Sales play a pivotal role in the success of any business. Sales for business is what oxygen is for human, without sales, your business would not be able to survive. Sales derive revenue, revenue covers costs. This allows a business to sustain its operations without burning out of cash. Therefore, it is imperative that businesses emphasize their sales and evaluate the progress pertaining to revenue generation on a regular basis.
The best way to analyze and gauge sales performance is by using metrics. What are metrics? To put it simply, they are quantifiable measures used to assess the status of different business processes. Metrics are heavily used in analyzing financial performance by those charged in governance and investors. However, they can also prove to be equally effective for monitoring sales operations and provide a big picture of sales status of key decision makers. Here are 3 effective metrics which can help your business to analyze and improve their sales.
Customer Loyalty And Retention
Customer loyalty is vital for the success of any business. Customer retention rate is one of the most understated yet an extremely useful metric that can be used by a business to gauge its sales progress. It provides a figure for customers who associated with the company for an extended period of time and made repeat purchases of goods or services.
It can be calculated by taking the difference between a number of customer at the end of a given time period and new customers acquired during the same period then dividing it by the number of clients at the start of the time period and multiply the result by 100.
Increasing customer loyalty is a challenging task, which can only be achieved by providing excellent and immaculate customer service. Moreover, the company must ensure to deliver high-quality products and services to their customers.
Lead-To-Client Conversion Rate
Lead generation is only the first step in acquiring a customer. It simply provides a point of contact for a potential customer to a business. However, converting that prospective buyer to a customer is the toughest part. The primary responsibility of the sales team is to contact those leads and convert them into paying clients, therefore, their performance must also be gauged via lead-to-client conversion rate. Furthermore, lead-to-client conversion rate also allows a business to identify the quality of their products and/or services as failed leads may indicate that their offerings are not appealing to the customers.
The calculation of lead-to-client conversion rate is extremely simple. It can be calculated dividing number of new leads with the number of new customers on a given month or quarter. To improve the conversion rate, a business must identify the issues behind poor performance of the sales team and fix them accordingly. Moreover, they must also analyze their offerings and check whether they are contesting in the correct market.
"It is much easier to double your business by doubling your conversion rate than by doubling your traffic." - Jeff Eisenberg
Completed to Overdue Milestones
Every business sets certain goals pertaining to every aspect of their business and sales is no exception. There are multiple sales targets and milestones that are set by managers to achieve by the end of the month, quarter, or perhaps a year. For instance, by end of the quarter, the sales must be increased by 1.5 times or possibly maintain 80% customer retention rate by end of the year.
Dividing achieved milestones by the number of total milestones will provide you an overview of the performance of your sales team. If they are constantly failing to meet their goals, they may require retraining, additional resources, or perhaps the figure of milestones are extremely difficult, if not unrealistic, to achieve and needs readjustment.
- Sales play a pivotal role in the success of any business.
- Customer retention rate is one of the most understated yet an extremely useful metric that can be used by a business to gauge its sales progress.
- Increasing customer loyalty is a challenging task, which can only be achieved by providing excellent and immaculate customer service.
- Dividing achieved milestones by the number of total milestones will provide you an overview of the performance of your sales team.