For many marketing and sales enablement teams, it can be tempting to create strategies and pursue initiatives based on feeling alone without much support from the data: "things seem to be going well, let's try this thing somebody else did successfully to generate more subscribers" or "revenue is down this month, probably due to poor lead generation efforts - let's host a webinar!" Sound familiar?
Instead, teams should be using key performance indicators and the data around those to direct their efforts and resource allotment. This way, everybody is driving toward the same goals and initiatives.
The first step toward determining the KPIs teams should be tracking is to take a look at the most common organization goals: increase revenue, improve customer service, and reduce costs. From there, the types of strategic initiatives each department may pursue in support of the organizational objectives can be derived. Finally, the specific progress-to-goal indicators can be determined.
OBJECTIVE: Reduce the Average Cost of Customer Acquisition
KPI #1 - Average Number of Days from Opportunity to Close
If you want to reduce costs, decreasing the amount of resources utilized in acquiring a new customer is a great place to start. By streamlining the sales cycle, sales reps will spend less time following up and more time closing deals. Where time is money, that's an easy expense to cut if you can make the system do the work for you.
Many CRMs and marketing automation platforms have this type of reporting widget built into the software. The most common challenge is in making sure the definitions and transitions around lifecycle stages and lead statuses are dialed in and followed consistently for accurate data output.
For instance, if one sales rep creates a new opportunity as soon as they receive a lead and another rep does not create the opportunity until actual dollars are part of the discussion, the data will be skewed. It is critical to ensure that your team is comparing apples to apples.
KPI #2 - Average Number of Days In Each Opportunity/Deal Stage
Keeping close tabs on the amount of time opportunities spend in each stage of the sales cycle will help you identify points of friction. With that insight, you can create content, adjust your sales touch-points, or set up re-nurturing workflows with the intention of preventing stalled opportunities or kickstarting those that have stalled.
As you increase your focus on the prospect and the customer, the resulting content and connections should resonate with them and where they are in their decision-making process. If you consistently use the questions and feedback that sales reps receive throughout the sales cycle from real live prospects to guide your content creation, there should be no question about whether your collateral messaging will be helpful or not.
OBJECTIVE: Increase Active Selling Time
KPI #3 - Number of Sales Activities - Phone Calls, Emails, and Prospect Enrollments
Unless your team is tracking time diligently, the idea here is that logged sales activities are the quantifiable measure of time spent engaged in selling activity. Since this likely feels a lot like micromanagement, it can be difficult to get buy-in.
However, if you make it clear to your team that you are simply trying to better understand how well you've cleared the path for them to get the job done, they will probably be more inclined to accurately and consistently log their activities properly. For instance, if you see increases in the number of activities after you build out a set of sales email templates for them to use or inject automation into previously manual processes, there's positive indication that your initiatives have been successful.
Conversely, if you start to see a decline in the number of sales activities, you can intervene sooner to help identify areas for improvement. The ability to course-correct promptly is critical to keeping your team on track toward key business objectives.
KPI #4 - Lead Prioritization and Urgency Ranking
While less of a metric itself and more of a "do you have this in place or not?" element to evaluate, it's still very important.
Ensuring that the team is following up on sales-ready leads without having to search high and low for them as often as possible reduces the amount of digging and nurturing they have to do, which ultimately increases the time they can spend on selling. If you can help your sales team identify who and when they need to follow up with, you'll help them reduce the time they spend sorting through all the leads.
KPI #5 - MQL-to-SQL Conversion Rate
Like the previous KPI, it is important for the marketing team to deliver high-quality leads that are engaged and ideal for sales follow-up to avoid wasting time and energy. Keeping an eye on how the conversion rate between MQLs and SQLs is trending is a good way to measure performance of the marketing team's ability to nurture contacts.
The key here is having a feedback mechanism in place between the marketing team and the sales team. Many marketers complain that once they hand an MQL off, they have no idea what happens to it. And in the tale as old as time, sales reps complain that they are only getting shitty leads.
In an effective system, the MQL-handoff process requires that the sales person on the receiving end formally accept or disqualify the lead before any follow-up takes place. If the sales rep disqualifies the MQL, they should also provide a reason so that the marketing team can use that feedback to adjust their qualification parameters and lead generation strategies.
OBJECTIVE: Increase Lifetime Value of the Customer
KPI #6 - Retention Rate
If you retain more of your customers for longer, you're inevitably going to increase their lifetime value and the revenue coming in. If this isn't something you've tracked before, you'll need to establish the baseline and then track the trend line.
Here's a quick calculation you can use:
Your particular business model will determine the most reasonable period of time to evaluate. If you see any dips in the trend line, you can look at adjusting or introducing initiatives like:
- New customer onboarding workflows to ensure smooth adoption or implementation
- Customer experience surveys to identify and address pain points
- Retention workflows aimed at giving customers notice ahead of contract renewals
Since it's generally easier to retain the clients you have than to go out and get new clients all the time, take the opportunity to identify areas for improvement seriously.
KPI #7 - Cross-sell/Upsell Success Rates
Another key approach to increasing the LTV of customers is pitching them on additional services or product add-ons. This is not a new concept to most, but many organizations struggle to pinpoint the right time to make suggestions or recognize the opportunity to connect a new product/service to an existing customer.
This is another metric that will take some work to refine from a definition standpoint in addition to setting up systematically for accurate reporting. What counts as a pitch? How is the opportunity record configured to reflect appropriately?
If product or service segmentation isn't currently being leveraged in your database, this would be a good place to start. You'll also want to identify the triggers that indicate a customer is a good fit for the upsell/cross-sell and automate where possible - this will help reduce the number of opportunities slipping through the cracks.
Get Your Team on Track
It can sometimes be difficult to build system and structure from a clear perspective when you spend so much time in the trenches yourself. If you'd like some outside insight and feedback on what you currently have in place, we'd be happy to discuss your challenges and ideas.