Growing your small business is as much about math and numbers as it is about customer satisfaction and service delivery. Paying attention to the right metrics will let you design the best and most effective strategy for meeting your sales and revenue goals.
So what are the metrics that you and your B2B team should be tracking? Here’s a list of key indicators you can use to keep your momentum going.
Sales and Marketing Performance Metrics
Sales and marketing performance metrics help determine if your outcomes align with your small business goals. You track the metrics and select ranges (some sort of benchmark) that signify ideal performance.
You can then weigh the tracked metrics against those ranges to evaluate performance. When a metric is within the range, you know you’re on course to reach your targets. However, if the results are short of the range, it’s time to investigate your processes and take remedial action to put performance back on track.
If you want to improve your sales and marketing performance, here are the metrics you should track:
Sales Performance Metrics
Sales performance metrics help you determine whether your sales teams are hitting their set targets. They enable you to track progress towards set goals, tweak your sales process to accelerate sales growth, award performing reps, and replace underperforming reps to boost performance.
Here are the most critical sales performance metrics you should be measuring:
Average Deal Size
The average deal size gives you the average revenue brought in from your closed deals within a certain period of time. It’s a quotient of the total dollar amount of closed sales and the total number of deals.
For your business to keep an upward trajectory, you need to ensure the sales reps are closing deals that align with your goals. If your goal is to move upmarket, you want to see the deal size grow – or vice versa.
Sales productivity helps measure how much time the reps spend selling. It’s an important metric to understand as it helps evaluate sales performance in terms of efficiency. Ideally, your sales reps should spend little to no time on non-selling activity and more time on actually selling (and closing).
Statistics show that high-performing sales reps spend 65% of their time in direct selling and the rest in non-sales activities. In contrast, average-performing reps spend their time in the exact opposite way — 35% selling and 65% in non-selling activities.
The conversion rate is simply the percentage of leads that become customers. For example, if you generate 400 leads every month and only 80 of those ultimately buy your product, your conversion rate is 20%.
Your conversion rate helps you figure out how many leads you need to hit your monthly team quota. For example, if your target is $1,000,000, and the average deal size is $1,000, your reps need to close 1000 deals. If your conversion rate is 20%, you need to generate 5,000 leads to hit the monthly quota.
Sales Funnel Leakage
Tracking sales funnel leakage helps determine where leads are exiting your funnel at the highest rates.
Consider, for example, a case where 40% of your leads sign up for a discovery call, 50% of those make it to the demo phase, and only 3% buy the product. Clearly, the drop-off rates are high, and this means your reps aren’t:
- Qualifying leads enough
- Giving convincing demos
- Negotiating properly
You can investigate further to determine where the problem is. And then delve into the potential issues to remedy them to improve conversion rates.
Marketing Performance Metrics
Customer Acquisition Cost (CAC)
This metric is a snapshot of how much it costs you to gain each customer. New customers are important, but not to the extent that they cost you more than the revenue they generate.
CAC = (Sales Costs + Marketing Costs) / New Customers
In order to calculate your client/customer acquisition costs, take the number of total sales and marketing costs for a specific period of time for all customers, and then divide that by the number of new customers and/or clients that you generated during that time period.
Here’s how it would work: if you spent $20,000 on sales and marketing advertising, salaries, and other overhead in one year and generated ten new customers in that same period, your CAC is $2,000.
Your goal, over time, is to see that number go down instead of up. This will show you how efficient your B2B sales efforts are and allow you to adjust any planning and strategy accordingly.
Fit Rate, Closing Rate, and Win Rate
Your fit rate is a calculation of the number of meaningful conversations that your B2B team needs to engage in to find the right customer. For example, if your sales team has to talk to four prospects (on average) to get to a proposal, your fit rate is 25%.
Fit Rate = Proposals / Sales Conversations
Your closing rate will then be the number of people who sign a proposal, divided by the number of clients to whom you send a proposal. So, in short, this metric is the number of fit rate proposals divided by the number of closed sales.
Closing Rate = Signed Proposals / Sent Proposals
Your win rate, then, is the number of new accounts that you generated, multiplied by your fit rate. If out of three conversations you get one final yes, your closing rate is 33%, and your win rate is 8.33%.
Win Rate = New Accounts X Fit Rate
Why track this? Because it will help you plan for a reasonable and actionable amount of conversations that you need each team member to engage in during any sales period. If you know your fit rate, you can set goals based on that data. That way, you’ll have realistic expectations for conversions and revenue goals. And, you’ll be more prepared for instances when your goals aren’t going to be met.
Qualified Lead Rate
Your qualified lead rate will help you assess the quality of both the channels you use to generate leads and the strategy you use in looking for leads going forward.
Not every avenue will produce the same amount of warm leads. Some will direct you to businesses that are less likely to be interested in your product or service. If a broad approach is turning up a ton of leads but no real prospects, go deeper on the channels that result in more prospects ready to buy.
Take the time to assess the number of leads that any one channel generates over a specific period in comparison to other B2B lead generation avenues that you use, and adjust your plan accordingly.
Monthly Visits and Leads
Tracking the number and type of sales opportunities is critical for your business. In one study of companies not exceeding their sales goals, 74% of them weren’t tracking their monthly activity in this category.
In order to set clear and measurable targets for B2B sales, compare your old data with the new, and set tangible goals for what you want to strive for. There are a number of sales metric tracking tools out there that will help you do this, many of which use Excel or another software that you probably already have.
Marketing Revenue Attribution
As an organization, you run multiple marketing campaigns to accelerate revenue generation.
Marketing revenue attribution helps you understand how much revenue each channel generates instead of looking at your campaign as a whole.
It helps you determine which of your marketing campaigns are effective and which ones are not. This way, you can double down your efforts on campaigns that are beneficial as you look for ways to improve ineffective marketing channels.
Customer Lifetime Value (CLV)
As the name suggests, the customer lifetime value (CLV) is the average revenue your business can expect over a single customer’s lifespan. It’s heralded as a complete metric for marketing analytics because it blends all the most critical statistics of individual customers.
CLV is a measurement of how valuable a customer is to your business over time. If your business has a high CLV, it means you have more loyal customers – and the opposite is also true. And because acquiring a new customer is five times more expensive than retaining an existing one, keeping a high CLV is essential to your business’ success.
Digital Marketing ROI
When you spend money on marketing, you need to see a return on your investment. The digital marketing return on investment (ROI) gives you the bigger picture of the returns you’re reaping from the marketing efforts.
The marketing ROI equals sales growth minus marketing investment, divided by marketing investment. For example, if you invest $10,000 into marketing campaigns that ultimately grow sales by $50,000, your marketing ROI is four (four times as much as you put in).
Landing Page Conversion Rates
Your landing pages present an opportunity to website visitors. The landing page conversion rate indicates how many of these visitors are taking advantage of what the landing page is offering. It’s a traffic-to-lead ratio and signifies how well the landing page is performing.
For example, if a landing page attracts 1,000 visitors a month and only ten sign up, the landing page conversion rate is 1%, which is far below the industry-wide average of 4.02%. However, note that the landing page conversion rate varies between industries.
Click-Through Rate (CTR)
The click-through rate (CTR) measures the number of clicks you receive on your ads or email per number of impressions. CTR uncovers some critical insights that you cannot glean from email deliverability and open rates.
For example, if you send out 1,000 emails, 900 make it to subscribers’ inboxes, and 90 leads click on the email CTA, your click-through rate would be 10 percent. A high CTR means your audience is highly engaged and interested in the content you’re sharing.
What Do Sales and Marketing Teams Do?
Enough with the math and numbers. Let’s now turn our attention to the people responsible for these metrics and KPIs. Every organization has teams that work diligently to keep the sales and marketing operations sailing along to achieve the set goals. The teams are:
Your sales team is the link between the product or service your business offers and the customers. The core objective of the team is to meet the sales goals of an organization. To that end, the team performs a handful of functions, including sales generation and conversion, customer acquisition and retention, and business growth.
Depending on the size, goals, and stages of your organization, you can set your sales team to take one of the following structures:
The marketing team is also focused on sales but relies on the necessary research and peripheral vision to get there. They identify target customers, create collateral that attracts prospects or customers, create an overarching brand image, and assemble content for salespeople to leverage.
The marketing team is responsible for various tasks from building brand awareness, fueling engagement on digital platforms, and promoting products or services. Depending on the size, product or service you offer, and sales goals of your organization, the marketing team can take one of the following structures:
- Customer experience model
- Operational model
- Product-based model
- Channel-specific model
- Segment-focused model
- Geography-focused model
The Importance of Sales and Marketing Alignment
One element that teams often fail to track is the alignment of the KPI of sales and marketing teams.
If your sales and marketing staff don’t regularly meet and share data, it’s common to be missing the info you need to determine which sales activities are working. Some analysis indicates that as many as 24% of marketers don’t know whether their efforts resulted in closed deals — which is crazy, considering how easy it is to track this information with a small business CRM!
Aligning your sales and marketing efforts will allow your talent to see what is working best and double down on those strategies while pulling back on those that are less effective.
How Sales and Marketing Work Together
Sales and marketing teams are all focused on sales. Even though both teams use different means to reach the ultimate goal, they benefit from working together. Proper alignment of sales and marketing generates 209% more revenue and a 20% annual growth rate – who doesn’t want that kind of result?
However, building alignment is easier said than done. The team needs to align on all levels, including process, feedback, and focus. Building connections across those levels helps overcome any hurdles you may face when aligning and getting the teams to work on the same page.
Here are some ways sales and marketing teams work together:
- The sales team helps the marketing department understand the customer better.
Since the salespeople spend most of (if not all) of their time engaging with the customer, they have firsthand information about the customer. They understand the customer’s pain point better, the challenges they face, and what makes them tick.
The marketing team can create more tailored campaigns that exemplify how your organization solves the issues using these invaluable details. Super strategic campaigns help generate better-qualified leads that can lead to increased sales.
- Marketing prepares leads for sales.
Picture this: the sales team helps the marketing team create ads that use strategic words and offer solutions to the target customer’s specific problems. Any lead that enters the sales funnel will have a higher probability of converting because they’re consistently sent resources and content. Simply put, the marketing teams warm up the leads, making it easy for sales to convert.
- Marketing can nurture cold leads.
Besides warming up leads, the marketing team can lend a hand in nurturing leads. If your sales team pursues the easiest targets to reach daily or monthly quotas quickly, integrating with marketing could unlock the seemingly “hard” targets.
The marketing department can ensure leads that require a little more time and effort to convert don’t slip through the cracks. How? It can create a tailored prospect nurturing campaign that nudges the cold leads and hand them over to sales when they are ready to convert.
If you’re working to grow your business, don’t shy away from incorporating these sales and marketing performance metrics into your strategy. If you haven’t used them before, it only takes a little practice to get comfortable reading and analyzing them. Make sure you have a set plan for consistently tracking them (every quarter, for example), and the work will pay off and keep your business headed in the right direction.