How many sales metrics are you using to make strategic decisions?
The recent explosion of business intelligence and analytics tools has resulted in an organizations ability to measure every sales metric possible. Often the problem is not a lack of KPI’s, rather too many Key performance Indicators (KPI’s).
For most businesses 5 KPI’s is enough to capture the trends, identify areas of opportunity and dig further into those areas. Too many KPI’s will take your attention away from the most important data. Think about all the daily, weekly, monthly and quarterly reports you review. Are strategic decisions being made from these reports?
Here are 9 sales metrics that illustrate comprehensive KPI’s to measure today. These metrics, once put into operation will be the key to strategic business planning.
Top 9 Sales Metrics
- CMRR – Committed Monthly Recurring Revenue: CMRR looks at current MRR, (New Business + Expansion – Contraction – Churn), then adds in signed contracts going into production and subtracts out revenue that’s likely to churn within that period.
- CAC – Customer Acquisition Costs. This is comprised of all Go-to-Market costs, including Product, Marketing and Sales that are focused on new customer acquisition.
- CLTV- Customer Lifetime Value. The value of gross margin the customer will bring over the lifetime of the subscriber.
- CLTV:CAC Ratio – This is the Lifetime Value of the Customer / Customer Acquisition Costs. In the subscription software business, a typical ratio is of 3:1 – 5:1.
- CAC Payback – The period of time (e.g. number of months) it takes your company to earn back the CAC you spent to get a new customer. 12 months is benchmark payback in the subscription software business.
- Bookings/Head – The bookings the company/team is achieving against the weighted average headcount. This will provide visibility to rep productivity & effectiveness over time.
- Magic Number – A magic number of 1 means that last quarter’s sales & marketing spend will be “earned” back over the next 4 quarters in incremental revenue, and is seen as the desired metric for subscription software business.
- Customer Churn – The percentage rate at which customers cancel their recurring revenue subscriptions.
- Pipeline Velocity – Pipeline velocity metric gives predictability in sales results in present and future quarters.
How many of these sales metrics are being measured today? How many are being measured, but are not used to drive strategic decision making? Simplify your KPI’s and focus on the top 9 metrics.
ProAptivity support business in implementing CRM. CRM is a tool for recording and reporting on clearly defined sales metrics. Contact us today on 028 9099 6388 or via email at firstname.lastname@example.org.
Source: Sales Benchmark Index