Important Metrics for a Modern Sales Team

As Winston Churchill once said,

“It is no use saying, ‘we are doing our best’. You have to succeed in doing what is necessary.”

Benchmarking against industry leaders is a constructive way of scaling revenues with precision and perfection. The practice of tracking the metrics at an individual and at an organizational level should be induced as a fundamental DNA within your organization.

The sales team has, and always will be, the driving force behind the success of your organization. All that you need to do is to identify which metrics are important for your organization and which aren’t at that juncture of decision making, whether those are growth metrics or burn metrics. Let us delve deeper into some of these metrics that are necessary:

1. Monthly Sales Growth:
   The annual sales revenue, though important, is too far off a projection and therefore, tracking monthly sales revenue gives a more accurate picture of the status quo. This helps in acting on the revenue trends than relying on the projected report based on certain assumptions, gut feel, and facts.

2. New and Expansion Monthly Recurring Revenue (MRR):
   A sales teams’ work doesn’t stop at just closing the deal; additional work needs to be done in order to upsell and cross-sell. This will not only help in getting more bookings but will also steer you towards retaining the existing customers.

3. Customer Lifetime Value or CLV:
   This can simply be put as the monetary value over a period of time. Let’s say, for example, Sam spends an amount “X” for a cup of coffee at a famous café. It wouldn’t be a big deal for him to spend that amount every day but the amount of revenue his expense would be generating for the café will be huge over the next two years. Hence, CLV will reap more profits over a period of time and therefore, it becomes important to create a strategy and execute it to increase your revenues.

4. Sales Efficiency:
   In simple words, this is the additional contribution towards revenue as a result of the Sales and Marketing spend of the company i.e. revenue relative to the cost. According to saasx.com, it should be treated as a health indicator. A ratio of 0.5-1 is considered to be an acceptable range. A ratio of more than 1 indicates strong sales efficiency and a capital efficient growth model. (Ratio = Annual Recurring Revenue/ Sales and Marketing Expense)

5. Churn Rate:
   Retaining an existing customer is as important as getting new customers onboard. While churn is bound to happen at some point in time, tracking it will help in devising a better strategy to retain the customers across specific time periods. It will always be a good practice to discuss this in meetings that happen monthly across various departments.

6. LTV to CAC ratio:
   All that needs to be done to calculate this ratio is to compare the monetary figure and get the ratio. An ideal LTV to CAC ratio is 3:1. Any lower than that, (for example, 1:1), will mean that you are overspending. Any higher, (for example, 5:1), might indicate that you are spending less and probably missing out on business as well. This ratio can be treated as the health indicator of the marketing program of the business.

These are a few of the metrics which can be tracked by every organization. Having said that, metrics will vary from company to company and taking a call on those will depend on which phase your company lies in at the moment.

Written by
Harsh Choudhary
Associate Consultant