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http://www.goldenspiralmarketing.com Golden Spiral Fri May 10 18:05:31 2019
Read Time: 20 Minutes Strategy Leadership

A Step-by-Step Guide to Building KPIs for B2B Tech Companies

Are your marketing efforts producing the kind of results you need?

Sometimes, companies can put the right tactics in place and desire the best outcomes, but end up flying blind because they haven’t set key performance indicators (KPIs).

You can reach the most aggressive goals if you set KPIs and monitor them weekly (and monthly, quarterly, and annually). KPIs promote higher performance from yourself and your team. And they make project management much more effective.

KPI Basics

When you set a goal, you are clearly defining an objective. A KPI is the numeric value assigned to determine if you are on track for a goal. If you want clear and understandable goals, an accompanying KPI is essential.

For instance, you might set a goal to drive from Nashville to Los Angeles in three days with zero accidents. If you set broad KPIs, they might be, “reach Oklahoma City at the end of day one and Gallup, New Mexico by the end of day two.” Or you might zoom in and document, “drive ten hours a day at an average speed of 72 mph.” The first expression is the big picture. The second can be monitored minute-by-minute. Both are metrics that will help measure whether or not the goal is ultimately accomplished.

A KPI is the ruler by which you measure your progress and you can set multiple KPIs per goal. Setting KPIs for your goals is a matter of asking good questions. Keep asking the questions until you hit clarity and a measurement that works.

Throughout this article, I’m going to break down the process and help you see the questions and logic that go into writing a KPI. Instead of trying to create the entire scorecard for a company, I will drill down and write one KPI as an example. From there, you can repeat the process and extrapolate every single KPI you need to empower your team for greater success. (The questions are at the bottom of the article to make it easy for you to copy.)

For the rest of this article, I will write as if I’m coaching a fictional Chief Marketing Officer, Diane O’Toole of Wehenger Technologies, in setting her first KPI. We will use very round numbers. My questions will be in bold.

Identifying the Primary Goal

Diane began the process frustrated with setting her KPIs for the next fiscal year. She knew that there wasn’t complicated math or difficult logic involved, but she felt overwhelmed with the goal and the work ahead.

She knew the board and investors were expecting much from her this next year. She was worried and was procrastinating breaking down the problem.

Unsurprisingly, her most important goal was revenue. Wehenger Technology needed to produce $20 million in revenue over the next fiscal year. Your most important goal might be brand awareness, customer retention, new employee recruitment, or venture funding. The same process I outline below can work for you; just substitute your key numbers into the process.

Knowing your goal is $20M in revenue, how much work is under contract from existing customers?

$16 million.

How much additional revenue is expected from existing customers?

$2 million.

So that leaves $2 million in new customer revenue, right?


How much new revenue needs to come from leads generated from marketing as opposed to leads generated from sales?

$1 million.

Over a 12-month period, what is the average value of a customer?


That means we need two new customers to reach $1 million in new revenue.

Yes, but that feels almost impossible.

How many new clients signed on in the last year?

Only two. One through our sales process and one through marketing. We need to double our number of new clients from marketing.

New call-to-actionA word about the average value of a customer: Looking at the last 24 months will give you a solid picture, assuming there have been no major changes to your pricing model over that period. Clients don’t always sign contracts in January and revenue isn’t always spread evenly throughout the year. By looking at each client’s average month and year, you can get a picture of how much a new client is worth over a 12-month period. If you don’t have enough historical data, analyze the revenue from clients that best fit your target persona. From there, you can hand the numbers off to your finance department to determine the timing to finalize the targets to account for these nuances.

At this point, we know Wehenger has three branches of revenue generation: new revenue from existing customers, new revenue from new customers generated by sales, and new revenue from new customers generated by marketing. That means the company needs separate goals for each branch.

Because Diane is only accountable for marketing, we walk Diane through how to build KPIs for the marketing branch, however this same process should be repeated by the owners of the other business functions.

Her primary business goal: two new customers generated by marketing activities.

Highlight the Critical Step to Reach the Goal

When setting goals, always work backwards from success. We’ll start with the smallest number and work backwards to the largest. The smallest number is one new client from marketing channels during the last year.

What is the most important conversion tool to close sales? For most B2B tech companies, it is the demo—the tip of the funnel in the sales process. Be very granular in your sales analysis because there are fewer variables. For many of our clients, the sales funnel is demo > proposal > contract > negotiation > signature. The transition step into the sales funnel is the demo. Marketing’s goal is to get that demo scheduled. This secures the transition from marketing qualified lead (MQL) to sales qualified lead (SQL).

Let’s return to Diane at Wehenger.

How many demos from your marketing efforts did you perform last year that resulted in one client?

We provided 10 full demos. Sales attracted several more demos and converted one client from their recruitment process.

Now we have our crux. In order to convert two new customers from marketing, Wehenger will need to provide 20 full demos. How did Wehenger get to ten demos requested through marketing last year? Let’s look at some key metrics.

Research the Right Key Indicators and Statistics

We’ve zoomed in closely on Diane’s business. Let’s pull back and look at some overall numbers.

Let’s get a picture of your internet traffic. How many organic user sessions did you get within the last 12 months?


How many website sessions lasted longer than two minutes?


How much did you spend on display ads and PPC?


How many impressions did you receive?


How many clicks through? Basically, how many paid user sessions?


That means a total of 125,000 user sessions?


How many backlinks now exist to your website?


How many of those backlinks are new during the last year?


How much growth did you experience through social media?

We’re not really doing much through social media.

How many media placements did your PR efforts score?

Four. We want to expand.

Look at your inbound tools. How many landing page sessions were there?


How many downloads were requested?


From how many unique contacts according to your CRM?

8,000, Making an average of three downloads per contact.

How many non-demo form completions were there?


How many net subscribers did you gain for your email list?


All of those numbers produced one customer. In order to figure out how much activity is needed to sign two new customers from marketing, we must understand what Wehenger’s funnel looks like.

Map Indicators and Statistics to Your Funnel

A typical marketing funnel leads to the sales funnel as you see here. You could have a master funnel plus a funnel for each major marketing tactic (e.g., trade shows). Let’s identify these terms and fill in some numbers from our fictional example.

Golden Spiral Inbound Marketing Funnel

Ring 01 represents interest and awareness

This is a picture of overall traffic that’s getting to your actual site. This includes all traffic from SEMpaid clicks, email, and referral traffic. Wehenger received 100,000 visits from organic searches plus 25,000 from paid advertising for a total of 125,000 visitors. Any traffic driven to the site through her PR and trade show efforts would also be reflected here.

Ring 02 represents leads

This ring shows potential customers who’ve indicated an interest in your business. These individuals have filled out a form or offered answers to qualifying questions.

Wehenger had 60,000 landing page sessions which resulted in 8,000 unique leads.

The lead ratio for Wehenger is:

Traffic (01) to Interest (02) ratio: 6.4% [Unique leads (8,000) / Traffic (125,000)]

According to Capterra, the conversion rate average for lead generation in the software industry hovers between the 5% to 10%. Marketing Sherpa puts it at 7%.

Ring 03 equals Marketing Qualified Leads (MQLs)

These potential customers meet basic requirements (i.e., good fit for industry focus, budget to spend, etc.). There are dozens of ways to qualify leads. Many companies use a form that asks questions before the user can download a piece of rich content. Based on the user’s answers a score is assigned. The higher the score, the more qualified the lead. Other companies assign research to members of the marketing team to look into the website and company’s public file.

Wehenger used lead scoring tools to qualify the 8,000 contacts who downloaded resources. A total of 1,000 met the requirements to become MQLs.

Lead (02) to MQL (03) ratio: 12.5% [MQLs (1,000) / Leads (8,000)]

According to Unbounce, the industry benchmark lead-to-MQL ratio is 12%.

Ring 04 signifies Sales Qualified Leads (SQL)

After nurturing and other forms of communication, the lead expresses a desire to partner—most likely requesting a demo—and becomes an SQL.

Wehenger: MQL (03) to SQL (04) ratio: 1% [Demos Requested (10) / MQLs (1,000)]

According to Impilist’s research, B2B MQL-to-SQL conversion ranges from 1% to 30% depending on the source of the lead. Website leads typically convert at around 30%. Events are around 4%.

Ring 05 is for Sales Accepted Leads (SAL)

Not all companies use this signifier, but it can be important. An SAL means the sales leadership agrees that the SQL is worth pursuing. For example, Golden Spiral had a recent lead which met our qualifications and was interested in our material. However, working with them would have been a conflict of interest with an existing client, so we agreed they were not a good candidate for us and referred them to another agency.

Wehenger: SQL (04) to SAL(05) ratio: 100% [Accepted potentials (10) / Demos requested (10)]

At this point, the customer is handed off to sales. We know that Wehenger’s sales process converts 10% of those who request demos from marketing channels.

SAL to signed customer: 10% [New customers (1) / Demos (10)]

This means that from top to bottom, Wehenger’s success rate is:

Overall funnel conversion rate: 0.013% [New customers (1) / Leads (8,000)]

Like MQL-to-SQL conversion rates, overall lead-to-deal conversion rates vary. Website rates are around 1.5% while event conversion rates are very low at 0.04%.

Take a moment to look at your conversion rates for the last year. What do you extrapolate your traffic and other factors will need to be for the next year Compare them to your numbers for the previous 12 months? How much growth is required? Is the growth similar to your year-over-year growth in the past? Or do the numbers reveal goals that are out of reach? If they are out of reach, schedule a time to discuss with your leadership to adjust your goals. Otherwise, move on to the next step: Analysis.

Determine Your Focus Areas for Future Growth

One of the things I often say to my team is, “It all comes down to smart people making smart decisions.” At Golden Spiral, we’ve hired well and we trust our team to make the best suggestions and strategies.

That attitude comes front and center when analyzing numbers like the ones we’ve sketched for Wehenger. What do the numbers mean? I strongly believe that these numbers are triggers for conversion and deeper analysis:

  • If you are “on track” or “off track,” why?
  • What should you do to get back “on track?”
  • Are you “off track” on one metric but “on track” overall? Why?
  • Should you adjust your funnel to reflect the newer data?

There is no obvious “if, then” solution to this—it again comes down to smart people looking at the numbers, understanding the factors at play, and adjusting accordingly.

I noted a couple of sources for industry benchmarks for conversion rates. If you do your own research, you’ll find what I have: many sources contradict others. The best indicator for whether your business is working is your business. Is it growing? Do you experience positive momentum? Let the benchmarks be your guide, but trust your team and trust your own metrics.

In the case of Wehenger, the most important focus area is:

Increase top-of-the-funnel traffic.

Notice that the focus area doesn’t sound like a goal. It’s not specific or tied to a metric. The specificity comes in the next phase.

Outline Your Marketing Plays for Each Focus Area

When you have identified your focus areas, move on to creating your playbook. “Play” is a word Golden Spiral uses for “specific application of a marketing tactic or tool.” At this point in the process, marketing comes down to your people making the best decisions they can with the information they possess. Trust yourself. Trust your experience. Trust your team’s collective wisdom.

There are hundreds of tactics and tools you can put to use to reach your goals. We will not go into great detail here in this article on which plays to choose. You can look over our blog posts to find articles where we’ve expanded on certain plays like:



Marketing Automation

Inbound Marketing

Content Marketing

Public Relations


Determine which plays you believe will best reach each goal, then create KPIs to accomplish them. Your marketing is interconnected so one play may affect multiple goals, but as a general rule, track each play as if it were independent. One person should be accountable for the application of the play and the reporting of progress.

To highlight all of the plays and all of the tactics to accomplish Wehenger’s goals would be impossible (or at least very tedious) in this post. Let’s look at just one play.

Organic traffic was very strong. Wehenger will bolster their organic traffic by increasing the frequency of their blogging from two to four times per month and offer six new pieces of gated content during the year. They will also refresh their existing white papers and eBook giving them a total of 12 pieces of gated content.

Those are solid and time-tested tactics to increase organic traffic. How should they measure it?

For Each Play, Create the Metric—KPI

The KPI is the measurement tool. Before we can set the KPI, there are a few other questions to ask. Again, we will work backwards through the funnel.

What do you need? 2 customers

How many demos will be required? 20 (10% conversion rate)

Last year, how many pieces of content did the average MQL download before requesting a demo? Three.

Last year, how many total MQLs did you have? 1,000.

8,000 downloads resulted in 10 demos. That means 16,000 downloads will be needed to result in 20.

Our KPI needs to measure the number of downloads. Roughly 300 downloads per week are needed to meet the goal. However, simple math isn’t how growth plays out. Two factors will alter these numbers. First, your product or service has seasons of stronger traffic. Secondly, growth happens exponentially. As you build content, traffic will increase and raise the number of downloads. Taking both into account, set a different overall KPI for each quarter and then extrapolate your weekly KPI. For example:

Q1: 20% of goal

3,200 total downloads or 247 per week

Q2: 23% of goal

3,680 downloads or 283 per week

Q3: 27% of goal

4,320 downloads or 333 per week

Q4: 30% of goal

4,800 downloads or 370 per week

Note: setting KPIs for content marketing is notoriously tough, according to Databox, a digital KPI dashboard provider for businesses. "Content marketing is viewed as a long-term strategy;" says Elise Dopson, "It’s uncommon for a person to land on your blog post and purchase your product immediately." They recommend certain KPIs for tracking your content strategy.

Set Up a Scorecard to Track All of Your KPIs

A KPI is only good if you track it. A good scorecard helps you track every KPI. Scorecards can be simple spreadsheets or complicated, programmed dashboards. Don’t neglect to keep score just because you want a more elegant solution. Start with pen and paper if you need to and work up to your desired scorecard.

I am a fan of Traction by Gino Wickman and have built much of our operations model on his work. In his book, he offers three scorecard rules of thumb:

  1. The numbers in the Scorecard should be weekly activity-based numbers.
  2. The Scorecard is much more of a proactive tool, helping you to anticipate problems before they actually happen.
  3. When managing a Scorecard, many clients find value in red-flagging categories that are off track.

For our Marketing and Sales Scorecard, we do all three. We meet each Monday at 1:00pm to go over our numbers. Prior to the meeting, members add the numbers associated with their KPIs. Then, during the meeting, each briefly explains why the number is on track or off track. When activity dips in a certain area, we set action items to bring the area back up to the weekly measurement needed.

KPI Score Card Color Coding

Our scorecard is color coded so you can see at a glance if we are on track or off. The color coding helps motivate the team to produce in the areas where we are not performing.

We are often off track on three or four KPIs each week, but that doesn’t mean we won’t hit our goals.

If a trend develops, it may be time for changes. For example, if in Q1, Wehenger is supposed to have 247 weekly downloads but regularly did not hit the goal, they would know quickly to look deeper into their download strategy to discover what isn’t working. If they hadn’t been tracking the number, they might have arrived at the end of the quarter in tough shape.

If you are consistently missing a target, one and/or two things are true:

  1. You are off-track.
  2. Your target for this KPI is not representative of your goal.

Anytime you are off track, you should seek to understand which of these things is true.

But let me turn this example on its head for a minute. Let’s say Wehenger needs 247 weekly downloads and only hits 200 on average during the quarter, but the revenue from the closed deals exceeds the projections for the quarter? That’s a fantastic outcome. Diane and her team don’t need to feel the hurt from missing one KPI. The greater goal was achieved. KPIs are another way to tell the story and to know where you stand. Take all of them together as a whole.

Key Takeaway

At the end of the day, you’re relying on smart people to make smart decisions for your company. You are the ones who are committed to your products and solutions. Your careers are riding on these decisions. Look at the numbers. Create a plan. Develop your KPIs. Then trust each other and get busy.

Working with an agency allows the marketing experts to map and manage the funnel while you do the important—keep your product great, perform amazing demos, close deals, serve your customers after the sale, and come up with the next product for launch. Schedule a strategic consultation with Golden Spiral to find out how we can help you fill your funnel.


Summary of KPI Process

  1. Identify your primary goal. What is the most critical thing you must accomplish in the next fiscal year?
  2. Highlight the critical step to reach the goal. Of all the factors that contribute to that goal, what is the most significant?
  3. Research the right key indicators and statistics. It’s easy to be overwhelmed by all of the data available to you. Do you know your numbers? Are they the right ones?
  4. Map indicators and statistics to your funnel. Your marketing and sales funnel should lead from one stage to the next.
  5. Determine your focus areas for future growth. At this point you know your past. Now, what will your future look like? What areas are performing well and need more fuel? What areas are hurting and need repair?
  6. Outline your marketing plays for each focus area. What strategies, tactics, and tools can be directly applied to the focus areas to make a difference? How will you deploy each one? Who will be held accountable?
  7. For each play, create the metric—KPI. It becomes the best warning light for that issue.
  8. Set up a scorecard to track all of your KPIs. This is your daily and weekly dashboard telling you how things are going, where to apply more effort, and when to celebrate.
  9. Faithfully track every KPI every week. Your business isn’t a crock pot you set and forget; it’s a finely-tuned, high-tech spacecraft that needs constant vigilance.

Questions to Ask in Your KPI Journey

How much work is under contract from existing customers?

How much additional revenue is expected from existing customers?

How much new revenue needs to come from leads generated from marketing as opposed to leads generated from sales?

Over a 12-month period, what is the average value of a customer?

How many new clients signed on in the last year?

How many demos from your marketing efforts did you perform last year that resulted in one client?

Let’s get a picture of your internet traffic. How many organic user sessions within the last 12 months?

How many website sessions lasted longer than two minutes?

How much did you spend on display ads and PPC?

How many impressions did you receive?

How many click-throughs?

How many backlinks now exist to your website?

How many are new during the last year?

How much growth did you experience through social media?

How many media placements did your PR efforts score?

Look at your inbound tools. How many landing page sessions were there?

How many downloads were requested?

From how many unique contacts according to your CRM?

How many non-demo form completions were there?

How many net subscribers did you gain for your email list?

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Peter Smith

Peter Smith

President/COO As our President and COO, Peter oversees Golden Spiral’s operations, workflows, and finances while providing direction and vision for our company’s future.