No business can thrive and survive without sales. In the past, companies often solely used sales quotas to set goals for their team to achieve in terms of sales. There are many sales quota examples and these quotas have long been used to measure how successful a business or team member has been over a specified amount of time.
But today, another thing that should be measured to see how successful a sales team has been are sales metrics. These data points can gauge sales performance and quickly compare them to company goals. Here are a few of the sales metrics your business needs to be sure to track.
Customer Acquisition Cost
The first metric you should be tracking is the customer acquisition cost. This is essentially how much you spend to acquire new customers. You need to consider the cost of things like marketing, equipment, and the various other costs when finding out how much your business needs to spend to turn someone into a paying customer.
The lower your customer acquisition cost, the better it is for your business. If you are spending too much to convert someone, it may not be sustainable for your company in the long run. By tracking this cost, you can make sure your business is able to turn a profit and isn’t spending an arm and a leg to bring someone aboard.
Customer Lifetime Value
Next, you should also take time to track customer lifetime value (CLV). This looks at how much revenue a specific customer will generate throughout their entire lifetime as a paying customer of your business. It can help you see just how valuable your customers are.
If your average CLV is low, it can be concerning as it means your customer isn’t spending a lot, and in order to have long-term sustainability, you need to convert a lot more customers. If your CLV is high, you won’t be as reliant on new customers, as existing ones will be spending more.
It costs much less to retain customers and get repeat business than it does to acquire new customers. If you want to calculate customer lifetime value, you’ll need the value of their purchases, how frequently they make a purchase, and how long they continue to buy products or services from you.
You should also make a point to track your conversion rate. This is how many leads end up converting and becoming a paying customer. Of course, every business wants their conversion rate to be as high as possible.
The better your conversion rates, the better your sales and marketing teams are at turning leads into customers. If your conversions are low, it generally means there is a disconnect or issue somewhere in your sales and marketing that can be corrected. You may be targeting the wrong people, or your sales/marketing efforts are simply not resonating with your target.
Also, because conversion rates can vary, it is important to familiarize yourself with conversion rates benchmarks so you know what is competitive or acceptable in your industry. Tracking this metric ensures you know whether your marketing efforts and sales team are working effectively.
In conclusion, by tracking these sales metrics, you can ensure your business can find as much success as possible.