Updated based on original post from November 1, 2017
What Gets Measured Gets Done When It Comes To Revenue Generation And Growth
Hope is not a strategy. You can’t hope you close that big deal. You can’t hope you hit your numbers this month or this quarter. Hope is a recipe for missing your goals. Instead of hoping, start applying energy directly toward the areas where your revenue generation methods are faltering.
To know where to apply energy and what to work on, you need to have 100% visibility into the entire buyer journey.
The more people you have participating in the marketing and sales effort, the more complicated building a scalable revenue machine is going to be. But by empowering these people with direction and focus, you can impact revenue in short order.Here are seven of the key metrics we help our clients create, track and analyze through insights and action plans.
1) Average Sales Cycle In Days
How long does it take you to get a new customer? From the time someone visits your website to the time they sign your paperwork, how many days, hours, minutes and seconds does it take? Just kidding about the hours, minutes and seconds, but yes, you need to know how many days it takes to get a new customer. Does it take 30 days, 45 days, 90 days or more? This is a critical metric and you should know it.
Knowing this number enables you to lower it and shorten the sales cycle. Shortening your sales cycle by even a handful of days means extra revenue every single year. Instead of 50 new customers, you could get 55 new customers, and if each new customer spends $50,000 a month, that’s hundreds of thousands of dollars to the top line.
How do you shorten the sales cycle? One way is to eliminate or reduce the number of references checked. References typically add days if not weeks to the back end of the sales process, and in most cases, the prospect has already decided to go with you. They’re just checking boxes.
If you had a reference reel or an active advocacy program, they could watch a video and view information from happy customers. No need to check references, and the end result is a shortened sales cycle.
2) Close Rate On Proposals Submitted
This is a number a lot of execs are aware of, and they might say, “We win 40% of the proposals we submit.” OK, not bad. But what if you won 80% of those opportunities? That’s a 100% increase in revenue each month.
You’re doubling your top-line revenue without having to do anything else from a marketing or sales perspective. No need for more visitors to your website, no need for more leads and no questions about lead quality. Just increase the close rate on current proposals submitted.
Here’s how you can do that. Look at the proposal, agreement or contract. Is it filled with legal jargon? If so, does it need to be so legal? I know some companies need to be protected, but a lot don’t. Does it talk more about you than what you’re going to do for your new customer? I see this all of the time, 20-page proposals with 18 pages about you and only two pages about what you’re going to do.
Did you rush to proposal without getting to know the prospect better? Now the proposal isn’t really what they wanted, or worse, they don’t think you took the time to get to know them and their challenges. Did you walk them through your recommendations? If you didn’t, your prospect might not understand everything, and they might make incorrect assumptions that cause you to lose the opportunity.
With some simple process and formatting changes, you might be just a few days away from doubling revenue and you don’t even know it.
3) Visitors To Marketing-Qualified Leads
This number gives you an indication as to whether your website is turning anonymous visitors into leads. It’s an important top-of-the-funnel number. If you get 100,000 visitors a month to your site and no one converts into a lead, you have a big problem. From a marketing perspective, this is one of the most important metrics. This conversion rate typically ranges between 1% and 3%, and this is a site-wide number.
While you might have, and probably will have, pages that convert at a higher rate, knowing your site-wide conversion rate gives you an overview of how the site is converting across all pages, all CTA buttons and all offers. Some high-performing sites have site-wide conversion rates of 8% or higher, but in a lot of cases we see sites with conversion rates well below 1%.
To improve this, look at all of the offers and conversion points on the site, and either upgrade or add offers that are better aligned with the questions and challenges facing your prospects.
4) Visitors To Sales Opportunities
Marketing-qualified leads are a good indicator of the quality of your content and the ability of your website to engage with prospects. But leads don’t pay the bills.
To drive revenue, you need sales opportunities. Typically, prospects are leads first, meaning they want to talk to you. We call these sales-qualified leads (SQLs). Yes, the label is a little deceiving, as these leads are not qualified by sales. But the prospect has requested to talk to you.
Once prospects ask to talk to you, your sales team talks to them and decides if it’s an actual opportunity worth working on. If so, now you have a sales opportunity. Don’t get hung up on our vocabulary and labels. Almost every company we work with has their own funnel labels, and as long as everyone (sales and marketing) agrees on the labels, any approach works.
Knowing what percentage of visitors turn into sales opportunities is an indication of how good your marketing is at generating highly qualified leads that become sales opportunities. It also gives you some indication of your sales team’s ability to turn initial conversations into opportunities.
5) Sales Opportunities To New Customers
While some of the numbers above are marketing numbers (like site-wide conversion rate), this is a pure indicator of the quality of your sales team.
Since your sales team is identifying all of the sales opportunities and then working to convert those opportunities into new customers, this number gives you a true indication of how good your salespeople are at executing your existing sales process.
If this conversion rate is low, you’re wasting high-quality sales leads and you have a bottom-of-the-funnel sales issue. To improve this number, look at your sales process, look at the content you’re using to help tell your story and look at how you’re leveraging client advocacy in the sales process.
6) Average Revenue Per New Customer
This is more of a financial number than a sales and marketing number, but revenue experts consider this a good indicator of how effective your sales process is at helping new customers purchase the full solution. By benchmarking where this is today, you can redesign your sales process to drive this number up over time.
In a lot of cases, this drives top-line revenue and bottom-line profitability too. In short, the cost of sales is usually the same whether new customers buy 50% of what you sell or 100% of what you sell. By getting new customers to buy more from the outset, it moves a lot of important numbers in the right direction.
7) Percentage Of Wallet For Current Customers
We like to ask new clients, “What percentage of customers buy everything you have to sell?” The answer is almost always a small percentage. Worse, a lot of clients don’t even know this number. That should be a top priority for executives looking to grow revenue. You need to know how effective your sales team and your services team are at getting customers to buy everything you offer.
Understanding this number helps us decide how aggressive we want to be in marketing cross-sell opportunities to current customers. It also helps us measure the performance of your sales team as we redesign the sales process. If 50% of your new customers buy your full suite of services, then you should expect that to go up as your sales team gets better at offering the full program to new customers.
Yes, you could be tracking other metrics when it comes to revenue. But if you’re new to key performance metrics and data, this is a great place to start. Sometimes simple is the best place to start, and then you can add additional metrics to the list as you get more comfortable.
Now that you know what to track, how often should you be reviewing these number and what action should you be taking if these numbers are not improving month over month?Looking at these numbers every day might not provide much insight, but looking at them weekly should, and reviewing them monthly definitely will show you trends that you can take action on.
For example, perhaps you notice your average sales cycle goes up from 50 days last month to 55 days this month. What are you doing differently? How are the prospects responding? Are there competitive changes going on that you may not be aware of? All of these questions help identify what issues might be in play.
Maybe you notice that your conversion rate on sales opportunities to new customers is increasing this month vs. last month, which usually indicates the quality of your leads is improving. Good news! But you should know what’s contributing to that improvement. Did you publish new content? Did you upgrade messaging to attract a higher quality prospect?
To implement the best revenue generation strategies, you have to understand that revenue generation is a science. This means every action has a corresponding reaction. You need to understand those reactions to get the results you want.
Square 2 Marketing – Innovating Marketing And Sales To Match Today’s Buyer Behavior!
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.