What KPIs for sales should you be using to drive growth for your startup? To maximize productivity and efficiency, you need the right measures in place.
KPIs are powerful tools to show sales teams and leadership the impact of marketing campaigns, sales staff productivity, and strategies to reach potential and existing customers.
Sales teams are the drivers of growth and growth is what fuels profits and expansion for businesses across industries. They are motivated by performance, whether in the form of bonuses or other incentives, and can use KPIs to monitor progress and compare output and productivity to other team members.
So now you ask, what are the key KPIs for sales growth acceleration? Here is a look at the top seven.
Customer Acquisition Cost
How much does it cost your business to bring a new customer on board? That figure, the customer acquisition cost (CAC), is a measure of how efficiently and effectively your sales team operates.
Sales teams should be very interested in the CAC. Typically, it’s calculated by adding the total sales and marketing costs and dividing that figure by the total new customers during a period of time.
The lower this ratio is, the better. A lower CAC indicates that sales teams are using their resources to bring in more customers. If the expenses of sales and marketing are yielding low numbers of new customers, adjustments need to be made.
Customer Lifetime Value
Customer lifetime value (CLV) demonstrates how much a customer will spend during the duration of their connection to your company. It factors in not just the revenue of a closed deal, but the impact of that deal on other expected revenue from a typical customer making a similar purchase. It goes hand in hand with CAC as it shows the long-term impact of securing a new customer.
A high CLV means that a customer, and those like them, bring in significant value over a lifetime engagement. It can be an inspirational figure to indicate why sales to new and recurring customers have value.
Churn Rate
Churn rates are a measure of how frequently your customer base turns over. Sales teams understand that it costs much less to retain a customer than to find a new one. That’s why it’s so important and a low rate is desirable.
Sales teams should be invested in, and measured on, the churn rate. They can play a critical role in customer retention, lowering the churn rate.
Competitor Pricing
Competitor pricing is an indication of how similar companies are selling the products and services your business offers.
Price sensitivity is an important consideration for businesses. Understanding the competition helps you set prices and sales strategies. For example, if price points are close, you could offer a price-matching marketing effort, guaranteeing the lowest prices.
If your competition’s prices are much lower than yours, you can use the information to calculate your own costs and pricing and incentivize sales teams to market other competitive advantages to close sales.
Sales Cycle Length
Your company wants to close deals quickly. Sales cycle length helps you understand how fast you move prospects through the sales funnel. In the long run, sales staff who close deals faster have more time to make even more sales. That’s better for the company and for them.
You can also use sales cycle length to compare how long it takes different salespeople to close a deal. If some sales staff take twice as long as the average salesperson, additional training or coaching may be necessary to reduce the sales time.
Contact to Customer Conversion Rate
The contact to customer conversion rate is a newer KPI that gives insights into individual sales performance. The rate measures how many contacts a salesperson has converted into sales.
Contacts may include:
- Sales leads
- Existing customers
- Past customers.
Sales teams can use this KPI to measure how well the contact pool grows the customer base and evaluate the quality of the sales team’s contacts.
Customer Retention Rate
A signed contract or a closed sale is terrific. But if the customer does not remain in place for the next deal, there is a lost opportunity.
The longer a customer stays with your business, the better your bottom line. Customer retention, especially measured for each salesperson, helps indicate how well sales professionals do at engaging customers after the sale is done.
An Experienced Accountant Will Help You Track the Right KPIs for Sales Growth
Sales teams are the lifeblood of revenue for your company. Measuring their performance, using proven and insightful KPIs, helps you assess efficiency and drive growth.
At Pasquesi Partners, we help companies develop, track and use KPIs for more effective performance from their sales professionals. To learn more about how Pasquesi Partners can help drive growth for your company, contact us today.