A strong relationship between sales and marketing teams is crucial for success in today’s business world. Traditionally, these departments have often operated in silos, with sales blaming marketing for low-quality leads and marketing blaming sales for failing to close deals. This disconnect can be detrimental to a company’s bottom line.
Enter marketing metrics, a set of key performance indicators (KPIs) that measure how effectively your sales and marketing teams work together. By tracking these metrics, you can identify areas for improvement and foster a more collaborative environment.
Why Alignment Matters
A whopping 90% of sales and marketing professionals agree that aligned initiatives and messaging positively impact customer experience. Sales and marketing alignment is when both departments work together, unifying strategies and integrating processes to achieve shared goals. Companies that achieve this alignment experience significant benefits, including:
- Higher revenue growth
- Increased win rates
- Improved customer retention
The 7 Smarketing Metrics You Should Track
Here are seven critical smarketing metrics to monitor and analyze to assess your sales and marketing alignment:
- Cost per Lead (CPL): This metric reveals the average cost of generating a new sales lead. It helps you gauge the effectiveness of individual marketing campaigns in terms of cost-efficiency.
For example, knowing how many people open your emails, click on your links, and convert them into leads gives valuable data on your email marketing efforts. However, CPL goes further by telling you if the campaign was profitable, regardless of the number of leads generated.
Aligned sales and marketing teams will have a lower CPL because they work together to evaluate campaign profitability, set realistic sales goals, and adjust advertising budgets as needed.
- Marketing-Qualified Leads (MQLs): An MQL is a potential customer who has shown buying interest through specific actions, such as signing up for a product demo, attending a webinar, or downloading an e-book. The sales team then passes these leads on for further nurturing.
A low MQL rate can indicate miscommunication between sales and marketing. When misaligned, sales reps save time on leads with low buying potential. Improving communication, refining sales criteria, and streamlining the handoff process between departments can significantly improve the quantity and quality of leads.
To maximize the effectiveness of MQLs, both teams must agree on what constitutes a high-quality lead. This definition should include specific buying intent actions and the customer’s characteristics.
- Sales-Qualified Leads (SQLs): An SQL is an MQL that has demonstrated a strong desire to purchase. They have all the necessary information, including resources and executive buy-in, and are ready to talk to a salesperson.
Tracking how leads move through the sales pipeline, from MQL to SQL, provides valuable insights for both teams. They can analyze where and why leads drop out of the funnel and then make targeted improvements.
A slow flow of SQLs could indicate a leak in your sales funnel. It’s important to remember that it’s a marketing and sales funnel, not just a sales funnel. Every stage, from initial awareness to purchase, needs to be aligned. Simply handing off an MQL isn’t enough; marketing needs to ensure each lead continues their journey toward becoming a customer.
If you find a drop-off in SQLs, sales and marketing should review the data and work together to optimize the funnel at every stage.
- Customer Retention Rate: In today’s competitive market, more than a great product or service is needed to guarantee customer loyalty. Studies show that many B2B buyers switch brands for reasons unrelated to product quality.
While a poor customer retention rate is often blamed on the sales team, it could also indicate misalignment between sales and marketing. Your retention rate is an excellent indicator of lead quality. Assessing this metric helps you identify where you’re losing customers so you can collaborate on improvements.
Both teams must understand the channels, campaigns, and customer profiles that contribute to high retention. They should also create streamlined, consistent experiences for customers who meet the criteria for high retention potential.
To achieve this, both teams must work from the same set of data, a “single source of truth.” This is similar to how software development teams use GitOps, HR and finance teams use HR accounting software, and sales and marketing teams use a unified CRM (Customer Relationship Management) system.
A unified CRM provides both teams access to the same rich, real-time customer data. This enables them to deliver consistent, personalized communications that drive customer loyalty. Additionally, a well-designed client portal can enhance the customer experience by offering self-service options and direct communication channels.
- Customer Acquisition Cost: This metric represents the total cost of acquiring a new customer. It’s calculated by adding your marketing and sales expenses and dividing the total by the number of new customers acquired.
A high CAC suggests that sales and marketing priorities must be better aligned. To reduce CAC, both teams must work together to identify and streamline customer journey touchpoints throughout the sales funnel.
- Revenue/Marketing-Revenue Attribution: Measuring your total revenue is a vital KPI that offers a high-level view of your company’s overall health and success. While revenue is often seen as a direct result of sales efforts, measuring marketing-generated revenue provides explicitly a clearer picture of the revenue generated from each marketing channel.
This lets you identify the most impactful marketing campaigns, channels, and activities that generate revenue directly. With this knowledge, you can make more focused and impactful decisions in the future.
The modern customer journey is no longer linear; every stage has multiple touchpoints and channels. You can pinpoint the channels your leads engage with by identifying marketing-revenue attribution.
It’s important to remember that a low return on investment (ROI) doesn’t necessarily indicate misalignment. However, it does present an opportunity to improve the performance of both teams throughout the entire sales and marketing funnel, from initial awareness to conversion.
Use this metric to track how each element of the marketing strategy affects sales and collaborate on mapping out the sales cycle. By identifying and communicating which channels lead to the most new customers, both teams will better understand how their efforts are connected.
32% of sales professionals agree that increased revenue is the most significant benefit of achieving sales and marketing alignment.
- Opportunity-to-Win Ratio: This metric tells you how many qualified leads your sales team successfully converts into closed deals.
By analyzing this KPI, you can identify sales reps who excel at initiating opportunities with leads but struggle with closing deals (or vice versa). Optimizing your sales team involves putting the right people in the right roles while providing them with training to address any skill gaps.
A high opportunity-to-win ratio is an excellent indicator of strong alignment between sales and marketing. By measuring this metric, you can ensure your marketing team consistently generates high-quality leads that smoothly progress down the funnel for your sales team to convert and retain.
Conclusion
The more aligned your sales and marketing teams are, the more effectively you can channel your resources toward achieving your overall business goals. Tracking marketing metrics can illuminate gaps in alignment and unlock opportunities for significant business growth. You can create a more cohesive and successful organization by fostering open communication and collaboration between these two crucial departments.
