17th January 2024 •
As the pressure to do more with less becomes greater, marketers have an opportunity to refine their strategy by allocating resources and budget to tactics which are directly linked to revenue. Many B2B businesses are already trending away from performance metrics which might not always correlate with the actual ROI their campaigns produce, and this is driven by a heightened focus on what a strong growth strategy looks like. By embracing contemporary demand generation strategies, businesses can empower their growth plans with a clear focus on how to strengthen and drive revenue.
So-called ‘vanity metrics’ do provide value and tell us much about how engaging our content and messages are. However, it’s also important to recognise the fact that KPIs like downloads, traffic or followers don’t automatically translate into paying customers. So, how does your business build a growth strategy around revenue-orientated metrics to provide a clearer picture of success while also proving the value of what you do?
As a starting point, LTV (Lifetime Value) should become a key measure of success as it enables you to evidence the true value of your campaigns by considering not just the initial sale but also the potential for upsells, cross-sells, and long-term loyalty. Understanding the LTV of your customers is paramount as it allows you to allocate resources more effectively, ensuring that you invest in marketing strategies, channels and content that yield a higher ROI, taking into account how this grows over a longer period of time.
This should be balanced against your CAC (Cost of Acquisition) if you truly wish to understand the relative value of conversions. By tracking CAC alongside LTV, marketers can assess the sustainability and scalability of their marketing efforts. Reducing CAC while maintaining high-quality leads is a sign of a robust demand generation strategy.
The LTV:CAC ratio is the ultimate litmus test for your marketing efforts to determine whether your channel tactics and content are generating a positive return on investment. This is where the true goldmine of demand generation strategy lies, and a healthy benchmark to aim for is typically 3:1 or better. And this is what B2B marketers should optimise.
Shifting to measurables like LTV and CAC still isn’t enough to guarantee success. It’s essential to go one step further and link these revenue-oriented metrics with the specific strategies, campaigns, and content you are running. This will provide invaluable insights into what is working and what needs adjustment. Then, by connecting the dots between successful tactics and tangible outcomes on revenue, you can refine your strategy for maximum ROI.
More than ever before, B2B marketing demands a focus on revenue-driven strategies. Avoiding an over-reliance on vanity metrics while prioritising ROI measures like LTV and CAC is the first step on the path to more profitable demand generation. Linking these metrics directly to your campaigns and even the individual ads that you are running will enable you to truly understand where ROI is coming from and optimise towards that.
2024 is likely to be a tough year for marketing budgets, but by investing in strategies that are true drivers of ROI, your marketing teams can truly show the value they bring to the bottom line and therefore the growth of the business.
And if you’d like to see how Torpedo can help out, just get in touch below.