- Metrics can be a sales manager's best friend.
When used correctly,
they create a clear view of how your company works.
Metrics can show your strengths,
as well as your weaknesses.
You don't what actions would lead to improvements
if you don't have clear insights
into what exactly is going on.
Identifying key performance indicators, or KPIs, is crucial.
These numbers help measure performance
and allow you to make data-driven decisions.
Every sales team's KPIs are unique
and should be laid down keeping in mind their product,
industry, and competitive landscape.
But while each sales team
will end up tracking different KPIs,
there are some that are essential for all sales teams.
First, your lead-to-sales conversion rate,
this conversion rate shows how effectively your team
is converting prospects into customers.
If your lead-to-sale conversion ratio is low,
break it down by individual rep,
and identify what can be done to improve this ratio overall.
For example, if your leads are not converting
because prospects think your solution is too risky,
train your team to reassure their leads
that your product is absolutely reliable.
Next, cost per lead is a total cost of a marketing campaign
divided by the number of leads generated
for your sales team from that campaign.
If your overall cost per lead has gone down,
it often means that your brand awareness has increased.
If it's getting more expensive to acquire leads,
it might be time to adjust your marketing strategy.
Remember that different marketing campaigns
will have different costs, but nothing is cheaper
than happy customers telling their friends about you.
Another important KPI is churn rate,
or the rate at which you will lose customers.
You can track this as a percentage of customers
that have decided to stop using your product
over a given period of time.
Some churn is inevitable.
But if you notice a pattern of churning
from a certain segment of your customers,
you need to uncover the root causes,
so you can figure out how to fix it.
Then, customer lifetime value
is the total amount of money a customer pays you
during their entire relationship with you.
This helps you think about how much you're willing to invest
to acquire a customer.
If someone is likely to be a customer for life,
they're worth way more than someone
that will be a customer for six months
or, even worse, a one-time customer.
A sales manager should be willing to invest way more
to acquire a long-term customer.
In my company, Badger Maps, for example,
we have people that buy one month of our product
to plan out the routes for their vacation,
and then we have field sales reps
that use our product for their entire career.
Guess which customer segment I advertise to
and which one I ignore?
A final KPI, Net Promoter Score,
this measures how likely customers are
to recommend your product,
often ranked from zero, not very likely,
to 10, very likely.
The simplest way to get this information is
through a followup email after a product order
or after they've used your product
or service for a little while.
These customers are then ranked by the scores they give.
Promoters are those that give you a score of nine or 10.
These customers are loyal,
and they'll recommend your company to other people.
Passives give a score of seven or eight.
These customers are satisfied with your product,
but they aren't enthusiastic.
And they're more likely to leave
if they receive a better offer from a competitor.
Anyone who gives a score of six or less is a detractor.
Compare your NPS over a period of time
to see if your customers' experience
with your product is creating promoters,
and pay extra attention to those customers that are at risk.
Now, for each of these KPIs, make a plan for one action
that your team can take to make an improvement.
This way, you can set specific and measurable goals
for your team and improve your company's performance.