One of the characteristics of goal setting is that it must be measurable. As a business owner, you must familiarize your sales team with the various demand generation KPIs. This will help rate the performance of demand generation and the generated revenue.
Before introducing you to great KPIs that will aid your demand generation success measurement, you must understand what demand generation is and how it differs from lead generation.
What Is Demand Generation?
Demand generation, or demand gen for short, plays a vital role in your business. It is a means of introducing your product or company to people who need to learn that your product solves a problem they are having.
In marketing terms, demand generation is building brand visibility or awareness. It is positioning your product as the only solution to the problem of your target audience. You also have to support your claims with quality information that will aid your target audience in believing in your product.
What Is the Difference Between Demand Generation and Lead Generation?
Often, people use these terms interchangeably, but they are different.
Demand generation attracts the attention of your target audience to their needs that your product can solve. In contrast, lead generation focuses on generating leads from the audience for further personalized marketing using gated content.
If you have been using this strategy but need to learn how to measure its success, read on to get introduced to good ways of measuring demand generation.
1. Engagement metrics
This is the easiest way to know how far your demand generation has gone. It entails monitoring how your audience reacts, relates, or interacts with your demand generation activities.
Suppose your demand generation method is content marketing such as blog articles or video content. In that case, you can measure the success via the number of people that viewed the post and the number of people that commented or reacted positively. The number of shares and where your target audience entered your page can give insight.
When strategizing for demand generation, revenue generation should be the ultimate goal. Keep an eye on sales and revenue generation rates to measure your demand generation success rate based on channel.
If you use written or video content as a demand gen strategy, it will educate your audience. It will also arouse the desire to buy your product to solve their problem.
3. Brand recognition
One of the demand generation KPIs is brand recognition. It’s a simple demand generation metric alongside media mentions. This is what demand generation does: it creates brand awareness and educates your target audience. If your content is persuasive enough, these people become paying customers who will spread the news about your product.
4. Customer Acquisition Cost
The goal isn’t just to generate more clicks. As earlier said, the ultimate goal is revenue generation. Hence, clicks need to convert to revenue because demand generation often requires a large budget.
Customer Acquisition Cost (CAC) is another vital tool for measuring demand generation. It helps you, as the business owner, calculate the amount of money it will take you to get a paying customer before going all in.
Calculating the cost per acquisition isn’t tricky. It divides the money spent on acquiring customers by the number of customers acquired.
5. Customer Lifetime Value
Customer Lifetime Value (CLV) is a demand generation KPI. It will help you to calculate the amount of money a customer will bring into your business throughout their lifetime.
To calculate Customer Lifetime Value, you must first note or be aware of the average purchase, number of purchases, and average profit margins. This will help you to determine an average yearly margin for each customer. When you derive the annual profit margin, you can use your customer retention rate to calculate the Customer Lifetime Value.
6. Cost Per Lead
Cost Per Lead (CPL) helps calculate the cost of acquiring a lead but not a paying customer, as in the CPA case. To calculate CPL, divide the cost of the campaign by the number of generated leads.
7. Sales Pipeline Value
Sales Pipeline Value is the number of leads that might convert within a specific period.
To calculate sales pipeline value, multiply your sales team win rate by the total number of generated leads in your pipeline. The result is then multiplied by the average deal size and divided by your current sales cycle.
Sales Pipeline Value help in demand generation success measurement. You can measure the campaign’s success by determining its contribution level to your success team.
8. Number of Opportunities Generated
This is one of the easiest ways of measuring the success of your demand generation. To know the number of generated opportunities, track the number of readers or viewers that converts to leads and then pay attention to the number of these leads that are turning into prospects.
These opportunities are the ones that you can pitch to convert them from prospects into paying customers.
Conclusion – Is Demand Generation Worth It?
The benefit of demand generation cannot be over-emphasized. It gives your marketing team a direction and helps your business increase its customer base. Demand generation also helps increase your brand visibility and maintain your existing customers.
These tips will help you track your success as a beginner. It will also help you reduce the amount of money spent on demand generation as well as help increase revenue generation.