With only a little more than a month left before Black Friday and Cyber Monday, sales teams across the US are preparing for this season more than any other time of the year. The last quarter of the year is where you should execute your best plans. Your marketing team should be planning the perfect strategy for your sales team to optimize lead generation and promotions to assure sales. But how are you keeping track of those sales? That's where sales KPIs come in.
Key Performance Indicators (KPIs) are measurable values that demonstrate how effectively a company achieves key business objectives. You can use KPIs to evaluate your success at reaching targets. These indicators can focus on overall business performance or center in departments, such as marketing, customer success, and, most importantly, sales.
Defining a KPI
Key Performance Indicators can be challenging to define. You need to find a "key" that will allow you to release your company's full potential. To define a KPI, you need to focus on the following guidelines:
Desired Outcome. What is your desired outcome? It could be creating brand awareness, ramping up sales, or providing better customer support.
Measure progress. How do you measure your progress? Increased revenue, increased clientele, and reduced customer callbacks are some examples.
Schedule Reviews. How often will progress be reviewed? You can choose between a daily, weekly, monthly, or yearly basis. The amount of time between reviews will depend on the size and duration of the project.
Influence the Outcome. What can you do to assure the outcome? For example, if you are trying to increase your sales, you can hire additional staff, hire a virtual sales rep or promote ads through social media.
Asking yourself these questions at the beginning of each project can lead you to better results and, therefore, a measurable outcome. You also need to consider your company's general objectives, the availability of your employees, and the communication channels you are going to use.
Now that you have a clear definition of what Key Performance Indicators are, you need to know how you can utilize multiple of them for your business. You must understand that the KPIs listed below are only for sales. Some of them will also apply to different departments within your company, but sales are the main factor in this article. In addition, the list below only serves as an example. You should take into account the guideline above to make your indicators. Different activities will require different indicators. It is also worth mentioning that you can find online software that can help you measure your sales KPIs, such as Datapine, Lucidchart, or Capterra.
1. Sales Growth
Starting off the list, sales growth is one of the most common KPIs. Most companies use their sales to track the company's growth. It can also help you discover the type of sales your customers are most attracted to. If one of your products is selling more than any other, this will be a performance indicator on what to invest next. Remember to be flexible when analyzing sales growth. A positive sales growth over a specific period indicates you are on track with your sales goals.
2. Sales Target
Sales target is tightly related to the prediction you made when starting your sales plan. With this metric, you will compare real-time results with forecasted predictions. The information from the comparison will help you understand how your customers are responding to an advertisement or to track inconsistencies that you need to change to assure the planned goal.
3. Campaign Sales
Campaign sales show the number of sales generated by each marketing activity you have performed. For this sales KPI, you will need to divide all of your sales campaigns. Some of the most popular sales campaigns include social media, emails, physical media (billboards, flyers, and newspaper ads), and business-to-business sales. By tracking your campaign sales regularly, you can determine which campaigns bring more income to your company. From there, you can create marketing strategies based on the results.
4. Employee Profit Margin
Upselling is one of the most used and ancient techniques for increasing sales. Employee profit margin is useful when management determines promotions or bonuses for each worker, specifically sales representatives. This profit margin can also help workers allocate their time and resources to deliver the best possible results. Don't forget to establish realistic targets! Take into account all of your sales representatives' strengths and abilities.
5. Customer Acquisition Cost
Depending on your line of business, the Customer Acquisition Cost (CAC) will be different. CAC includes all of the costs of getting a new customer or maintaining one. These costs include employee salaries, marketing, sales campaigns, and sales costs. Promotions and business proposals play a crucial part in this KPI too. Sales experts recommend recovering your CAC via yearly subscriptions. The goal is to increase customer loyalty and measure the individual revenue they are bringing to the company.
6. Average Revenue per Unit
The Average Revenue per Unit (ARPU) indicates the average customer's revenue from all your sales and subscriptions. ARPU is related to the Customer Acquisition Cost. Your ARPU must be higher than your CAC. If your ARPU is lower than your CAC, you will need to reassess your campaign. Your customer acquisition costs should be lower; otherwise, you are not making profits. The bigger customers you sign, the higher the Average Revenue per Unit will be.
7. Average Purchase Value
Average Purchase Value (APV) shows the average sales value of each transaction. For example, when going to the movies, you can purchase a medium or large soda. The APV of a large soda will be more significant due to the profit a business can make from it. With this example in mind, you can compare your average purchase value with past performances to understand if the metrics increased or decreased. This metric will also be related to the number of opportunities, hence the example. You can always buy two or more soda sizes.
8. Sales Opportunity
The Sales Opportunity KPI can help you optimize and increase the value of your sales metrics. With this indicator, you will differentiate trends that make your customers buy your product or service. Opportunities include contact information, past purchases, and trend indicators that will help you compare your current performance with past weeks, months, or years. Furthermore, it will allow you to identify bottlenecks in your sales funnel at an early stage of the sales plan.
KPIs are a great tool to measure and improve but are only great if you pay a lot of attention to them. Incorporating these sales KPIs into your business plan will help you identify new customers, engage with your clientele, and positively influence your company. Remember to pay attention to social media and general sales trends, so you can react accordingly and modify a campaign when necessary. In addition, check with your sales team regularly. Your sales team will keep track of these KPIs, so ensure they have valuable training and updated tools for their success.
Start implementing these KPIs into your sales plan and transform Black Friday into a success story.