’s the biggest single cause of disputes between sales and marketing. And, as we’ve already discussed, misaligned sales and marketing teams are distinctly bad for business.
Targeting your marketing team on MQL volume encourages the view that more leads = good, fewer leads = bad.
Invariably, this means you end up with a huge database of low-quality leads for your sales reps to wade through, with each terrible lead bringing them one step closer to a career change.
Rather than concentrating on MQL volumes, focus on cross-funnel conversion metrics like these:
| Metric | What it measures | How to calculate |
|---|---|---|
| MQLs to meetings booked | The number of meetings booked for every marketing-qualified lead you generate. | Divide the total number of MQLs by booked meetings within a given period. |
| Meetings booked to meetings attended | The number of booked meetings that are actually attended by leads. | Divide the total number of booked meetings by the number of meetings attended. |
| SQOs to closed-won deals | The number of sales-qualified opportunities for every deal you close. | Divide the total number of SQOs by closed-won deals within a given period. |
| Meetings attended to closed-won deals | The number of meetings attended for every closed-won deal. | Divide the total number of meetings attended by closed-won deals within a given period. |
3. Board-level revenue marketing metrics
Marketing budgets climbed to 9.5% of total company revenue in 2022, up from 6.4% in 2021.
So you’d assume marketers must love speaking to the board of directors. Otherwise, why would the board keep forking over all that cash?
In reality, many marketers hate speaking to the board simply because they struggle to demonstrate that their actions deliver real-world results.
Much of this comes down to focusing on the wrong metrics — vanity metrics.
Fact is, boards don’t care about how much engagement you generated on social or how much traffic you drove; they care about revenue.
That’s why you should definitely be telling them about your MRR (monthly recurring revenue), other revenue generated (like one-off contracts), and your CAC (customer acquisition costs).
From a revenue marketing perspective, CAC shouldn’t just be based on how much you spend on marketing. Remember, the name of the game here is to align your sales and marketing operations, so it also needs to take into account the actions of your sales function — from the salaries of your business development representatives to the costs of traveling to meetings. It might also make sense to segment your CAC across your various marketing channels, such as organic vs. paid or inbound vs. outbound.
4. Time-based revenue marketing metrics
“Time is money” might be a cliche, but there’s a lot of truth to it.
If it takes you too long to close deals or generate SQOs, you’re not going to hit your growth goals.
Funnel speed metrics
Funnel speed metrics help you measure how long it takes you to move leads from one funnel stage to the new and acquire new customers.
One key funnel speed metric is average sales cycle length, which we’ve already covered in deal-tracking metrics. But that’s not the full story:
| Metric | What it measures | How to calculate |
|---|---|---|
| Funnel stage velocity | How fast prospects move through each stage of the sales funnel (e.g., from becoming an MQL to being qualified by the sales team). | Break down the various stages of your sales cycle, add up the total number of days for leads to move from one stage to the next, then divide by the number of leads who progressed between those stages during the reporting period. |
| Time to impact | How long it takes from a customer’s first interaction with your brand to the point at which they convert, broken down into different channels or campaigns. | Add the total number of days from a customer’s first interaction with a channel or campaign to the point at which they convert, and divide by the number of closed-won deals in a given period from that channel or campaign. |
Time-to-payback metrics
It’s not just about how fast you close a deal; it’s also about how long it takes to start making money from the new customers you acquire.
Take too long to generate a return, and you’ll struggle to turn a profit, especially if you also have customer retention issues.
It also suggests you’re spending too much on sales and marketing, or that your pricing is too low for the complexity of your product or the length of your sales cycle.
Of course, you’ll only know that you’ve got a problem if you’re tracking the right metrics, such as:
| Metric | What it measures | How to calculate |
|---|---|---|
| Time to ROI | How long it takes for a given sales and marketing campaign to deliver a positive return on investment. | Add up the campaign’s total sales and marketing spend, and measure it against the time taken for revenue from new customers to surpass that level of spend. |
5. Cohort-based metrics
Cohort-based conversion metrics are effectively a kind of time-based metric, but they add a whole extra layer of insight, so they deserve to be discussed separately.
This type of metric is all about giving you a more accurate view of your sales funnel conversion rate.
That’s important because sales cycles are long. CSO Insights found that three-quarters of B2B sales teams take more than four months to close an average deal, with almost one in five taking 12+ months to sign up a new customer.
All of this means you can’t get a clear picture of your conversion rate without looking at how different cohorts convert. This approach, often called cohort marketing, is essential for understanding user behavior and improving conversion strategies. For deeper insights, you can explore how advanced cohort analysis works .
Your latest campaign might bring a ton of top-of-the-funnel MQLs, but it could take months until they’re even ready to start a conversation with your sales team.
Okay, so let’s say it takes you three months on average for a sales-qualified opportunity to translate to a closed-won deal. With that knowledge, you can run a cohort-based analysis by:
- Grouping together all the SQOs you generated three months ago.
- Calculating how many of those opportunities have converted so far.
- Dividing the number of closed-won deals by the number of SQOs in your cohort.
Just like that, you’ve got a more meaningful measure of your conversion rate.
Run cohort-based analysis over time to assess performance for different campaigns and audiences.
6. Audience-based metrics
Chances are you have more than one audience.
Take Encharge. Sure, we have one product, but it’s equally useful for SaaS brands, agencies, content creators, subscription businesses, and productized businesses.
Hopefully, you’re already targeting different audiences with different campaigns.
After all, 90% of leading marketers say personalization significantly contributes to business profitability.
Pro tip: With Encharge, you can create user segments by leveraging live data from your website, app, and marketing tech stack. Try segmenting users based on their behavior within your product, such as when they sign up for a free trial, activate a feature, or show signs of churning.
But wouldn’t it be good to understand how much revenue you generate from each audience segment?
Or which audience converts fastest, costs the least to acquire, or has the highest lifetime value?
And if you’re planning to enter new markets or target new verticals, wouldn’t it also be good to understand how those new customer segments measure up against your existing audiences?
That’s why you should be tracking the various revenue marketing metrics we’ve already discussed in this article for each audience segment you target.
Want to learn more about marketing metrics?
- 18 Sales and Marketing Analytics You Should Consider Tracking
- 8 Revenue Operations Metrics You Should Start Tracking
- 11 Email Marketing Metrics You Must Track In 2022
- How to Measure the Success of Your Email Campaigns
- 13 Marketing Automation KPIs to Track to Propel Your Business
- Tactics for SaaS Customer Acquisition
Final thoughts
Metrics are the “sexiest” part of the sales and marketing equation.
Closing deals and launching campaigns gets people excited, but not many of us feel the same about measuring sales efficiency or customer acquisition cost.
But unsexy doesn’t mean unimportant.
If you’re not tracking the metrics in this article, your revenue marketing strategy just isn’t going to work, which means you won’t enjoy the wide-ranging benefits of a harmonious relationship between your sales and marketing functions.
