In a recent post I looked at a number of sales metrics used in managing sales performance. With some many indicators available, which are the most critical sales metrics for a sales leader to manage?
I have selected the following 5 metrics as the most beneficial to a sales leader in managing sales performance.
1 – Customer Acquisition Cost (CAC)
The first metric is Customer Acquisition Cost, commonly referred to as CAC. This represents how much it costs to acquire a new customer. This is used by executives to ensure new customers are being acquired profitably. It’s also a key metric for boards and investors when evaluating the health of a business. Ultimately, when the CAC is too high, Sales Leaders explore more efficient ways of acquiring new customers. An example of this may be moving from direct field sellers to inside sales reps.
2 – Customer Lifetime Value (CLTV)
The second metric is Customer Lifetime Value, commonly referred to as CLTV. This represents how much a customer spends over the course of their “lifetime”. This is used by executives to understand how much a customer can generate for a business. It is also often looked at in conjunction with Customer Acquisition Cost. Organizations want to have customer CLTV be at least three times what it costs to acquire them. Sales initiatives undertaken are often tied to improving the average CLTV of the client base. Key to this is an effective account management focus within the business.
3 – Selling Time
The third metric is Selling Time. Selling Time is an indication of how often your sales team is in front of customers and prospects. Benchmark selling time is estimated at 65% and varies by industry, product and role type. Top performing Sales Leaders are hyper-focused getting, and keeping, their sales team in front of customers. They know that being in front of customers translates to growth. An example of how this is done is redesigning sales territories or using technology applications, such as CRM to remove unproductive tasks for their daily activity.
4 – Revenue per Head
The fourth metric is Revenue per Head. Sales Leaders use Revenue per Head as a barometer for how effective their sales team is operating. Typically Sales Leaders want a revenue per head that is roughly seven to ten times what it costs per rep. This balances the revenue and cost side of the equation.
5 – Pipeline-to-Quota Ratio
The last metric is Pipeline-to-Quota ratio. This compares the total pipeline against the quota. As a benchmark, pipeline should be approximately 4x the quota target at all times. Sales Leaders use pipeline-to-quota ratio to ensure their team has enough ‘opportunities to make the number. It is also a metric used to hold Marketing accountable for providing 30% of the pipeline.
Sales leaders are relentless about using data to manage sales performance. This in turn drives strategic decisions. If you are having difficulty managing sales metric, speak with us.
How CRM can assist organisations with Managing Sales Performance
A CRM system benefits an organisation through the visibility of its sales activities. This visibility is fundamental to managing sales performance and control of the sales process. This visibility enables management to understand why, when, who and how opportunities are being won, stalled, or being lost. If it cannot be monitored, it cannot be managed. The visibility offered within the CRM system also allows management to make educated business decisions based on hard data.
ProAptivity are an independent CRM solutions provider. We focus on the implementation, training, and support of highly customised CRM software solutions. Our CRM software supported by our sales training provide customers with the tools needed to deliver successful sales process management.
Fundamentally, we help organisations embed CRM best practice throughout their organisation.
If you need help in understanding why my business needs CRM, maybe some of our eBooks could help! Alternatively visit Maximizer CRM or Pipedrive CRM for more information. Contact us today on 028 9099 6388 or via firstname.lastname@example.org. We can help you assess if your business is CRM ready.
Source: Sales Benchmark Index