Understanding and Identifying Key Sales/Marketing Metrics
Using Sales Key Performance Indicators (KPIs) to monitor company wide performance can help you improve your sales process over time as you double-down on strengths and work to improve weaknesses.
A number of the metrics below are usually applied to Software-as-a-Service businesses. Thinking about your business in the same manner (even if you’re not selling a recurring product or service on a regular cadence), can help you assign sales and marketing budgets properly, and assess how profitable your current investments in those activities actually are.
Some popular SaaS Metrics to consider applying to your business:
- Frequency of new leads added
Usually defined as the number of leads per month. Can be further subdivided into the number of leads each channel brings in individually for comparison of conversion rate between channels.
- Average Lead Response Time
The length of time it takes for a lead to follow-up on one of your marketing campaigns.
- Conversion Rate
Number of successful leads advanced to the next stage divided by the total number of leads in the current stage of the sales funnel.
- Average length of the sales cycle
Amount of time it takes from a lead’s entry into your sales funnel, to the time where they become a closed deal.
- Win Rate
Number of deals won divided by the number of deals negotiated.
- Average Annual Contract Value (ACV)
The amount of revenue a contract brings you per year.
- Average Customer Lifetime Value (LTV)
Amount of revenue your business can expect from a customer throughout their lifespan with the company.
- Customer Acquisition Cost (CAC)
The overall cost of winning a customer to purchase your product/service.
- Revenue by Product
The amount of income generated from each specific product. Can be further classified along product lines/branches.
- Cost of Selling
The amount of money spent by you and your sales team to sell your product or service. Can be helpful when measured as a percent of the revenue generated per sale.
- Revenue Churn
Number of customers lost over a given timeframe X the revenue from those customers.
- Net Revenue Retention (NRR)
The sum of revenue generated over a particular time period (new customers + upsells of existing customers) minus revenue lost to churn and downgrades, divided by the revenue generated over that particular time period.
A less well-defined metric to consider analyzing within your sales process: is there a certain sales closing strategy that outperforms others — in other words, how do conversion rates, win rates, and length of sales cycle vary based on the type of close you or your sales reps use, or do they vary based on the type of customer?
The real “trick” to closing more deals (if there is one) is to apply the most successful closing technique to the right customer at the right time. Analyzing the KPIs above and segmenting them by channel and customer type helps your sales operation be as efficient and productive as it can be.