As a business owner, you know that sales are the lifeblood of your company. Without making sales, you can’t stay in business for long. That’s why it’s important to track your sales performance metrics and make sure you are doing everything possible to increase revenue.
Here are some key sales performance metrics that you should be tracking.
1. Total Revenue
This is the most important metric of all. You need to know how much revenue your company is generating on a monthly, quarterly, and yearly basis. This will help you track your progress and make sure you are on track to reach your sales goals.
Total revenue is also a good metric and should be the key indicator in any sales performance management software.
Revenue is the key determiner of a successful business so it’s important to track this sales performance metric closely.
Doing so will give you key insights into whether or not your company is on track to reach its goals. Additionally, revenue can be used to benchmark your company’s performance against others in your industry.
2. Gross Margin
Gross margin is a key metric for evaluating your company’s profitability. It tells you how much profit your company is making after subtracting the cost of goods sold from total revenue.
To calculate gross margin, simply take your total revenue and subtract the cost of goods sold. Then, divide that number by total revenue. The resulting percentage is your gross margin.
For example, let’s say your company generated $100,000 in sales last month and the cost of goods sold was $40,000. The gross margin would be 60% ($60,000/$100,000).
Gross margin is an important metric to track because it shows you how efficient your company is at generating profit. A higher gross margin means your company is more profitable and efficient.
If you want to improve your company’s profitability, focus on increasing gross margin. One way to do this is by reducing the cost of goods sold. Another way is by increasing prices.
3. Lifetime Value of a Customer (LTV)
Lifetime value is the total amount of revenue that a customer will generate for your company over the course of their relationship with you.
To calculate LTV, you need to know two things: the average revenue per customer and the average customer lifespan.
Once you have those two numbers, simply multiply them together to get the lifetime value of a customer.
For example, let’s say the average revenue per customer is $500 and the average customer lifespan is five years. The LTV would be $500 x five years, or $2500.
Lifetime value shows you how much revenue you can expect to generate from each customer. It also helps you make decisions about where to allocate your marketing resources.
If you want to increase your LTV, focus on acquiring more high-value customers and retaining them for longer periods of time.
4. Customer Acquisition Cost (CAC)
Customer acquisition cost is the amount of money you spend to acquire new customers. CAC indicates how efficient your marketing and sales efforts are.
To improve your CAC, focus on reducing your marketing and sales expenses. You can also work on acquiring higher-value customers who will generate more revenue for your company.
Keeping CAC low is a key part of growing a successful business.
5. Market Penetration
Market penetration is a measure of how much your company has penetrated the market. It’s calculated by dividing the number of customers you have by the total addressable market.
For example, let’s say your company has 100 customers and the total addressable market is 1000. The market penetration would be 100/1000, or 0.01%.
There are a lot of different sales performance metrics that you can track, but these five are some of the most important. Make sure you are tracking all of them so that you can make informed decisions about how to improve your company’s sales performance.