10 Demand Generation Metrics to Track For SaaS Business

Most businesses, whether they are startups or not, are always looking for new and innovative ways to increase revenue and grow their customer base. 

And as a SaaS business, demand generation should be one of your top priorities. But how do you know if your demand generation efforts are effective? By tracking the right metrics, of course! 

In this article, we’ll look at 10 of the most important demand generation metrics you should be tracking for your SaaS business. But before that, let’s quickly understand what demand generation is and why it’s important.

What Is Demand Generation?

Demand generation is the process of creating awareness and interest in your product or service in order to drive sales. It’s important to understand the mechanics of demand generation, and the various metrics involved, so that you can fine-tune your demand generation strategy and see the greatest ROI for your efforts.

Gone are the days when the success of SaaS is measured by the quantity of leads alone. Today, it’s important to measure the quality of leads and their conversion rate. 

Data from Hubspot found 70% of organizations consider converting leads to paying customers as their top priority.

Why a Demand Generation Strategy is Important for Your Business

There are many benefits to implementing a demand generation strategy, which we will outline below.

It helps you establish your brand as an authority

In order to generate more demand for your product or service, you need to create quality content that will educate your target audience about your industry. You can use various digital platforms, such as social media, blogs, and email campaigns, to engage with your target audience and distribute your content. According to the Content Marketing Institute, almost 8 in 10 B2B marketers say email is the most effective distribution channel.

If you partner with other companies that complement your product or service, you will be able to reach a wider audience and generate more leads.

It helps you connect with customers across the customer journey

You can use different platforms to reach customers at different stages of the buyer’s journey. For example, if you use social media to create awareness about your product or service, you can then use email marketing to nurture your leads and move them further down the funnel. 

You can also offer free resources on your website, such as e-books or webinars, to engage with potential customers and build loyalty.

It allows you to evaluate and optimize your lead generation efforts 

You can use automation tools, such as marketing automation software, to streamline your lead evaluation process. By analyzing data from your marketing campaigns, you can identify what strategies are working well and generate more leads in the future.

The Three Key Areas to Measure in a SaaS Demand Generation Funnel

If you want to optimize your SaaS demand generation funnel, there are three key areas you need to measure:

Engagement Metrics

Engagement metrics give you insight into how well your target audience is interacting with your content. These metrics can include website visitors, click-through rate, and time spent on page. Engagement data is important for optimizing campaigns because it helps you understand what content is resonating with your audience and what isn’t.

Performance Metrics

Performance metrics help you evaluate how well your campaigns are performing in terms of generating leads and sales. Examples of performance metrics include marketing qualified leads, sales cycle length, and sales-accepted leads. This type of data is critical for understanding which campaigns are most effective at driving results.

ROI Metrics

ROI metrics provide insight into the return on investment of your marketing efforts. These metrics can include customer lifetime cycle and total revenue. ROI data is essential for validating budget utilization and understanding which campaigns are providing the most value for your money.

10 Key Demand Generation Metrics to Track

Let’s take a look at some key demand generation metrics that every marketer should be tracking:

1. Marketing Qualified Leads (MQLs)

MQLs are leads that have been identified as having potential business value for your company. They are typically generated through marketing activities such as website content downloads, webinars, or free trials.

It’s important to track MQLs because they give you an indication of how well your marketing efforts are performing in terms of generating leads that could eventually become customers.

To define an MQL, you need to establish criteria such as budget, authority, need, and timeline (BANT). This will help you to weed out leads that are not a good match for your product or service.

2. Sales Qualified Leads (SQLs) & Sales Accepted Leads (SALs)

SQLs are leads that have been vetted by sales and determined to be a good fit for your product or service. SALs are leads that have been accepted by sales and moved into the active sales pipeline.

SQLs and SALs differ from MQLs in that they have been more heavily vetted by sales and therefore represent a higher quality lead. As such, they offer a better indication of how well your demand generation strategy is performing.

3. Cost per Lead (CPL)

CPL is a measure of how much it costs your company to acquire each lead. It’s important to track this metric because it allows you to determine the ROI of your demand generation efforts. To calculate CPL, divide the total cost of your marketing campaign by the total number of leads generated.

4. Cost per Acquisition (CAC)

CAC is a metric that measures the cost of acquiring a new customer through marketing and demand generation activities.

To calculate CAC, simply divide your total marketing and sales expenses by the number of new customers acquired over a certain period of time.

For example, let’s say you spent $1,000 on marketing last month and you generated 10 new leads. Your CPA would be $100 ($1,000 / 10).

If your CPA is too high, it means you’re spending too much money to acquire each new lead. To lower your CPA, you can either reduce your marketing costs or increase the number of new leads you generate.

To do the latter, consider refining your target market, running more targeted ad campaigns, and/or producing more thought-leadership content like eBooks or whitepapers.

5. Activations & Signups

Activations refer to the number of people who have started using your product or service. Signups refer to the number of people who have signed up for a free trial or created an account on your website.

Both activations and signups are useful measures of demand generation effectiveness because they indicate whether or not people are actually using what you’re offering.

Additionally, monitoring activations and signups over time can help you to identify any potential problems in the top of the funnel so that you can address them quickly.

6. Customer Lifetime Value (CLV)

CLV is a metric that measures the total value of a customer over the course of their relationship with your company. To calculate CLV, simply take the average revenue generated per customer per year and multiply it by the average number of years a customer remains active with your company.

For example, let’s say the average customer spends $500 per year and remains active for an average of three years. Therefore, the CLV would be $1,500 ($500 x 3).

Tracking CLV is important because it allows you to see how much revenue each customer brings in over time and makes it easier to determine how much you can afford to spend on acquiring new customers.

To increase your CLV, focus on improving customer retention rates through things like providing great customer service or offering loyalty rewards programs.

7. Demand Gen Funnel Progression Conversion Rate

The Demand Gen Funnel Progression Conversion Rate measures the percentage of leads that progress from one stage of the demand generation funnel to the next. To calculate this metric, simply take the number of leads at each stage of the funnel and divide it by the number of leads at the previous stage.

For example, if you have 100 leads at the top of the funnel (TOF), 50 leads at the middle of the funnel (MOF), and 20 leads at the bottom of the funnel (BOF), then your conversion rate would be 50% (50 MOF leads / 100 TOF leads) at each stage of progression.

Monitoring this metric is important because it allows you to see where Lead leakage might be occurring so that you can make adjustments to improve conversions rates and generate more quality leads that eventually turn into customers/clients.

8. Close rate per channel

The close rate per channel measures how effective each marketing channel is in generating customers/clients. To calculate this metric, simply take the number of deals closed via a given channel divided by the total number of deals closed multiplied by 100%.

For example, if 10 out 20 deals were closed via email marketing channels last month then your email marketing close rate would be 50%. Monitoring this metric is important because it allows you to see which channels are most effective in closing deals so that you can focus your efforts on those channels moving forward.

9. Marketing cycle length

The marketing cycle length measures how long it takes from when a lead first becomes interested in your product/service until they make a purchase.

To calculate this metric, simply take the total number of days from first contact until purchase and divide it by the total number of purchases to get the average cycle length in days.

For example, if on average it takes 60 days for someone to research a product before making a purchase and you had 10 purchases total last month then your marketing cycle length would be 6 days (60 divided by 10). 

Monitoring this metric is important because it allows you to see which leads are moving through your funnel effectively and which ones might need some help. You can then focus on shortening your active selling cycles for those leads in order to get them closer to your product/service.

10. Payback Period

The payback period measures how long it takes for a company to recoup the costs associated with launching a new product/service. To calculate this metric, simply take the total cost of launching the product/service and divide it by the average revenue generated per month.

For example, if the total cost of launching a product is $30,000 and the average revenue per month is $3,000 then your payback period would be 10 months (30,000 divided by 3,000).

Monitoring this metric is important because it allows you to see how quickly a new product/service is generating enough revenue to cover its own costs. If the payback period is too long then you may need to make adjustments in order to reduce the costs associated with launching new products or services.

How to Improve Your Demand Generation Performance

There are a multitude of factors to consider, from targeting campaigns in meaningful ways to paid advertising channels to expand your reach.

Targeting Campaigns in Meaningful Ways

One of the most important aspects of demand generation is targeting your campaigns in meaningful ways. This means understanding the focus and goals of each campaign, as well as who your buyer personas are and what metrics you’ll use to qualify leads. 

It’s also important to avoid the mistake made by many demand marketers, which is trying to attract everyone instead of narrowing their focus.

Paid Advertising Channels to Expand Top-of-the-Funnel

Adopting paid advertising channels can help expand your reach and generate more leads. But it’s important to establish parameters prior to adoption, such as what your goals are and what kind of return on investment you’re hoping for. 

You should also review targeting options and select content that is appropriate for each channel.

Multi-Touch Attribution Models for Proper Measurement

Measurement is another essential piece of the puzzle when it comes to demand generation. 

Multi-touch attribution models can be extremely helpful in this regard because they allow you to track touch points throughout the sales funnel and assign revenue credit to each one. 

Multi-touch attribution models are defined as “models that assign credit for a sale or conversion to all the marketing touch points in the customer’s journey.” Examples of which are time-decay and linear models.

Time-decay models assign the most credit to the touchpoint closest to conversion, while linear models assign equal credit to each touchpoint

By establishing multi-touch attribution models, you can accurately measure the impact of your demand generation campaigns and see which channels are working best for you

This helps you understand what’s working and what isn’t so that you can adjust your strategy accordingly

Aligning Sales & Marketing Efforts

Finally, aligning sales & marketing efforts can be done in a number of ways, such as holding regular meetings with both the marketing and sales teams or sending updates to them on a regular basis (depending on organization size/volume). 

By doing so, you can avoid duplication of effort and ensure that everyone is on the same page with regard to objectives and targets.

Final Thoughts

If you’re not tracking demand generation metrics, you may be missing out on opportunities to grow your SaaS business.  This is because the 10 demand generation metrics we’ve outlined above provide a great starting point for understanding which numbers matter most to your business, and they can reveal wins and flaws with regards to your marketing efforts. 

Now, by tracking these 10 key metrics, you can gain valuable insights into how well your demand generation strategy is performing and make necessary adjustments to achieve your growth goals. 

For more tips on growing your SaaS business, be sure to check out our blog.