Marketing And Sales Are Quickly Becoming Data-Driven, Metrics-Oriented Practices
It looks like sales and marketing alignment is finally becoming a reality. Most of the legacy issues preventing sales and marketing from merging into one single revenue department are dissolving. Today’s CRM systems link elegantly into the marketing platforms, so it’s now easy to track a prospect’s journey from click all the way to close.
The most progressive businesses are hiring chief revenue officers to lead their revenue departments and set clear revenue growth goals. They’re focused on leads, sales opportunities, shorter sales cycles and more new customers. These CROs are smart and they’re intimate with the language of revenue, which is math.
Here are 11 revenue metrics you should have if you company is revenue ready!
1) Conversion Rate On Proposals Submitted To New Customers
I started with this number because almost everyone overestimates it, and most people looking at this number don’t realize that it should be closer to 95% than 50%, the number stated the most by clients.
First, you should only be giving recommendations, proposals or agreements to people who are ready to do business with you. You’ve discussed their requirements, you understand their business intimately, you’ve co-created the solution and you already understand how the value of your service matches their business initiatives. The proposal or contract should be the last step to an agreement you’ve already reached to work together.
If you have a 50% close rate on proposals submitted, you’re sending these out prematurely. Your process needs an upgrade.
2) Length Of The Sales Cycle In Days
You have to know this number, because we’re going to work to shorten it. If you could cut two weeks from your six-week sales cycle, how big of an impact would that have on your business? You’d be closing more business more quickly and with less effort. You need to know how long it takes from the very first time a prospect visits your website until the time they sign your paperwork. Is it 30 days, 45 days or 90 days?
3) Average Revenue For New Customers
This is also a number that most people are not sure about. Again, our goal is to drive it up. By giving prospects a better experience, a more guided experience and a more educational experience, they’ll be more apt to buy more. You’ll want to see that impact on your numbers. As the experience improves, the average revenue per new client will go up too.
4) Conversion Rate On Sales Opportunities To New Customers
This is a key metric. Your marketing team is going to be getting sales opportunities. The higher quality the lead, the more sales opportunities you’ll see, but this number is a true indication of how good your sales team is at turning high-quality leads into new revenue.
5) Total Number Of Marketing-Qualified Leads
This is the total number of leads created by the marketing efforts. This number has a direct relationship to the amount of content you’re creating and the experience on your website. This is the number the marketing team will have the most significant impact on. This number includes all types of leads — top-, middle- and bottom-of-the-funnel leads. It’s the most significant indicator of how well your marketing is performing.
6) Total Number Of Sales-Qualified Leads
This is a subset of the MQL numbers we discussed in the section above. While all leads are good leads, not all leads are created equal. These are the bottom-of-the-funnel leads. These are the requests to talk to you or your sales team. These are prospects who request to speak with you. We call them sales-qualified leads because they’re opting in for a conversation with sales. Typically, our research shows that only about 10% of all leads are SQLs.
7) Total Number Of Sales Opportunities
This is a health score for your pipeline. If you’re constantly increasing the number of active and quality sales opportunities your team is working to close, it’s an indicator that your pipeline is healthy. If this number is decreasing, it’s an early indicator that you have sales challenges looming in the future. How far in the future is directly related to the length of your sales cycle. The longer the cycle, the further out your challenges. The shorter the cycle, the sooner you’ll be looking at a real lack of new customers.
8) Total Number Of Proposals/Agreements Submitted
This is going to give you the best and most accurate projection for revenue expectations over the next 30 days. If you have a proposal out, you should expect it to close in the month it was submitted. If it is taking longer, your paperwork or process may have issues. If it’s May 11 and you have $200,000 worth of new business proposals on the street, you should be expecting almost all of that to close this month.
Referring back to the very first number in this article, proposals should only be submitted when you’ve agreed on the complete configuration of your program, and 95% of those should close within a few weeks.
9) Conversion Rate On MQLs To New Customers
To measure the overall quality of the leads that marketing is generating, you want to look at this number, the percentage of MQLs that turn into actual new customers. This is a very important metric. Consider the following scenario: Company A generates 100 leads a month and turns only three of those into new customers, while Company B generates 50 leads a month and turns 20 of those into new customers. On paper, Company A looks like it’s doing a better job, but the numbers show that Company B is doing a much better job at generating the right leads.
10) Total Site-Wide Conversion Rate
This is a pretty standard indicator of how effective your overall marketing is at turning visitors into leads. As long as you’re executing an earned attention or inbound marketing program, this number is one you should be looking at regularly (monthly at a minimum).
11) Total Website Visitors
People visiting your website is the ultimate top of the funnel. If people can’t find you on the web, you’re invisible. It’s like having a retail store that no one can find. The more people who visit your site, the more opportunities you’ll have to fill up your funnel and optimize the stages we’ve been talking about in this article. A month-over-month drop in visitors is usually an indication of a misaligned marketing effort or a dysfunctional program.
Do these numbers seem intimidating? They shouldn’t today because they’re much easier to track, report on and optimize than ever before. These have to be your magic numbers for revenue. If you noticed, the actual revenue number isn’t even on this list. Why? Because that’s a number almost every CEO, VP of sales and VP of marketing knows off the top of their head. Don’t you know your revenue target for May? Do you know it for the second quarter? What about progress toward your annual goal? These numbers are easy to identity and track, but they’re difficult to move and make improvements on.
These 11 KPIs for the revenue team make weekly analysis more action-oriented. If you see a decline in the close rates or conversion rates, take action today that will impact those numbers tomorrow and the next day. Don’t wait until you miss your numbers at the end of the month, quarter or year.
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Posted By Author Mike Lieberman, CEO and Chief Revenue Scientist
Mike is the CEO and Chief Revenue Scientist at Square 2. He is passionate about helping people turn their ordinary businesses into businesses people talk about. For more than 25 years, Mike has been working hand-in-hand with CEOs and marketing and sales executives to help them create strategic revenue growth plans, compelling marketing strategies and remarkable sales processes that shorten the sales cycle and increase close rates.