How to Use KPI Metrics to Increase Your Sales
It’s tough going into the unchartered territories of KPIs if you’ve never touched it before. You may be wondering, “what, exactly, are KPIs? How can they help me increase my sales?” The good news is, you don’t need to be a sales expert to read and analyze your KPI and metrics and use these statistics to increase your sales.
In this blog post, we’re going to go over the basics of KPI and metrics before teaching you how to use them to increase your sales. It’s not as difficult as you think!
KPI Metrics: What Are They?
KPI is short for “key performance indicator,” and it’s used to denote a number that demonstrates how companies are meeting their goals. By that very definition, then, KPIs are arbitrary. Each company has a different performance indicator that demonstrates how well — or not — their online marketing and sales efforts are doing to get them the results they want. In addition, different industries have different KPIs.
For example, if your industry requires you to keep track of a supply chain, a supply chain KPI would help you track things like shipments, inventory levels and administrative costs and services. On the other hand, you may be in a sales-driven industry (whether those sales are B2B, or B2C), and as an end result, your sales KPI would measure things like year-to-date (YTD) sales growth, profit margins and quote-to-close (QTC) ratios.
When it comes to KPIs and metrics, there are a few best practices to keep in mind, namely:
- Your KPIs need to always be evolving. As your business grows and changes, your KPIs and metrics need to change as well. This means that the measure of the success of your business needs to change along with the times, especially as you either make more money, get more clients, or change industries.
- Your KPIs need to be quantifiable. The only thing that matters in sales, in the long run, is dollars and cents — and this is true no matter what industry you’re in. Whatever you’re measuring needs to be able to be measured in the first place; if it can’t, it’s not a KPI.
- Your KPIs need to be in line with the strategic goals of your company. For example, if you’re in the restaurant industry, you might want one KPI that measures your supply chain and another for your sales, but having a KPI that doesn’t measure either of those would be unnecessary.
Which KPIs Metrics Matter Most?
No matter what industry you’re in, there are a few KPIs and metrics that matter above all else. Namely:
What is the cost of each lead generated?
- In other words, how much did you spend in time, money and labor to obtain that customer?
How fast did that lead respond to your initial outreach?
- Because of the increasingly digital nature of business, it shouldn’t take too long for a potential customer to respond to your initial outreach attempt. If it does, in fact, take longer than expected, you can use that metric to adjust your sales strategy.
Are all of your marketing materials that you make available to sales staff being used?
- If not, why not? Are you, therefore, spending money needlessly? Knowing this metric will help you cut unnecessary costs.
How big is the average deal you close?
- In looking over your data, can you clearly see which technique works best for each customer and what was done differently on your largest accounts?
Finally, what is your sales-to-revenue ratio?
- Remember: no sale you make is completely profit. There are expenses that come in the form of salaries, overhead, taxes and so on. Analyzing this metric makes it easier to obtain a larger profit margin.
It’s always important to measure progress regardless of industry or company size. When you take the time to look into the details of your KPIs, you can make a big difference for your company.