Seven B2B sales metrics to help you plan your marketing strategy
Running a B2B business is a challenge when there are few customers and your competition is fierce. Only the best can achieve these coveted high conversion rates and convince other companies to make a company part of their supplier pool.
The path to converting a potential customer into a customer is long and marked by several discussions. Because of its high value and long-term engagement, B2B sales tend to have lower conversion rates than B2C.
Getting corporate customers on board requires planning and a focused approach.
Seven sales metrics for a better marketing strategy
In this article, I’m going to talk about B2B sales metrics that can help you crack the coveted 10% conversion rate. Data is your best friend. So make sure you use the insights from these metrics to improve your marketing strategy.
1. Customer Acquisition Costs (CAC)
Before you can develop an effective marketing strategy, you need to understand how much it will cost to add more customers to your business. Your goal should be to keep the numbers down as it means your strategies are working and you will have to spend less money to get customers.
You can calculate the CAC by dividing the total sales and marketing costs for a given period by the number of new customers you added over the same period. For example, if you spend $ 1,000 on marketing expenses in one month to get 100 customers in the same period, your CAC is $ 1,000 / $ 100, or $ 10.
2. Conversion rate
Conversion rate is probably the most important sales metric that you will be tracking. You get the percentage of actual purchases or subscriptions in relation to the number of leads, site views, visitors, posts, or emails it took to get those conversions out of your sales pipeline.
The conversion rate is particularly useful in determining the effectiveness of your marketing efforts. For example, let’s say you use a combination of email marketing, social media, and cold calling to announce a product launch. Divide the number of conversions (or purchases) you get from each channel by the number of emails, social media posts, and calls you make to determine which channel is best for your niche.
3. Sales pipeline speed
The sales pipeline is the entire sales process, starting with the first contact with the buyer and through to closing the deal.
You can compare the sales pipeline to a boat race. A boat’s speed is the distance it travels over a period of time: if your boat travels 20 feet in 2 seconds, its speed is 10 feet per second. When you consider that the average rowboat has a speed of just under 9 feet per second, your boat (and the rowers and the equipment they row with) is pretty fast.
The speed of the sales pipeline applies the same logic to your sales and marketing process.
Since your sales process has a lot of moving parts, calculating pipeline speed is a little more complicated. To calculate the speed of the sales pipeline, use the following formula: SPV = (number of leads * average deal value * win rate) / sales cycle in days.
You want the SPV number to be as high as possible.
The longer your sales cycle is (as is the case with B2B versus B2C companies), the more you have to compensate with a higher number of leads, a better win rate, or a higher average business value.
For example, if you want to maintain a sales pipeline speed of $ 10,000 per day and have few leads per sales cycle, you need to either close higher value deals or shorten your sales cycle.
4. Average lead time
You know where your leads are coming from, but what if they’re in your sales funnel? Does your sales team respond on time? That’s what the average lead time measures.
The early bird gets the worm, so ideally your sales team should follow up within minutes. According to a study by Dealhub, half of all potential customers choose the company that responds first. Don’t stick to the industry standard of 61 hours. That way, you will lose a large percentage of your leads.
Use an efficient email workflow system that sends requests to the right person and, equally important, keeps an eye on all social media requests. Your B2B web design agency should help you set up a process with email notifications as well as a live chat system that website visitors can use to instantly connect to a representative.
5. Customer Lifetime Value
You have a new customer and your sales funnel is working fine. But do new customers stay with you? Customer Lifetime Value (CLV) is a metric that shows whether your marketing efforts go beyond just attracting new customers and are contributing to long-term growth.
You can calculate the CLV by multiplying the average length of time a customer has been with you by the money they spend on your company in each period. You want this number to stay high as it means you will keep your customers. For example, if a customer has been with you for 10 years and spends an average of $ 1,000 per year, the CLV is $ 10,000.
CLV is an important metric to consider because customer loyalty is just as necessary as customer acquisition. If you spend time attracting new customers while your existing customers are leaving in droves, you are always pumping money through your sales funnel and your CLV will stay low.
6. Win rate
I mentioned win rate earlier in this article in terms of sales pipeline speed. Many people confuse the two; While the win rate and sales pipeline speed are related, they are not the same thing.
Unlike sales pipeline speed, which takes into account average deal size and the length of the sales cycle, win rate is a much simpler metric: divide the number of profits you’ve made over a period of time by the total number of sales opportunities in the same period of time whether they were successful or not.
Win rate is particularly useful for comparing your sales performance between two or more periods or market segments. For example, you may find that you have a higher win rate for widgets on Black Friday and Cyber Monday than in the week after Christmas, or that you sold more lawnmowers per capita among suburban customers than in homes.
The Win Rate can help you identify the times and areas when you are most likely to make a sale, as well as the sectors or seasons when you should be promoting your product more widely.
7. Lead source
This important sales metric will help you learn more about the source of your lead generation and the amount that is contributing to your sales.
For a B2B company, the average conversion rate is 10%. It’s a small window of success so your marketing needs to be targeted and you need to invest in the right channel. For many companies, email marketing – a conversion rate of 62% – is an effective way to generate quality leads.
Source: Venture Harbor
Track the source that gives you the most sales opportunities to find out your strengths and where to improve.
Once you have that data, you can further break down how much sales each source is generating. The data will help you get a better return on investment. Knowing the expected income from each source will also provide you with a yardstick against which to measure the success of your efforts.
Track your main sources of leads like inbound marketing, paid search, and sales development so you understand which prospects are coming from where.
Once you know what sources are attracting potential buyers, it is easier to track results and measure the return on investment from those sources. It also helps you direct your funds to the acquisition source that attracts the most interested buyers.
The insight into sales metrics
Metrics can help you take a closer look at your practices and see where you’re wrong – and what you’re doing well!
All businesses, B2B or B2C, need to know who their buyer is, where to contact that person, and what that person wants. The B2B sales metrics listed earlier will help you answer these questions while also giving you insight into your sales funnel and how it works.
Use this data insight to improve your marketing strategy and you will watch your customer numbers grow.
More resources on sales metrics
Take 10: Three Sales Metrics Marketing Should Possess
Advanced measurement strategies: metrics that really matter
Nine key metrics for the sales pipeline for healthy sales [Infographic]