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How to use KPIs in B2B Sales and Marketing

by Insight Onsite

Sales KPIs give SaaS businesses visibility into their operational health. Effective use of key performance indicators can provide vital insights into how your business is running. This is particularly true when you're working to refine your sales and marketing processes. The right sales KPIs can help you understand how your efforts are paying off, letting you identify the divides between sales and marketing and determine the root cause of any problems that emerge.

For example, if you have a situation in which your sales are down, it could be because of a marketing issue, a problematic sales process, underperforming representatives or poor lead generation. These types of problems can emerge easily and be difficult to pin down based on surface-level analysis. A deeper dive into KPIs can help you pin down precisely what is working and what isn't. The precision offered by effective B2B sales KPIs is the bedrock of a culture of continuous improvement. Whether you're looking to identify problems or pin down opportunities to grow, KPIs give you the insight needed to improve on an ongoing basis.

Establishing and leveraging KPIs effectively begins with getting your sales and marketing teams aligned.

Aligning Sales and Marketing 

Getting your sales and marketing teams on the same page is an essential first step in using sales KPIs effectively. The importance of alignment comes into play in choosing what KPIs you're going to prioritize and identifying which department is ultimately responsible for success or failure within a certain metric. For example, consider a simple metric such as the number of qualified leads. How are you determining if a lead is a qualified and who is responsible for ensuring non-qualified leads are filtered out before they get into the sales process?

Simply calculating the number of qualified leads you are generating doesn't give you visibility into whether your sales and marketing team is responsible for the problem. Are your marketing efforts aimed at prospects who your sales team isn't trying to reach? Is your sales team being so specific in who they consider qualified that your marketing team can't design campaigns accordingly? These are the kind of questions you can't answer with overly simple KPIs. However, you also can't determine how you want to deal with these types of questions until you get your sales and marketing team on the same page.

Bringing Sales and Marketing Together to Define Success

Your ability to leverage KPIs depends on defining what success looks like. Your sales and marketing teams can't do this in isolation. If they do, they may well set disparate priorities. This brings us back to the example about measuring qualified leads. If your marketing team is looking at your business and determining that you need to increase lead volume aggressively to ramp up revenue, they may well prioritize getting the message out to as many places as possible, even experimenting with new channels and audiences, to see what may stick. If, at the same time, a few of your sales reps have left the company and your sales team is focusing on efficiency to maintain sales at a lower cost, you could end up with significant problems.

In this scenario, your sales team is probably working to refine leads and be stricter about which ones they consider qualified, so they can put more effort into those most likely to qualify. Meanwhile, marketing is experimenting, leaving sales bogged down.

This example is simplistic in nature and highlights an isolated scenario that can be dealt with through a few simple meetings. But it also highlights how quickly poor alignment between sales and marketing can make it impossible to accurately evaluate success. Something as simple as tracking qualified leads becomes impossible because sales and marketing have a different idea of the priority. If you want to get value from sales KPIs, you need to create a common strategic vision and set of goals across teams. You'll want to perform this analysis across every stage of the funnel to ensure teams are on the same page about how to prioritize and measure different KPIs across the sales and marketing pipeline.

Key KPIs to Track 

Once you have your sales and marketing teams thinking similarly about how to achieve goals, you can start thinking about the specific KPIs that you'll need to track. There are important KPIs that should be prioritized, but having great alignment from the start gives you the perspective necessary to act on what those KPIs tell you. A few of the most important KPIs include:

  • Marketing sourced opportunity volume: This is one of the most vital marketing KPIs as it allows you see the direct link between marketing efforts and your organization’s ability to achieve booking targets.
  • Marketing sourced open pipeline: Comparing this KPI with your marketing sourced bookings can help you identify if your pipeline is growing or if you’re running into potential problems.
  • Leads generated and qualified: On their own, each of these metrics is simple and doesn't reveal much more than a raw number, b using them in tandem lets you determine what's working and what isn't. Comparing the two can help you identify what's working in marketing and how that translates into the sales process. On the marketing end, it’s vital to track marketing qualified lead volume, MQL to opportunity conversion rate, average deal size and cost per MQL. These data points are invaluable in fully understanding the lead generation and qualification process.
  • Conversion rate: Tracking conversions gives you a clear bottom line to evaluate how you're doing. Over-emphasizing this metric can be problematic as it doesn't tell you why you're converting sales or failing to do so, but analyzing it alongside other key metrics gives you visibility into how your pipeline eventually feeds sales.
  • Growth metrics: Pinning down growth often involves blending analysis of your bookings attainment rate, year-over-year bookings growth and your ability to fit within the “Rule of 40,” a guideline maintaining a growth rate 40 percent higher than your cashflow margin.
  • Cost of acquisition/Cost per opportunity dollar: It can be somewhat difficult to determine this metric – you'll want to assess how many hours are used to sell a client, what your typical marketing costs are and consider similar expenses that contribute to how much it costs to acquire a new customer. However, taking the time to determine the cost of acquisition can help you determine how much to prioritize expanding sales to existing customers versus reaching new customers. With a high cost of acquisition, you'll know you need to put more resources into getting value from customers. If you have a high cost of acquisition alongside a high churn rate, you'll need to find a way to reduce sales and marketing costs. Specifically, we recommend tracking TTM CAC payback months and incremental S&M spend efficiency. In the marketing segment, you can come to similar conclusions by tracking your cost per opportunity dollar, giving you vital insights into how efficiently you’re reaching prospects.
  • Average deal value: Your average deal value can be extremely revelatory in terms of resource allocation. When you know how much value will typically come from a sale, you can use the knowledge to determine if your sales and marketing budget is efficient or if you need to put more effort into driving efficiency and employing cost-cutting measures.

Creating Value from KPIs

Each of these KPIs can deliver some value on their own, but most of the potential gains come when using them alongside one another to receive deeper insights into your business. As previously mentioned, using each of these KPIs together lets you get a full picture of your sales and marketing processes. With a clear, data-driven perspective into your sales performance alongside key marketing data, you can:

  • Identify areas of strength where you are performing well and able to sustain that performance.
  • Recognize cost savings opportunities through or potential new value.
  • Measure specific sales and marketing goals in clear, actionable ways.
  • Assess progress on short-term goals while ensuring you can sustain long-term business health.

KPIs have always been essential for businesses, but today's data-driven world escalates the important. Business leaders can't afford to make decisions without having impactful information behind their choices. Leveraging sales data is becoming a powerful science for organizations. Deepening sales and marketing alignment and using KPIs in conjunction with one another to assess your efforts goes a long way in creating and sustaining business health. Without a deeper data analysis, you can end up relying too heavily on surface-level data points to assess your operations and can end up with significant blind spots.

Get More from your Data

There's a lot to be gained from sales KPIs. A venture partner that backs funding support with a practical partnership can work with you to help you ask the kind of penetrating questions about your business that you'll need to explore to get as much value as possible. Nobody knows your business like you and you don't need a partner that will strong arm you into a specific strategy. But a venture partner that will work closely to consult with you and fill in the resource gaps, can empower you to maximize value potential and drive sales growth. That's what we aim to do at Insight Partners. Contact us today to learn more about how we work with our partners to help them gather and use operational data effectively.

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