B2B Sales Metrics You Need to Know
In a growing business, along with the strategy and tactics, it’s also about doing the math — your B2B sales metrics. Managing the numbers is more important than anything else in measuring B2B revenue. If you track the right data and balance the numbers, then growth becomes a much defined task. However, if you don’t keep track of appropriate measurements for your situation, it’s almost impossible to monitor and maintain a strategy.
According to a recent survey, only 23% of companies outperform revenue goals. Of the remaining companies, 74% did not track their number of leads, monthly visits, MQLs, or SQLs for sales conversion. Hard to believe.
In a lead generation or sales and marketing assessment, it starts with understanding the necessary math for an organization to meet its revenue goals and growth objectives. While the specific metrics will vary for each company, here are some standard measurements to be captured by any company seeking to nurture B2B revenue growth.
What Are Sales Metrics?
The first set of numbers focus on your funnel’s bottom stage and highlight important sales performance indicators like these:
The Closing Rate is calculated by defining the number of people you formally approach to purchase. This can be described as offering some sort of proposal to the potential buyers. So if you get one conversion out of three proposals, your closing rate is 33%.
A company’s Fit Rate is calculated by the number of client conversations the B2B team requires to engage with the clients to find the right potential client. For example, if the sales team approaches four clients on average to get one proposal, then you have a 25% Fit Rate.
The Win Rate is calculated by multiplying the Closing Rate by the Fit Rate. It is important to determine the Win Rate to understand how many Sales Qualified Leads are needed to acquire one client. For example, If out of three conversations, you acquire one client, the Closing Rate 33%, and the Win Rate is 8.33%
What Are Lead Generation Metrics?
The next thing to pay attention to are numbers from your lead generation and lead management efforts.
Lead Channel Origination Rate
As the name implies, this metric tracks from where leads originate. It’s necessary to understand this measurement in order to track the results and ROI of the channels. It helps allocate the resources in the future.
Here are standard channels that can be tracked;
- Inbound Marketing Efforts
- Sales Development Efforts
- Paid Search
You can add categories or sub-categories for tracking until they provide a substantial contribution to your research. However, if you get into too much detail or “in the weeds,” you’ll end up losing the benefits that effective metrics provide.
The Conversion Rate can be a bit complex to evaluate, as it’s directly proportional to the channel you’re measuring.
For example, with inbound marketing and paid search, the Conversion Rate is the number of new leads acquired during a specific amount of time divided by visitors’ number on your website. For sales development or new sales, it would be the number of target accounts converted into leads, divided by the scale of the list being used during a given time.
The combined calculation of all the channels is called Blended Conversion Rate.
Qualified Lead Rate (QL Rate)
Not every lead that you get is a qualified lead. Some channels generate a higher amount of qualified leads compared to others. The Qualified Lead Rate is defined by the total number of leads obtained over a certain period divided by the number of leads that meet the basic criteria of qualified leads. QL Rate for all the channels combined is calculated as Blended QL Rate.
What Are Marketing Metrics?
While the above metrics provide clarity into sales and marketing efforts, that’s not the end of the story. Long-term, an effective marketing strategy should increase your current clients’ value and lower the costs associated with growth.
While there are tons of metrics that can be used, two marketing metrics that stand out are:
Client/Customer Acquisition Cost (CAC)
CAC calculates the cost to gain clients. When the number is decreasing, it’s a good sign that you’re doing many things right and that the efforts are paying off. Similarly, the adverse trend can be a disaster.
CAC is calculated by taking the total sales and marketing expenditure for a specific period divided by the number of new clients acquired. Sales and Marketing expenditure can get into money spent directly on marketing, advertising, promotional campaigns, events, employee salary, commission, bonus and overhead used for sales and marketing.
If you don’t have dedicated personnel, you may want to allocate those expenses in a more standard way. For example:
- Sales and marketing costs for the year: $30,000
- New customers for the year: 10
- CAC = $3,000
Lifetime Value (LTV):
Lifetime Value is another crucial indicator that shows if your efforts to keep customers genuinely contribute to the business’s success. The two major factors used to calculate LTV are:
- The average duration of time a client partners with you (measured in months or years)
- Average money each customer has spent during a specific time period
Multiply 1 and 2, and you get the Lifetime Value. There are several ways to increase Lifetime Value:
- Establish long-term partnerships
- Increase the time a client stays with your company
- Increase revenue from the account over time
Along with CAC, an increasing Lifetime Value suggests strong momentum and perhaps a need to scale growth, whereas decreasing LTV is a red flag that shows you need to buckle down and make some adjustments for long-term business growth.
Marketing Cloud and B2B Sales Metrics
While there are tons of metrics that could be used under various instances, these are some of the core areas to measure B2B sales growth. Practice tracking and sharing the results with each team in your company. When shared, the data derived by following these metrics may unleash creativity to spark faster growth. We work with many organizations to improve their ability to capture and study metrics. The True Influence Marketing Cloud is one way we help B2B brands, along with intent data intelligence.
Read more about metrics and the marketing cloud in this blog: “Marketing Cloud: Get a clear picture of your audiences and opportunities.”