Best 12 Demand Generation Metrics & KPIs in 2024

Demand generation is an important business operation that keeps the business running and profitable. It’s tough but necessary.

There are numerous ways you can do demand generation and uncountable metrics related to the process you can track. There’s a high chance that the sheer number of demand generation metrics and KPIs might overwhelm you.

In this article, I will tell you the best demand generation metrics and KPIs you must be tracking, why it’s important to track these, and how you track them.

TL;DR

You must measure demand generation metrics and KPIs as they will tell you how effective your marketing and sales efforts are.
Analyze all the factors listed below. Every business is different, so the factors listed below might or might not be valid for your business. Ultimately, choose metrics and KPIs that affect your business the most.

Factors to Consider When Choosing Demand Generation Metrics that You Must Track

1. Metrics’ Alignment with Business Goal

When shortlisting a metric for demand generation, double-check that it directly supports your company’s BIG goal. This big goal could be:

Increasing revenue
Improving customer retention
Doubling top-line revenue, etc.

Align metrics with specific marketing objectives, such as lead generation, customer segmentation, content performance, and more.

2. Relevance to the Sales Funnel

Choose metrics that correspond to different stages of the buyer’s journey – awareness, consideration, decision, and loyalty. The metrics you choose must be able to track how efficiently each customer moves down the funnel.

3. Data Availability and Quality

When shortlisting demand generation metrics and KPIs to track, data availability and quality are crucial factors that significantly influence the effectiveness of measurement and analysis.

This factor ensures that the metrics you choose to track are accessible, reliable, accurate, and timely.

4. Actionability

Select metrics that give you clear insights into performance and can tell you ways to improve a certain marketing or sales campaign to get your numbers up. Focus on KPIs that, when improved, will have a significant impact on business performance.

5. Timeframe Considerations

Have a balance between the type of metrics you track – short-term and long-term. Determine how often each metric should be reviewed based on its relevance and the pace of your campaigns.

What are the Best Demand Generation Metrics?

This section consists of the best demand generation metrics that a company must track and calculate. This is a ranked list, meaning that the first metric is the most important, and the last is the least important.

Marketing Qualified Leads (MQLs)
Sales Qualified Leads (SQLs)
Cost per Acquisition (CPA)
Customer Lifetime Value (CLV)
Return on Investment (ROI)
Marketing Sourced Pipeline
Signups and Activations
Close Rate per Channel
Average Deal Size
Contribution to Total Revenue
Marketing Cycle Length
Content Performance and Engagement

Let’s now discuss each metric in detail—what it is, why it is important to track it, and how to do so.

1. Marketing Qualified Leads (MQLs)

A marketing-qualified lead is a prospect who has engaged with your company’s marketing efforts at a certain level, which indicates he/she might be interested in buying your product.

Remember, they aren’t someone ready to buy from you immediately. It will take some nurturing for you to convert them into customers.

Tracking this metric isn’t as easy as it sounds. None of your prospects would tell you they’re MQLs; you have to track certain metrics to know which prospects stand out as MQLs.

Start by tracking data points like:

Content downloads from your website (blogs, e-books, reports, etc.)
Subscribers to your newsletter.
Repeat visitors to your website.
Time spent on the website.

Why Track MQLs?

By tracking MQLs, you can optimize your demand generation strategy. Here’s how:

When you focus on leads that have more probability to convert (MQLs), you allocate your sales and marketing resources efficiently.
There’s a better chance of an MQL moving down your sales funnel than a cold prospect.

To calculate MQLs, you need a proper lead-scoring system in place. This system will evaluate and rank leads based on their interactions and attributes.

2. Sales Qualified Leads (SQLs)

SQL is a prospective customer that your sales team has qualified to receive sales materials and buy your product. Unlike MQLs, SQLs exhibit behaviors that indicate a strong likelihood of becoming your paid customers.

Their qualification involves meeting specific benchmarks related to budget, authority, need, and timeline (aka - BANT criteria).

Just like MQLs, you track SQLs by tacking important factors related to your website, like:

Repeated visits to your pricing page.
Booking a demo.
Signing up for a free trial or free version of the product.
Have items in their checkout cart.

Why Track SQLs?

Tracking SQLs can help you optimize your sales process and maximize revenue. Here’s how

Identifying SQLs will help you increase your conversion rates as they have a better chance of becoming your customers.
SQLs are high-quality leads; when you focus on converting them, you have a chance to maximize company revenue.

Like MQLs, to know if a lead is SQL, you must assess all potential leads against predefined criteria.

3. Cost per Acquisition (CPA)

In simple terms, cost per acquisition means the money you are paying to acquire a customer. It considers the cost of a campaign divided by the number of conversions it generates.

Why Track CPA?

CPA helps allocate marketing budgets more effectively by identifying which campaigns yield the most cost-effective results.
It acts as a benchmark for evaluating the success of different marketing campaigns.

Here’s a formula to calculate CPA:

Total marketing spend: Includes all costs associated with the marketing campaign – advertising expenses, content creation costs, agency fees, etc.

Number of acquisitions: Total number of conversions from your marketing efforts.

👀 Note: A conversion could be a sale, a lead, a subscription, or any predefined action that signifies acquisition.

4. Customer Lifetime Value (CLTV)

Customer lifetime value is a predictive metric from which you can estimate the total revenue your business might get from a single customer during your relationship with them.

It is important for any business to have an increasing CLTV throughout its life. This can only be done by retaining existing customers and making them loyal to your product.

Why Track CLTV?

Measuring CLTV allows you to analyze how much you can spend on acquiring new customers (CAC) while remaining profitable.
By identifying customers with higher CLTVs, you can focus retention efforts on your most valuable customers.

Here’s how to calculate CLTV:

Let’s look at an example to understand it better:

Suppose your business has the following data:

Total revenue over a period = $100,000
Number of purchases = 2,000
Number of unique customers = 500
Average customer lifespan = 3 years

Step 1. Calculate Average Purchase Value (APV)

APV = $100,000 / 2,000

= $50

Step 2. Calculate Average Purchase Frequency (APF)

APF = 2,000 / 500 = 4

Step 3. Calculate Customer Value (CV)

CV = $50 X 4 = $200

Step 4. Calculate CLTV

CLTV = $200 X 3 = $600

5. Return on Investment (ROI)

Return on investment is a financial metric that measures the profitability of any investment relative to its cost.

In relation to demand generation, ROI measures the efficiency of your marketing campaigns by comparing the revenue generated against marketing-related expenses.

Why Track ROI?

ROI offers a tangible measure of how effectively your marketing efforts convert into revenue. By calculating ROI, you can determine which marketing campaigns deliver the best returns.
When you know the ROI of every campaign you run, you can make quick and accurate data-driven decisions.

To calculate ROI, use this basic formula:

Where:

Net profit is the total revenue generated from your marketing campaigns ‘minus’ the total costs.

Cost of investment is the money spent on running these marketing campaigns

So, if you spend $10,000 on a LinkedIn ad campaign that generates $30,000 in sales, your ROI would be:

[(30,000 - 10,000)/10,000] X 100%

= 2 X 100% = 200%

6. Marketing Sourced Pipeline (MSP)

Tracking your marketing-sourced pipeline gives you the number of overall leads generated from all your marketing efforts.

For any business, it's important to know the impact of their marketing efforts on sales, right? MSP does just that.

It lets you know if your marketing efforts are a success or going in vain.

The metric counts every deal where marketing can be credited as the primary source of conversion—leads generated via content marketing, webinars, paid ads, email campaigns, events, etc.

Why Track MSP?

MSP gives you a tangible measure of how marketing efforts contribute to your company’s revenue goals.

To calculate MSP, identify and add up the total value of all sales opportunities that originated from marketing efforts within a specific time period.

7. Signups and Activations

Signups and activations measure the total number of people creating an account on your website to try your product for free or pay a fee for a monthly or yearly subscription.

Both these metrics signify a customer’s basic level of interest in your product, meaning that users are willing to invest some of their time and money to explore it.

Why Track Signups and Activations?

When you know the monthly or quarterly signups to your website or product, you can measure the success of your marketing efforts in attracting new customers.
Measuring activations gives you insights into how well the new users are engaging with your product after signing up.

Here’s how you measure signups and activations:

Signups

Activations

Start by defining what activation means for your business (subscribing to your newsletter, signing up for a free trial, downloading content, etc.). Once defined, you can calculate it:

Bonus

8. Close Rate per Channel

The close rate helps you measure the effectiveness of every sales and marketing channel. It measures the percentage of leads from a specific channel that are converted into customers.

Why Track Close Rate per Channel?

Measuring the close rate for each channel will help you identify your ‘hero channel’ to convert prospects into buyers.

Suppose you generate your leads via two marketing channels – LinkedIn and email marketing. By measuring the close rate for each of these channels, you can know which one converts better.

Here’s a formula you can use to calculate close rate per channel:

If you get 200 leads from LinkedIn in a month, 50 of those get converted into customers, your close rate is:

[50 / 200] X 100 = 25%

This means that 25% of the leads coming in from LinkedIn convert into customers.

9. Average Deal Size

The average deal size tells you about the revenue generated from a single customer transaction. The metric gives you valuable insights into the effectiveness of your sales strategies and the overall health of your revenue streams.

Why Track Average Deal Size?

Tracking average deal size helps you predict future income as it establishes a baseline for expected revenue per deal.
Knowing the average deal size for different customer segments helps your sales team focus on sales that will increase the deal size month over month.

👀 Note: When tracking average deal size, remember that you might have different average deal sizes for various product lines or customer segments. For example, you might have a lower average deal size for a basic paid plan of your tool and a higher one for an enterprise-grade plan with all the features.

Formula to calculate average deal size:

10. Contribution to Total Revenue

Contribution to total revenue is a metric that you must measure when you have taken care of all other demand generation metrics from this list.

The metric gives you a perspective into the bigger picture of what percentage of business an individual channel brings in.

This individual channel is a specific source that gets you customers—a marketing channel, product line, or customer segment.

Why Track Contribution to Total Revenue?

Tracking contribution to total revenue helps you understand which specific sector or channel brings in the most and least revenue for your company.

Calculating this metric involves identifying the revenue generated from a specific channel and expressing it as a percentage of the total company revenue.

For example, if I want to find out the contribution of a certain marketing channel, the formula would be:

11. Marketing Cycle Length

The marketing (or sales) cycle length is the average amount of time you take to move a prospect down your sales funnel and convert them into a buyer. This metric tracks the entire duration of a customer’s marketing journey.

One way a marketing journey could flow is this:

The first interaction with your website

⬇️

Checking out the pricing page

⬇️

Adding the product to their cart or filling in the signup form for a free plan

⬇️

Upgrading the free plan to a paid plan

Why Track Marketing Cycle Length?

Knowing how long it typically takes to convert a lead into a customer allows you to forecast sales and allocate resources accordingly.
Knowing the time it takes for lead conversion gives you insights into buyer behavior, which can, in turn, help you make important business decisions.

Here’s a formula you can use to calculate marketing cycle length:

12. Content Performance and Engagement

Let’s face it; it's a rare chance your business might only be using one form of content to bring in all the conversions you get.

No matter the type of content you use – video, blogs, illustrations, case studies, etc.- there are quantitative ways to measure its success, depending on how you distribute it.

For example, if you want to track how your social media content is doing, you can easily track the impressions, likes, shares, comments, and more to know the performance of your posts.

Several email marketing tools can help you analyze your email copy and subject line, giving you a sneak peek into your email content's performance.

Similarly, for every type of content you use online, find a SaaS tool that quantitatively measures content performance and engagement.

Why Track Content Performance and Engagement?

It provides valuable feedback on what types of content your audience engages with, allowing you to tailor future content to their preferences and needs.
Engaging content is more likely to capture attention and encourage prospects to enter your marketing funnel. Knowing what content keeps your audience hooked will increase lead-generation opportunities.

To calculate content performance and engagement, track some key metrics like:

Page views and unique visitors: Total number of times a page is viewed and the number of unique individuals.
Average time on page: The average time users spend on a specific page of your website.
Bounce rate: Percentage of users who leave your website after viewing only one page.

And more.

Create More Demand with Warmly

Tracking and analyzing all demand generation metrics manually is not easy.

If you are an extremely small business that tracks only a couple of metrics, you can do it manually. But, when you have multiple demand generation channels with several metrics and KPIs to track and analyze, you need a tool like Warmly.

Warmly is a revenue orchestration platform that identifies website visitors, detects their buying intent across channels, and helps convert them via automated, semi-automated, and human-operated functionalities.

Or book a live demo to see it in action first.