Business planning is the process of identifying key performance areas for operations to take forward, and achieve within a given deadline. To manage them, we measure them and award key performance scores regularly. We call these measures of performance key performance indicators.
Key performance indicators come in different shapes and sizes. Not all provide an absolute number, although we should try our best to ensure they do. Some publish success, while others are measures of our failings. Input KPI’s report the amount of effort we are putting in. Output ones measure what is leaving our production line, no matter what our goods and services may be.
Accountants use financial key performance indicators to track financial health, or otherwise. The system works well for them. In this post, we share the 30 most important KPI’s for sales and marketing. First, let’s wear a broader lens to understand KPI’s across the business world.
Some Common Generic Departmental KPIs
Factory managers track availability of machinery compared to actual use, and the quantity and quality of the goods it produces. IT Operations is more likely to be interested in uptime, meantime-to-repair and meantime between failures, while supply chain managers focus on inventory and average time through the delivery funnel. With that behind us, let’s turn our thoughts to what KPIs for sales and marketing should include, so we know with certainly whether results align with company business plans.
The 15 most Important KPIs for Sales Managers to Chase
1. The primary goal of any sales force is the dollar value of its monthly deals. This helps the accountant manage cash flow, so we have more money coming in than going out.
2. The second most important thing is perhaps percentage change, month by month. Are we getting better at selling, worse at converting, or simply marking time?
3. Next, we need to know our average dollar deal size. This tells us a great deal about the long-term sustainability of our operation. If our deal size is shrinking, so is our market.
4. While we should expect to spend more effort when closing larger deals, we should have a cost of acquisition target for discounts, incentives and other expenses.
5. We also need to know the average days or weeks or months we spend to materialize each acquisition. We take a long view, starting with lead prospecting through to harvesting.
6. The above information helps us calculate our dollar cost of sales, and then our sales return on investment (ROI) too. If our ROI is not improving, we need to reassess our strategy.
7. If our opportunity-to-win ratio is lagging behind our historic record (or industry standards) our sales funnel has sprung a leak and our profit is evaporating.
8. While true love they say lasts forever, everything else ends, even our best customers. Our new-acquisition-rate KPI tells us how effectively we are replacing them.
9. Because there is no such thing as a free lunch either, these new clients come at a cost, be it time spent closing or a discount. Our client acquisition rate measures this cost.
10. Having spent the money and signed up the client, we must continue to engage to retain them and make more sales. Our existing client engagement metric measures our success.
11. There are no asymptotes in business either. Either we are growing or we are shrinking. Our actual sales growth compared to sales plan can be a vital KPI alarm bell.
12. Pretty much applies to sales reps. The activity-per-rep versus wins-per-rep KPI helps us manage their bottom line, and encourage internal competition too.
13. There are internal ratios in the sales funnel as well. These track qualified leads to sales qualified leads, to opportunities discovered, to sales conversion.
14. Sales velocity is another essential KPI for sales that tracks the rate that signed orders come in. It’s a function of sales opportunities, average deals, win rates, and sales cycle length.
15. I left customer retention rate until last because I believe it is the most important. If we are not retaining customers, then something has gone wrong with the way we manage our business.
The 15 most Important KPIs for Marketing Managers to Fret over
1. Marketing departments have other fish to fry, i.e. leads as opposed to sales. Not being direct income producers makes their marketing cost per lead generated critical.
2. Leads generated from digital marketing as a percent of total visits come next. These include engagements via emails, websites, and of course social media.
3. The bounce-rate-percent metric measures visitors that ignore our calls to action, click to bounce away, and never return to darken our internet portal again.
4. We can assess the relative stickiness of these media by comparing the percentage of total leads we get per channel. Then the competition starts!
5. These media are assets and we need returns. The number of leads per asset expressed in dollar value tells us the revenue we gained from each.
6. We also need a combo % KPI to measure how well we are doing compared to previous numbers. Either we are growing or we are shrinking, or we are flat lining.
7. Our goal is to have websites making money, and blogs creating leads converting to sales. The percentage conversion rate of landing pages is a critical success factor.
8. A website is first prize when it draws users through the marketing funnel as they follow the various pages. The percent of total pages read relates the story.
9. The KPI for web-page-flow before conversion into leads tells us about each visitor’s personal journey. Knowing the % covered, tells us which calls are working.
10. Shoppers increasingly search for products and suppliers on social media. The extent of our social engagement has become another critical key performance indicator for marketing.
11. Leads are one thing. Marketing qualified leads are another. Lead scoring lets us rank them against their perceived value, so our sales reps know where to start.
12. We should archive leads that are going nowhere so we can focus on active ones. The ratio between the two tells us how the balance is trending.
13. Email marketing takes us nowhere unless sufficient leads open messages. If the ratio opened to total sent is falling, we need to refresh our messages with A/B testing.
14. The percentage emails that are opened and then clicked is the acid test for the success of email marketing. Again A/B plays a critical role in focusing with the accuracy of a sniper.
15. Although not all KPI’s produce numerical values, we should nonetheless have an overall feel for our content performance. What is working best, and importantly, where to from here.
Tracking Results & Rating Performance with Math Marketing
The information we glean from KPI’s can be confusing, even daunting! We need to keep a level head so we can extract the optimum benefit. At SiO we follow a logical, structured process covering all the bases. Once we have the data spread out before us, we unleash our creativity and experience.
Stage One: SIMULATE: Get to grips with the events behind the data. What is happening, how are our sales and marketing leads responding?
Stage Two: PREDICT: Imagine what could happen if we tweaked our content and our calls to action. Make the changes. Turn on the ‘A/B Machine’.
Stage Three: MONITOR: What does our KPI dashboard tell us? Did the situation improve or not? We continue our never-ending journey of constant refinement.
Stage Four: ANALYZE: Why did the situation change after we reworked our calls to action and content? Can we develop statistics to predict this occurring?
Stage Five: REPORT: We produce a detailed report, with recommendations regarding our research, and what we believe will likely happen in the future.
We don’t believe in holding back on data. We release every scrap of information to our client regarding our journey, because it is the client’s information, and it belongs to them.
iNBOUND iNTELLIGENCE is irrelevant unless we analyze and use it. Hence, it’s important to have a resource on the team able to follow the process we outlined above. The data we harvest pours in from social platforms, websites, customer relationship management, client feedback, and KPI dashboards. We must tame it quickly, so we can learn from it soon.
Intelligent use of this information is a path to knowledge that can help outwit our competition, and remain ahead of the curve with trends. When we know why our sales and marketing leads are behaving the way they do, we can improve our conversion rate by delivering content they actually want to find.
Ours is a never-ending journey. The world and its preferences are changing around us. We must constantly revisit our critical success factors, and the KPIs for sales and marketing we use to measure them. A wise person wrote, “The race is not always to the swift”. When we are diligent and patient, and constantly revisit our assumptions, our KPI’s can lead the way to victory.