Customer Lifecycle Metrics, Part 4: Convert, and Create a Customer


This is part four in a series of five blog posts that examines the metrics you should measure throughout the five stages of the customer lifecycle: attractcapturenurture, convert, and expand. 

Conversion – now that’s where the action happens. By this stage in the customer lifecycle, you’ve gathered up your prospects and nurtured them along the journey. They’ve become better educated and informed about your products and/or services, and your sales team is having more relevant conversations with them. Everything is going smoothly, and the lead pipeline is pumping out sales qualified leads – the kind of prospects that are ready to buy. Isn’t that the only metric that matters? Not quite. In part four of this series on customer lifecycle metrics, we’ll focus on the metrics that measure how well you’re converting leads into customers and creating new revenue.

The conversion stage can be a precarious part of the marketing lifecycle. It’s usually during this stage that the lead is handed from marketing, where it has been nurtured, to sales, where the nurturing continues and the deal is closed. And that handoff is a challenge for many organizations.

In a 2013 survey, Forrester Research asked B2B marketing execs about the quality of collaboration between sales and marketing, and 57% reported weak or mixed collaboration with sales when “defining lead qualification criteria” and “administering leads and lead pipelines.”

It’s not surprising to discover that marketing and sales continue to struggle with alignment. According to the new report from Gleanster and Act-On, sales alignment remains an issue. In fact, the survey found that 90% of B2B marketers surveyed indicated that marketing alignment with sales was a top challenge – one that was causing them to struggle to achieve their marketing objectives. This lack of alignment creates inefficiency and results in fragmented communications with customers.

On the other hand, the benefits of alignment can be significant. SiriusDecisions found that B2B organizations with tightly aligned sales and marketing operations achieved 24% faster three- year revenue growth, as well as 27% faster three-year profit growth.

Achieving Sales and Marketing Alignment

Clearly, in order to make sure you’re getting the best possible conversion rate from your leads, getting marketing and sales on the same page is critical. How do you make it happen? The first thing to remember is that it’s a process, not a project. It’s a series of phases, and each one (hopefully) gets you closer to the goal.

The following steps for getting these two teams in synch (as outlined in this Act-On eBook on sales and marketing alignment) sound simple, but they can drive significant changes in the way your organization operates.

  1. Get Your Buyer Profiles on the Same Page
  2. Develop an Integrated Messaging Strategy
  3. Agree on Common Metrics and Definitions
  4. Establish Service Level Agreements (SLAs)
  5. Create a Clear Process for Handling Off Leads
  6. Create a Shared Pipeline
  7. Follow Up, Review and Refine Your Efforts

Read the eBook to get details on achieving each step. With an emphasis on shared performance metrics and SLAs, your sales and marketing teams will have plenty of feedback on their efforts – and a lot of motivation to build upon their progress. If you need help setting up an SLA between your sales and marketing teams, this blog post has more information – as well as a downloadable template that can help you get started.

Conversion Metrics

During the conversion stage of the customer lifecycle, your focus is squarely on turning prospects into high-value customers. Questions to ask at this stage include: Which lead sources and campaigns are most effective in generating customers? How quickly are leads converting? How many sales qualified leads and opportunities are being generated? How many new customers are you creating? And how much revenue is resulting from these new customers? Here are the metrics you can use to measure the results of your efforts.

  • Number of sales qualified leads (SQLs): This is the number of leads that sales consider worthy of active pursuit based on several factors.
  • Number of new customers. Look also at the value of each customer.
  • Cost per SQL: The cost of creating a SQL, including the marketing program costs.
  • Cost per new customer: Sales and marketing expense in the period, divided by new customers acquired in the period.
  • Campaign and channel ROI: ROI can be calculated as one-year sale value (bookings) vs. marketing program costs. Here you might look at total costs and review ROI per channel and/or source.

Once you have this metrics and reporting in place, you can gain a clear understanding of which channels and campaigns are driving the best conversion results – and you can adjust your marketing and sales efforts accordingly. What other metrics do you track in order to measure conversions? Share your thoughts in the comments.