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The Gold Standard for KPIs in B2B SaaS Marketing

Posted January 26, 2024
Thumbnail with headshot of Zee Jeremic introducing podcast and article entitled The Gold Standard for KPIs in B2B SaaS Marketing

Zee Jeremic, CEO of MASS Engines, joins our host, Camela Thompson, Go-To-Market Thought Leader and B2B Insights Expert, in this episode of the Revenue Marketing Report. Zee and Camela share what they’ve seen work in SaaS companies at different stages and why people use the term “vanity metrics” to describe many marketing metrics.

Let us crack today’s topic, which is the gold standard for KPIs in marketing. I would like you to start with why it’s so hard to define KPIs.

“Everyone wants a shortcut. Everybody wants the definition because we want to get our jobs done. Nobody wants to spend months exploring the nuances and evolving a model. You just want someone to tell you what you should do, and you want to know it’s the right thing to do. When it comes to attribution, it’s important to understand we’re at the dawn of this discipline. And as a result, it is evolving.

“I don’t think there’s any consensus on KPIs, especially once you begin looking at more advanced attribution including multi-touch attribution. There are a number of models that have been proposed, that are being utilized, but there is zero consensus on which one is better than the others. There’s no model that’s better than others because there isn’t enough data, not enough experience. Again, all of this is imperfect. So it goes back to the question: what are you trying to do? Then, one model would probably be a little better than the others. Therefore, it’s the same idea. I think there’s a tendency for everybody wanting a shortcut and a solution to be baked. 

“However, when you’re talking about a rapidly evolving discipline that’s still at the very beginning, even talking about best practices is stretching it a little bit. It just comes down to what have people done that seems to make sense based on what you’ve seen or heard. Start there and evolve it yourself like we’re doing here. Share along the way with others so we can all improve together as a team.”

Yes, I agree. Even within attribution, within those models, which touch points we do or don’t include is completely non-standard and dependent on what the business or people are motivated to see. It’s so hard to define a gold standard, particularly when we consider different budgets and data maturity tend to vary so much. Are there statements we can make?

“I’ve very strong opinions myself on what the KPIs should be. So there was a little bit of what they call a safe harbor statement about the realities of this discipline and where it is going. I have been doing this for a long time. I have a lot of experience and very strong opinions. For me, there are three core KPIs you should be looking at. 

“I would start with revenue attribution. Connect to pipeline at least. But honestly, once you connect to pipeline, you can connect to revenue. ROI is a no-brainer for me. With all the coaching and everything that goes into it. It’s not perfect. There are dragons there, but connect to the ROI. I would say the conversion ratios of your leads as they flow through the funnel. If you look at any organization, once you get to opportunities, conversion ratios are well known because each organization does forecasting based on those conversion ratios of the opportunities. 

“But you can move beyond opportunities like the leads with your sales reps or God-forbid, prospects or suspects on the marketing side. And there are no stages. There’s no reporting. I strongly believe that bringing the discipline of opportunity and measuring opportunity conversions further up the funnel is an essential KPI in measuring the effectiveness of different types of marketing investments and campaigns. Certain marketing campaigns are not about revenue. It’s about moving somebody. It’s one of those early touches to get someone interested. So being able to quantify conversions through the funnel is extremely essential.

“The third one would have to be velocity since as marketers, there are certain things and every marketer who has been doing this for a while knows that one good campaign can make a world of difference. You go back to the draper, the magic era of marketing? No! A good campaign can make a huge impact. Therefore, being able to quantify velocity of the funnel can help us quantify how different campaigns and different marketing investments are helping us to move the leads through the funnel. And obviously, the longer the sales cycle, the more relevant it becomes. If you’ve a sales cycle that is less than three months, that may not be a priority for you. It goes along with what you said: KPIs can differ. We tend to work with companies that have sales cycles longer than six months.”

What I think is important to state is you naturally started with revenue and that’s the thing the business cares about the most. What frustrates me a lot about a lot of board decks I’ve seen and the step I’ve seen marketers take in the boardroom too often, is that they begin with the top of the funnel and move through when everyone cares about why we did or didn’t hit our number and what we’re going to do differently, first and foremost. So the order is brilliant at the minimum. I don’t care what kind of attribution you use. I don’t even care if you don’t use attribution.

At minimum, you need to say, here are the bookings, here’s what we did to impact it and here’s what we’re going to be doing differently to do it even better. I wish more people would internalize that and run with that first: Knowing conversion rates and velocity. However, one thing I would caution, and I’ve fallen into this trap myself as a marketer, is noticing big variations in conversion and velocity and not starting with what you can control and what you can do differently. Saying this is obviously a problem with our sellers. It’s not a good look. Don’t do that.

“I feel like you kind of jumped to the next phase since once you’ve some of this data, then it comes to the critical question; what do you do with it? How do you interpret and how do you put it into action? I feel that your caution makes infinite sense. Start with your team. Start with what you can control and I feel like that’s the right place to begin. And when you’re looking at other teams, look more to share and engage to learn rather than deflect cues and shifts.”

Have a private conversation with that leader alone instead of doing it in front of everybody. Another thing I like about what you said is focusing on these specific metrics. You’re coaching your team to also focus on some really important things. I noticed a huge difference in my team’s behavior when we moved from measuring MQL volume to pipeline, what they optimized for changed and that is magic. That’s really exciting.

“Peter Drucker’s quote says you can’t manage what you can’t measure. So you have to measure. Many marketing teams, at best, measure and therefore, manage the number of leads. What ends up happening is that you’ve the wrong incentive since anyone who fogs a mirror becomes a lead because you’re measuring how many leads you can create. Oftentimes, that results in disappointment and trouble down the funnel since the sales team will start ignoring your leads as they recognize that most of them are junk. They are cold leads. They’re not ready for a conversation that doesn’t help the sales team at all.

“And once you get disengaged with the sales team, even your good leads are going to be deprioritized and that’s a recipe  for death or that’s a strong statement. That is a recipe for challenges moving forward in terms of investing time into generating leads when they aren’t always followed up. I feel like that’s the bane of every marketer: knowing that you work so hard in a campaign and then learning later on, only a third of them were followed up rather than all of them.”

I don’t think you stated that too strongly when you reflect on the average tenure for the CMO. Part of what is at the heart of that is not understanding that a savvy CEO with their eyes on the right thing will care much less about missing an MQL number if you knocked pipeline out of the park. We need to understand what they prioritize. If we can get more efficient and produce more with less, everybody wins. They love that. Therefore, don’t be afraid to boldly state, yeah, we missed this number, but look at how conversion rates are way up! That is a great story, tell it.

“That’s exactly why we would like to focus on conversions because when things are good, it’s always good. The sales team is doing an amazing job. When things are bad, it is always because marketing isn’t doing such a good job, so we’re suffering. Some of these KPIs we are talking about help provide a little more nuance to that conversation and help direct how marketing invests in their budget and in the context of how the message can get socialized around what is the contribution of marketing to the organizational growth and or challenges.”

And you don’t need a complex, multi-touch, attribution model to figure out these things. You could rely on a last touch model and look at what they did immediately before converting into an opportunity and still get a good idea of how effectively sales is executing on the leads. Of course, always focus on what you can control and ensure you understand how your mix or use of channels is impacting that conversion rate since we cannot miss that. 

I do want to touch on what we call vanity metrics because I think some super seed early stage, that is kind of all they can get to. And these vanity metrics are going to be important for different marketing functions over time. However, why do you think people call them vanity metrics, to begin with?

“I will give my unvarnished take on it. They’re vanity metrics since they are not meaningful to the business. They’re meaningful to a specific stakeholder or leader. I also think it’s a bit of a diss. But I would argue it has become a more rightful diss, over time, because they’re many better metrics to measure. So it’s almost like calling them vanity metrics ends up being a diss. We know you are measuring what you can measure or what you’re used to measuring, but they’re vanity metrics since they aren’t really telling me what is really going on in the business or how this is moving the needle forward or they’re giving you a very incomplete picture. Therefore, that is my view about it and I think there’s room for vanity metrics.

“I think what’s important is to recognize they’ve a place, but they cannot be the only thing we’re looking at. What most people would say are vanity metrics, I think in today’s day and age would be like if you’re doing email marketing, it would be email opens or email clicks. If you’re doing ads, it would be impressions or clicks. 

“Again, all of these things are valuable to understand and measure, but they’re only a part of the picture. You have to look at the bigger picture. Email opens are a factor of two things; deliverability and subject lines. More often than not, it’s the subject line that drives the email opens. As long as your deliverability is decent, it’s going to be the subject line. Email clicks are similar. It is the design layout of your email and more importantly, the positioning and your call to action, your CTA.

“So these are indeed very important to measure, but they’re tactical. So what you really want to be looking at and that is why some people call them vanity metrics. When people use these metrics as the only metrics your whole department is reporting on, that’s a vanity metric because it rightfully belongs on level three or four on a reporting hierarchy that your department ought to have.”

Your point is just spot on. We’ve to keep in mind what the board and CEO care most about, which is really can we raise our next round? If you focus your reporting to support that top concern, you’re probably not going to have website information in there.

“Yeah. even when you’re looking at larger companies, it isn’t about raising the next round. It’s about meeting the analyst expectations or even more so, the expectations the company itself has set. Website visits are indeed a vanity metric. They are useful to the webmaster or the folks who are responsible for the website. Nevertheless, when you look at the bigger picture of the business, it’s a vanity metric that you should use to gauge the effectiveness of the corporation to sell the product.”

I think the last point for me on this one is a mistake I see a lot and I would encourage people to avoid. Be sure to consistently report on the same metrics, quarter over quarter and to show a trend, good or bad, because if you just report on your initiative, you look like you’re hiding something whether you’re or you’re not.

“I couldn’t agree more. Over time, what is going to happen is that you can do month to month. Then, you can do quarter to quarter, then you can do year over year comparisons. And now you can start painting a bigger picture around what impact you as a leader is making on the organization since you’re going to have the story to tell around how the different initiatives and performance of your department has contributed and has driven the performance of the organization.”

I love how reporting over time, you’re also building that muscle to identify patterns and anomalies. And you can start to speak to: is this a seasonal trend or is it something special and unique that’s happening because of X, Y and Z?

“That’s why it’s so important that once you’ve enough data, you start doing year over year comparisons. So we are not comparing this quarter to last quarter. We’re comparing this quarter to this quarter last year to the best quarter two years ago. And now, you can really see again taking seasonality and every business has certain types of seasonality in it. You can take that out and you can actually compare apples to apples.  

I just think this is a discipline that’s rapidly evolving and I would encourage everybody to keep an open mind and explore what’s possible and share with everyone else because we’re all learning as we go.”

For more content on B2B marketing trends, listen to the full Revenue Marketing Report episode at the top of the article or anywhere you podcast.