Overlooked Sales Metrics Every Business Should be Tracking

By Ingage.  

Tracking a variety of sales metrics can give your company a leg-up on competitors. If done properly, it can be very effective.  

Measuring a company’s success may seem like a fairly straightforward task — you look at how much revenue and income the company is bringing in and that paints the entire picture, right? Well, while assessing those aspects of the company may seem like you’re getting a full lay of the land, you’re actually missing out on some key components that accurately portray a company’s success. For example, bigger companies often require a larger investment than smaller clients and therefore generate smaller profits. On the other hand, smaller clients don’t necessarily need the time commitment from you to persuade them to buy from you. That shows a more accurate analysis. Looking at a variety of sales metrics will certainly give you a more accurate reading of your company’s financial status.  

In today’s highly competitive business environment, companies need every advantage they can get. After all, managing is about positioning your team on the best path to success. To get better performances out of their sales team, managers must establish clear sales metrics. This helps them measure each member’s contributions and identify areas where they can improve further. 

Today’s companies use a variety of sales metrics to measure business success. By definition, these are collected data that show a team or individual’s performance in a specific sales area. Using this information, management can get a better grasp of the sales team’s current situation, which allows them to make strategic adjustments, give recognition or cut their losses. 

Why sales metrics are important 

There are many reasons businesses consider metrics an important bellwether for performance. For one, sales metrics provide an easy and convenient way to see how your business is performing at any point. They also allow managers to see which stages of the sales journey are experiencing bottlenecks. Once identified, it becomes easier for the team to apply remedies to improve the situation. 

For example, metrics can show that the sales team might be closing deals left and right, but delayed deliveries are leading to cancellations or returns. In another scenario, sales teams might be getting bogged down in contacting leads, which affects the conversion rate. The sales manager can tell the team to focus on qualifying leads before making contact to increase efficiency. 

In addition, sales metrics allow your company to identify which areas need more focus. Discussing the latest metric scorecard with your team gives them a clear picture of their performances. Metrics also eliminate the guesswork on why things aren’t working for some employees. Instead of wasting valuable time arguing over who’s to blame for missing quota, teams can own up to their shortcomings and work on improvements. 

Metrics versus KPIs: What’s the difference? 

When dealing with sales metrics, we usually come across key performance indicators (KPIs) as well. Some may interchange KPIs and metrics when talking about one or the other. However, KPIs and metrics are two different things that measure different areas. 

Metrics 

Between the two, metrics are the more generic. They simply track something that is quantifiable. By using metrics, an organization can measure its performance on certain operational aspects. Note, however, that metrics and measures are not interchangeable either. A metric can contain one or more measures.   

In short, metrics contain the data points used to measure performance and tell the story from an operational standpoint. For example, a website’s metrics measure the number of visitors per day, the most visited pages or how many visitors proceed to buy something. 

KPIs 

KPIs, on the other hand, are focused more on accomplishing specific goals. To do so, they enlist the help of one or several metrics to track how the company is achieving its goals. Unlike metrics, KPIs usually have a set time frame in which to achieve the goal. 

KPIs often materialize as specific targets set by companies at the beginning of the year. A typical business strategy should consist of five to seven KPIs that each have specific, measurable targets. It should also have a reporting mechanism that reports progress regularly, including a clear data source that provides the basis for performance.     

The KPI-metric connection 

If metrics are operation-based, KPIs lean more toward strategy. In fact, KPIs don’t function alone — they need to attach themselves to bigger and more specific goals. Meanwhile, metrics will happily measure processes even without the benefit of established goals or deadlines. In short, metrics can be part of a bigger KPI, but not all metrics will become KPIs. 

For example, let’s say a company sets a lofty goal KPI of increasing sales by 20%. Breaking it down further, this goal has a measure (increase in sales), a target (20% increase), a data source (customer relationship management, sales management, enterprise resource planning) and reporting (in this case, we can safely assume a monthly status report).   

To achieve this increase, different departments will have to chip in by bumping up their numbers in specific metrics. First, the sales department should accelerate its conversion rate so more leads turn into actual buyers. Then, customer service should also bump the average satisfaction rate of existing customers. Remember, a fundamental rule of business is that retaining existing customers is less expensive and more profitable than recruiting new ones.   

Warehouse and logistics should also improve their delivery completion rates to minimize shipping delays or stockouts. These disruptions can lead to cancellations or returns, which ends up denting revenue. When these individual performance metrics are improved, the company should see its KPI improve as well and meet its goal. 

Align sales and marketing for better results 

There are sales metrics, and there are marketing metrics. Marketing is in charge of warming up the leads for sales, who then come in and close the deal. Getting these two departments to align can work wonders for companies. In fact, when sales and marketing work as a coordinated team, companies can see 27% faster profit growth, a 36% increase in customer retention and even a 10% increase in sales reps hitting their quota. 

The formula is simple: better collaboration between the two groups equals improved customer targeting, which then means better sales. However, you should note that this collaboration should run on a two-way street. So, it’s not just marketing helping out sales, but also sales helping marketing. 

How marketing can help sales 

Your marketing team can engage leads and prospects through its timely and targeted marketing and advertising strategies. By the time the sales team comes knocking at their doors, customers have already bought into the marketing message. A more accepting prospect makes it much easier for sales to navigate the buyer’s journey.     

In addition, marketing can help turn cold prospects into warm ones while sales pursue the hot leads. You can expect your sales team to go with the hot leads first, which allows marketing to focus its efforts on converting the more reluctant prospects. A tactical campaign designed to convince non-believers can help gain some of the leads that fell through earlier. 

How sales can help marketing 

Meanwhile, your sales team can contribute to the marketing cause by providing important firsthand customer feedback. Being on the front lines, sales have access to the customer’s unique perspectives. This can provide valuable insights that can help the marketing team fine-tune its campaign strategies.   

Nowhere is this more apparent than in developing the buyer personas. Even as marketing takes the lead in creating these personas, they will need input from sales to capture an accurate picture of who currently buys their products and who else would benefit from them. 

Marketing and sales metrics to track 

There are a number of marketing and sales metrics you can check to determine whether your company is hitting its targets. These metrics can provide better insight into how close or far your company is from reaching its stated goals. They can also show which areas are having trouble keeping up. By identifying these potential problem areas, management can step in and provide additional measures to get back on track. 

1 - Revenue 

Revenue is the main indicator of a company’s success. It provides a big-picture snapshot of the money flowing into the company. Also known as the top line, revenue does not reflect the cost of manufacturing, taxes and other expenses that went into the production and sales of the company’s products.   

In addition, tracking the revenue stream means showing how much each of the company’s divisions or sales group contributes to the whole. Doing so helps identify which groups already exceeded their targets, which ones are within target and which ones are underperforming.     

2 - Lead conversion rate 

As the name implies, the lead conversion rate (LCR) is the percentage of unique site visitors that check out the company webpage and end up as leads. A higher LCR means marketing and sales strategies are working to attract the right audience and convince them to sign up or leave their contact information. Conversely, a low LCR means your online presence is generating very little interest. A lead conversion rate of 2.4% is considered a good sign. For landing pages, the ideal standard is 4%.   

Lead conversion rates can also be further broken down to gather additional insights. For instance, filtering the LCR according to the lead source can help identify which channels are successful in attracting potential customers. Segmenting the LCR over time can also help determine the best days and times to upload new content or launch a promotion.   

3 - Customer acquisition cost 

Remember the adage, “It takes money to make money”? In a nutshell, that’s what customer acquisition cost (CAC) means. It’s the summary of how much a company spent to convert a lead into a paying customer. The simple formula adds up the total sales and marketing costs and then divides that sum by the number of new customers.   

Determining the ideal CAC ratio varies from company to company due to differences in marketing and sales strategies. For benchmark purposes, however, the company should ideally recoup the customer acquisition cost within 12 months. To achieve this, you’ll need to retain the customer for this period, which means ensuring a satisfactory customer experience.   

4 - Sales conversion rate 

Also known as the lead-to-win or closed-won rate, the sales conversion rate (SCR) is the ratio between leads-turned-customers and plain leads. Computed, the SCR simply means customers divided by leads. While the SCR remains the best indicator of a successful online campaign, the simplicity of the metric leaves a lot to be desired. 

This is why many companies refine SCR data further into marketing qualified leads (MQLs) or sales qualified leads (SQLs), which indicate the likely source of origin for the conversion. Determining which campaign or channel is the main vehicle for conversion is also a difficult undertaking.       

5 - Sales closed 

Sales closed, also known as won opportunities, simply refers to the number of closed deals marked by a signed contract or approved purchase. Unlike closed-won rates, which only apply to recently converted leads, sales-closed rates apply to both old and new customers. 

By itself, won opportunities will only indicate the limited metric of a closed sale. However, segmenting it by the source of lead, sales representative and location can generate richer insights. These data points can determine the company’s most successful salespersons, regions or channels. 

Marketing and sales metrics SaaS companies should track 

Software developers engaged in selling software-as-a-service (SaaS) products could use additional metrics to determine their success, as their sales and marketing efforts typically take on a slightly different tack. For instance, trial offers, subscription tiers and add-on premium services make tracking marketing and sales metrics a little more complex. As a result, SaaS developers might want to use these additional metrics to determine their business’ success: 

1 - Customer lifetime value 

The customer lifetime value (CLTV) is the assumed total revenue expected by a seller from a single account. The CLTV determines how much the company can expect from a single buyer over the course of its lifetime. The longer a customer stays with their account and renews their subscription, the higher the lifetime value turns out. 

In addition, by measuring the CLTV over the customer acquisition cost, SaaS companies can project the return on investment (ROI) timetable. This gives sales and marketing an idea of what programs to implement to entice the customer to stay for the optimum amount of time. Like non-SaaS companies, retaining a customer is far cheaper and more efficient than signing up new ones. 

2 - Customer retention rate 

The customer retention rate (CRR) computes the number of customers carried over from the subscription period. It’s a matter of calculating the number of customers at the end of a period minus the number of clients you acquired during that period, divided by the total customers from the start of the period. That number is then multiplied by 100. 

Determining the CRR helps companies understand the nature of loyalty among their customers. By tracking how many clients choose to renew their subscription year-over-year, they can determine if the client base remains happy with the successive iterations of the platform or if they’re leaving in favor of better software.   

3 - Monthly recurring revenue 

The monthly recurring revenue (MRR) represents the sum of all new and upgraded monthly subscriptions minus all downgraded and canceled accounts. This metric allows SaaS developers to determine their overall growth rates and check whether the CLTV remains sustainable. The MRR also lets the company know if it’s actually generating revenue or bleeding money.   

In addition, the MRR can help determine whether the SaaS developer’s subscription costs are in line with current pricing trends. The metric also helps the company determine if they need to shift their strategies to attract more users or retain existing ones. 

4 - Daily active users 

The daily active users (DAU) metric helps track how many subscribers are actually logging in or using the software on a daily basis. DAU records each instance of a unique user logging into the cloud platform for the day. Determining the rate is simply DAU divided by the total number of subscribers. 

Monitoring the DAU can help developers foresee any potential loss of subscribers. They can head off any drop in users by addressing complaints about the software or adding features demanded by users.   

5 - Monthly active users 

Similar to DAU, monthly active users (MAU) monitor how many unique accounts log into the software platform every month. MAU tracks both new and continuing users and also counts both subscribers and trial users. Determining the rate of active users versus active accounts helps determine the popularity and actual utility of the software. 

MAU can also highlight the use of certain features in the software so developers can pinpoint which ones are popular with users and which ones are hardly used. This helps set the developers’ directions when designing the next iteration of the software.   

6 - Churn 

Churn happens when a user drops or cancels their account subscription. By definition, it means the rate of customers who canceled their accounts when compared with the total number of active subscribers. The formula to compute the churn rate is canceled subscribers divided by total subscribers' times 100. 

Determining the churn rate is important when gauging user interest in the software. When the churn rate starts becoming higher than the growth rate, that’s a troubling sign that users might be abandoning the product in favor of a new one.   

Social media metrics 

Social media is a powerful tool to promote or sell products. Creating social accounts for your products can attract a lot more customers compared to only using traditional advertising. However, using and maintaining social media channels requires a lot of work in creating fresh content. In addition, monitoring social accounts will also require significant time and effort. These are the social media metrics to watch: 

1 - Account reach 

Account reach involves tracking the number of unique user accounts that visited your social media business account to view ads or look at posts. This metric only counts a unique user account once, no matter how many times it visited the channel. A similar metric, account impressions, counts the number of times a post gets viewed. If a user looks at content more than once, those individual impressions are counted separately. 

Account reach, and by extension account impressions, is important in determining the success and popularity of published content on social media channels. 

2 - Post engagement 

Post engagement is similar to account reach, but this time it counts the individual reactions to a social post. Engagement measures how involved followers are with a social account. The formula for measuring engagement rates is engagement divided by the number of followers. 

The post engagement metric tracks the number of likes, comments, shares and follows. These are the indicators of engagement, which typically means leaving a direct and measurable reaction to a post. Cross-referencing the metrics of engagement and followers can yield interesting results. 

For instance, a social page with low followers and high engagement usually means interesting content in a social post that has low viewership. Meanwhile, low engagement in a post with a high number of followers means that the content itself is uninteresting.   

3 - Video views 

Video views are just what the term implies: it counts the number of times users watch a video post. The subjective part of this metric is the definition of what’s considered a view. For social platforms such as Facebook and Instagram, even three seconds of viewing is counted as one view. 

On Twitter, LinkedIn and Snapchat, the minimum viewing time it takes to qualify as a view is two seconds. Meanwhile, YouTube defines video views as watching for a minimum of 30 seconds or engaging with the content.   

Companies who want more in-depth accounting can use metrics such as retention rate and minutes watched. Note also that metrics for paid video advertisements might have different standards compared to organic content. 

Notable KPIs to Help achieve goals 

The marketing and sales metrics above help provide a detailed assessment of how your campaigns, promotions and even social posts fare against today’s legion of users. These indicators can also provide the metrics needed to set goals and KPIs aimed at growing the business or increasing profitability. Here are some of the suggested KPIs that can help set goals for business success. 

Sales and marketing KPIs 

Sales and marketing KPIs often involve generating growth for the company. This includes having a better grasp of the profit and loss situation, which can be monitored and measured by the following KPIs: 

Average purchase value 

The average purchase value (APV) gives an estimate of how much a customer spends in a single transaction. The higher the APV, the better it is for the business, as it means more revenue for the same sales and marketing costs. Depending on the business model and the length of a typical sales contract, you can compute the APV as a daily, weekly, monthly or annual value. 

Tracking APV helps businesses determine the effect of pricing strategies. When you apply promotions or discounts, do they increase or decrease the APV? Similarly, is your pricing affected by the actions of your competitors? Once you determine these factors, you can set a KPI that targets the APV at its optimum level. 

When executed correctly, using APV as a metric and KPI can help you determine which products and pricing strategies to apply at certain points of the year. It also helps you apply measures that increase your APV while retaining your current number of customers. 

Order frequency 

To utilize order frequency to increase revenue, you should identify the market segment that purchases the product more than other segments. Once you isolate this group, you can apply favorable promotions or discounts that will encourage them to order more frequently. To arrive at the order frequency, you should divide the number of orders in a time period by the time period. 

To further encourage your best customers, implementing a loyalty or rewards program can nudge them into increasing their purchases. In effect, this KPI can boost your bottom line by rewarding the group of customers who contribute the most.     

Purchase frequency 

Purchase frequency refers to the number of times a customer purchases the same item. Establishing a KPI that can further increase a customer’s purchase frequency (or shorten the time between purchases) is a great way to increase revenue by focusing on customer loyalty. To arrive at the current purchase frequency number, divide the number of sold products by the number of unique customers.   

Purchase frequency is more suited to longer time periods, as this allows customers to make multiple purchases. This also means focusing marketing efforts on customer retention rather than recruiting new customers. And, it pays attention to consumer habits, which your marketing strategies will work around.   

Sales bookings 

Another key KPI to work with that can increase growth is sales bookings. While sales bookings strictly mean a signed order equivalent to the value of sale of the items, note that sales bookings only count when the seller completes the actual delivery. Therefore, the metric consists of average purchase cost. 

To come up with the sales booking metric, you first have to multiply the average transaction cost by the total bookings. Then subtract the result from total booking sales. This metric will tell you how much your company makes in a set period from active bookings. If the dollar value goes up, it means the KPI was successfully achieved. 

Missed sales opportunities 

A sales transaction is the ideal end result of converting a lead. However, when the sales team fails to communicate with a likely customer, this results in a missed sales opportunity. On the other hand, when sales successfully contact a customer who then proceeds to reject the sale, this is considered a lost sales opportunity. 

A missed sales opportunity can be something as simple as erroneously telling a customer an item is out of stock when it’s not. To eliminate missed sales opportunities, you must re-establish communications with customers. This means prospecting customers the company previously lost due to a lack of communication. As a KPI, the lower your missed sales opportunities, the better. 

Lead management strategy KPIs   

These are some KPIs that can help establish an effective lead management strategy, which can increase conversions: 

Bounce rate 

The bounce rate is the number of users who get directed to a website but do nothing to engage or interact with the page and therefore leave it. This full-scale ignoring of the website means the user wasn’t engaged or interested enough to explore the already-delivered site. It could also mean the user didn’t find the web page interesting enough, they found the answer to their question without the need to click anything or the website could not accurately display what they need. 

Reducing the bounce rate as a KPI may mean revisiting the website to making it more engaging. Or, the team in charge might make the layout more intuitive and user-friendly so people aren’t driven away out of confusion. Fixing the bounce rate can also mean revisiting the online ads that transport users to the web pages. Accomplishing the KPI can mean resolving the disconnect between the ad and the expectations set on the landing page.   

Landing page conversion rates 

The landing page conversion rate means exactly that. It measures the success rate by which users complete the call-to-action statement on your landing page. This typically either leads to account registration, membership enrollment or an online store visit.  To determine the conversion rate, you divide the number of conversions in a specific time period by the total number of landing page visitors and multiply the result by 100. 

Increasing the landing page conversion rates means creating a stronger call-to-action statement and messaging that conveys urgency. In addition, it can also involve improving the layout and reducing the clutter that leads to additional distractions. 

Click-through rate 

The click-through rate (CTR) is a measure of the ratio of clicks made on an embedded link to its number of views. Basically, it tells how many people actually clicked the link upon seeing it. Making the KPI about improving the CTR is similar to improving the landing page conversion rates. 

Like the landing pages, analyzing the cause of a low CTR and improving the messaging based on the causes can help increase the rate. This includes improving search engine optimization (SEO) methods to provide better relevance to the keyword.   

Social media post engagement KPIs 

In addition to reach and views, social media also features engagement in its KPIs. Triggering users to react to certain posts (whether positively or negatively) can boost engagement levels, which can lead to an increased following or higher popularity. 

Comments 

Comments on your social media posts are some of the most visible ways users can show engagement. Of course, depending on how you see it, comments can also be controversial. As a metric, it’s easy to measure engagement levels with comments: just count the number of comments on a post. In most cases, the messaging content of the comments is irrelevant. Each one still counts as a single comment. 

However, that doesn’t mean you should discount the messages in the comments section. Comments often contain user’s firsthand reviews on or reactions to the product or the brand. When collected, they can prove to be a valuable source of insights into how people see your brand, your products and your campaigns. 

Follows 

Compared to comments, follows are much tamer and offer a simpler metric for engagement. When a user likes enough of the brand’s social content, they might decide to follow the brand’s page so they receive updates when new posts are published. For metric purposes, counting the number of followers (including their follow rate) is the way to measure follow engagement. 

The number of followers not only establishes the brand’s social media popularity but also helps establish a community of like-minded individuals that share their love for the brand. However, using the number of followers as a metric is a bit short-sighted, as many accounts tend to stay dormant and not follow the brand account actively. Incorporating an additional metric like engagement rates, which filters followers and retain only the active ones, can help provide a more accurate picture. 

Present relevant sales metrics through presentation software   

KPIs and the underlying metrics are a great way to break down the effectiveness of your marketing and sales efforts. They give you a more accurate picture of why some strategies work for your brand and why others don’t. With the proper utilization of KPIs, you can track your marketing and sales metrics and adjust your campaigns accordingly. 

To share the results of your marketing and sales campaigns, it pays to use interactive presentation software that is both cloud-based and collaboration-friendly. The software also includes analytics features that identify which sections of your presentation made an impact and which ones fell flat. This can indicate which metrics your audience values and help you continuously improve your messaging.     

Consider Ingage for your next interactive presentation software investment. Its cloud-based software helps ensure your presentations stay interactive and highly engaging. To learn more about Ingage, visit our website and sign up for a free demonstration. You’ll be collaborating with your team members and creating professional-grade interactive presentations in no time.   

Learn more about Ingage in their RoofersCoffeeShop® Directory or visit www.ingage.io. 

Original article source: Ingage