There are a few significant differences in the way marketers approach B2B and B2C customers. With B2B, customers primarily belong to highly niche target groups like ball bearing suppliers or yarn producers. The sales cycle in this case can be pretty lengthy and the time it takes to go from initial outreach to closing the deal can be as long as a year. B2B customers have other defining characteristics too marked by extraordinarily high lifetime value and loyalty. Customers in this segment seldom resort to penny pinching and thus stick to their vendors for longer periods.
Tracking your success with B2B marketing needs to be a two-pronged strategy. First, you identify the metrics that move the needle and once you have identified the right metrics, you would also need to benchmark this metric against the competition. A 70 percent retention rate would seem excellent until you realize that other businesses in your segment enjoy much higher retention.
Let’s take a look at the two steps in more detail.
Breaking Down Your Sales & Marketing Cycle
At a holistic level, revenue and profits are the sole indicators of performance. But this cannot be used to track the success of each of your marketing strategies. Consider social media marketing for instance. B2B businesses seldom make sales over Facebook or Twitter. But by being present on social media, businesses are in a position to build their brand that in turn may contribute towards sale at a later stage. S
o if you had to look at social media marketing solely from a revenue perspective, it may reflect quite poorly. The first step towards identifying the right KPIs is thus to break down your sales and marketing cycle into individual components.
Identify The Objective At Each Stage
The next step is to identify the business objective at each stage of your marketing operation. It is best to start from the final stage of your business and work backwards to the initial stages of the sales and marketing cycle. The idea is to also use the opportunity to streamline your marketing operation. If any component in your marketing cycle does not contribute towards the next component, it probably is fluff and may be done away with.
So what does a business objective look like? For the final stage of the cycle, the objective most definitely is closing the deal and securing a payment. For the earlier stages of your cycle, the objectives may vary. With SEO, it may be to rank on top for your money keywords, while for your cold calling campaign, it may be to secure as many appointments as possible.
What Moves The Needle
Now that your business objectives with each stage of your marketing cycle are clear, the next step is to identify the parameters that move the needle towards these objectives. Ideally, you should have two definitive KPIs for every component – the first KPI must measure the growth in your revenues or profit while the second KPI must measure the drop in your expenses. For instance, if you are tracking the online customer acquisition stage of a B2B ecommerce company, the first KPI must track the website’s search ranking position (since it directly impacts the revenues of the business) while the second KPI
For instance, if you are tracking the online customer acquisition stage of a B2B ecommerce company, the first KPI must track the website’s search ranking position (since it directly impacts the revenues of the business) while the second KPI must measure customer retention or churn. This is because these metrics can bring down customer acquisition costs and thereby minimize expenses.
Measure & Repeat
Sometimes, what appears to be the perfect KPI to measure performance may not in fact be the best indicator of performance. So the last step in identifying the right KPI to use is to track these KPIs and corroborate its movement with actual performance. For instance, you may have identified Facebook followers as a reliable KPI to measure your social media marketing efforts.
But if a rise or fall in follower count does not directly impact your business objective at this stage (say, brand visibility), then it is time to drop this KPI and pick an alternate metric to measure.
But if a rise or fall in follower count does not directly impact your business objective at this stage (say, brand visibility), then it is time to drop this KPI and pick an alternate metric to measure.