Sales Productivity In the Digital Era

The increasingly blurred line between B2B and B2C has inevitably changed the nature of sales, with customers demanding a more personalized selling process. Salesforce’s “State of the Connected Customer” report recently found that 58% of consumers and 77% of B2B buyers believe technology has changed their expectation of how companies should interact with them.

As sales mandates and productivity quotas rapidly change, sales teams often fall short of these rising expectations and are unable to meet their job quotas.1 The easy solution for companies is to replace sales reps. The more effective solution, given the high career turnover rate and cost of hiring a sales employee, is to take measures that increase the productivity of existing sales teams.

Impact of High Turnover Rate On Sales Productivity

The turnover rate for sales representatives has remained much higher than that of other roles.

According to Bridge Group Research, there is a minimum 20% annual turnover for sales talent and an average annual rate of 34.7% per year in the United States; this is almost three times as high as the average turnover rate for all roles, which LinkedIn reports as 13%.2 Further research also suggests that one out of ten B2B companies experience sales turnover rates of above 55%.3

This contrast in turnover between sales and other roles can be attributed to the difference in perspective between the representative and company with job performance, as well as an increasing competitive landscape for talent. SiriusDecisions also lists deficient compensation and lack of connection with leadership as top reasons why high-performing representatives leave their organizations.3

General Costs of Hiring a Sales Representative

This high sales turnover rate means that firms are continuously spending money to hire and replace those representatives who leave. On average, US firms spend around $15 billion a year training salespeople and $800 billion on incentives, only for attrition and other factors to reduce the return on those investments.4

The key to improving employee retention is first understanding the cost of employee turnover.

There are a few general estimations of the upfront costs behind hiring a new sales employee. A report by DePaul University states that it takes an average of $97,690 to replace a salesperson, while SiriusDecisions reports that the average turnover cost of a B2B sales representative can range above $200,000.5, 6

However, the true cost of hiring an employee in 2020 is much more complex with additional hidden costs. Employers must consider the full cost breakdown of recruiting, onboarding, and training employees until they both reach full productivity levels and cover intermediate loss in overall company efficiency.

Hidden Costs in Sales Turnover

Hidden turnover costs come from the time and productivity lost in two places: recruiting, and training and onboarding new representatives.

Recruiting

Businesses are constantly searching the market to fill vacant positions with top sales talent. Recruitment during this period often draws time out from human resources and sales leadership and impacts their respective productivity. After considering commission for external recruitment firms, McKinsey estimates that some organizations spend roughly $15,000 in internal productivity to select a mid-level sales position.7

Companies also suffer costs from supporting a vacant position during recruitment. The average vacancy costs $500 per position per day, meaning that a vacant position itself costs at least $22,000 for the average recruitment period (44 days).7 This number often increases to anywhere between $25,000 to $50,000 when lost productivity and customer dissatisfaction are also considered.8

Training and Onboarding

Once a new salesperson is hired, they often undergo training and onboarding processes to establish expectations and mentorship until they reach full productivity..

CSO Insights research found that 71% of companies take 6 months or longer to onboard new sales reps, while a third of all companies take 9 months or more.2 This indicates that a majority of B2B sales representatives are not operating at full productivity and are unable to sell complex solutions for at least half of their first year on the job.

A majority of B2B sales representatives are not operating at full productivity and are unable to sell complex solutions for at least half of their first year on the job.

companies can spend up to 2.5 times of the average salary just to fill an open sales position

Onboarding also involves time invested by managers, outside trading companies, and co-workers to train new hires. By assuming that the cost of a loss in internal time and productivity is $500 per day, conservatively approximating a salesperson will take 6 months until full productivity, and estimating that an average rep receives $3,400 in training a year, onboarding a new employee alone can cost a business over $93,000.7

Therefore, the total cost of recruiting and onboarding a new sales rep conservatively ranges between $133,000 and $158,000 when considering the upfront and hidden costs. Given that an average annual salary is $60,000 per year for a US sales rep, companies can spend up to 2.5 times of the average salary just to fill an open sales position.

How to Increase Sales Productivity

The data above show that hiring more personnel to increase the productivity of a sales team comes at a significant cost. A more effective solution is investing in efforts to improve the existing sales team’s employee satisfaction and provide better high quality leads (HQLs).

Improve Existing Team’s Employee Satisfaction

Improving the onboarding process and providing digital sales technologies are two ways to improve employee satisfaction and decrease turnover.

According to Forbes, ineffective onboarding is a major reason why companies lose 20% of new hires within the first 45 days and 17% of new hires within the first three months.9 Employees who leave during the onboarding period results in a company suffering training costs at a loss; early employee turnover also contributes to the turnover cycle by increasing the costs of replacing sales talent for a single position.

Instead of stretching the onboarding process to last as long as twelve months, businesses can accelerate their onboarding process by organizing their roadmap into a three month formal timeline. A positive three month training process not only results in 69% of employees being more likely to stay with a company for more than three years, but also leads to reps who drive more sales.10, 11

Providing technology that supports virtual selling can also improve productivity. CSO Insights states that 88% of sales professionals cannot find critical sales material on their smartphones, while 60% of sales organizations experience longer sales cycles from lack of proper tools.1 As a result, one of the top reasons high-performing sales people leave organizations is concerns about ability to meet market needs.

Virtual selling has increased in popularity as technology, transparency, and efficiency play bigger roles in the sales process. Research shows that sales reps build 3.2 times more customer connections in front of screens than meeting with customers in person. Equipping sales people with new software and technology can improve employee satisfaction, reduce costs, and improve long-term sales success.3

A positive three month training process not only results in 69% of employees being more likely to stay with a company for more than three years, but also leads to reps who drive more sales.

88% of sales professionals cannot find critical sales material on their smartphones, while 60% of sales organizations experience longer sales cycles from lack of proper tools.

Sales reps build 3.2 times more customer connections in front of screens than meeting with customers in person.

Increasing the Number of HQLs

A sales person is only as good as his or her leads. When sales reps receive poor leads, the total time and effort they waste in qualifying, engaging, and selling to low-interest prospects is significantly more expensive than the time and money spent in pursuing better quality leads.

Low-quality leads have many hidden costs: wasted time, resources, and human capital. On average, bad lead prospect data costs sales departments 550 hours and $32,000 per representative.12 Assuming the average cost of $60,000 per year for a sales representative, not including additional payroll-related expenses, this means individuals are spending over 50% of their time and payroll working with low-interest customers—for SMEs, this number can often be higher at 85%.

Companies can focus efforts on increasing lead quality to increase the number of annual closed deals. High-quality leads not only increase conversion rates but shorten the overall sales cycle, leading a representative to increase productivity by closing 10 times more deals in a single year. For more information, read our previous article on “The Cumulative Impact of High and Low Quality Leads.

Works Cited

  1. https://www.salesforce.com/blog/2018/05/sales-future-trends-research.html
  2. https://www.forbes.com/sites/christinecomaford/2016/06/18/how-leaders-can-engage-retain-top-sales-talent/#15470bb55cbb
  3. https://www.linkedin.com/pulse/why-turnover-so-high-b2b-sales-anthony-chaine
  4. https://blog.hubspot.com/sales/employee-turnover-rate
  5. https://www.forbes.com/sites/jeffhyman/2018/10/03/merrygoround/#3924ef44313c
  6. https://www.truesalesresults.com/2019-b2b-sales-predictions/
  7. https://www.membrain.com/blog/how-much-are-you-spending-on-lost-sales-talent
  8. https://www.mckinsey.com/business-functions/marketing-and-sales/our-insights/maximize-the-lifetime-value-of-your-sales-force
  9. https://cdn2.hubspot.net/hubfs/3319111/ConnectLeader_June2017/PDFs/CL_DePaul_Survey_2__3_.pdf?t=1505990163541
  10. https://blog.atrivity.com/how-to-shorten-new-hire-time-to-productivity-with-90day-onboarding
  11. https://www.process.st/b2b-sales-management/
  12. http://www.marketingprofs.com/opinions/2015/28122/what-is-bad-data-costing-your-company

Five Factors Affecting Revenue Growth

five factors affecting revenue growth

A study by Bain and Company shows an alarming trend: the cost of sales and marketing is growing faster than revenues. Half of the companies surveyed experienced their sales and marketing costs rising faster than revenues. Ironically, when companies achieved high revenue growth, their costs of sales and marketing, as a percentage of sales, remained flat or even declined.

This study, along with others, proves a fundamental shift in the B2B world: Buyers have dramatically changed how they buy, while sellers continue to sell as they always have.How do sellers adapt to the changing demands and preferences of the modern buyer while pursuing continuous revenue growth?

Through the Five Factors that accelerate revenue growth; these factors are:

Factor 1: Chose the Right Market Focus for Revenue Growth

This first factor advocates that you select, market, and sell to the right industry segment for your unique business’ products and services. Of all of the five factors, this segmentation and focus has the greatest potential to increase or decrease your revenue growth.


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Factor 2: Remove Friction from the Sales Process

The old selling process is being replaced. Today’s buyers want to work exclusively with vendors who align their selling process to the buyer’s preferences. Buyers prefer to research and reach out to companies that the like. To capture the attention of this new brand of buyers, sellers must align their sales and marketing processes with their buyer’s expectations and preferences.


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Factor 3: Tightly Align Sales & Marketing

To achieve high revenue growth, companies should perceive their marketing and sales efforts and departments as intimately linked. If your marketing and sales teams see themselves as a united force, at least 75% of your leads should be directly generated by marketing.


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Factor 4: Leverage Intelligent Sales & Marketing Data for Revenue Growth

With the overwhelming amount of data present in sales, you must be careful to only provide sales reps with intelligent data. Intelligent data is numbers and figures that enable sales reps to be relevant, engaging, and convincing in their interactions with buyers. The targeted capabilities of intelligent data enables your sales team to more effectively speak to leads and prospects, increasing the likelihood of their conversion into buyers.


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Factor 5: Manage Sales & Marketing Operations by Metrics

Most B2B companies today track some form of metric, but usually only in regards to sales departments. To generate revenue growth at a faster rate than costs, companies should invest in tracking the performance of their marketing campaigns. Factor 3 informs us that marketing is just as important, if not more important, than sales at generating leads and revenue growth.


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In short, buyers are demanding more from sellers. They want a real partner that can ceaselessly add value to their own offering, enabling them to renew non-stop their own competitive advantage. In other words, they want to work with a top tier provider. This is no easy demand—which is why, for most B2B companies, the cost of marketing and selling is growing faster than revenues.

To fully learn how to best leverage these Five Factors to reduce your costs and grow your revenue, download our full whitepaper.

Read more about revenue growth strategy here.

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The Cumulative Impact of High and Low Quality Leads

The B2B industry is infamously known for its time-consuming sales cycle. While B2B sales are challenged by more decision-makers than B2C, they are also impacted by varying-quality leads that make the process even more unpredictable. 

A sales person is only as good as his or her leads. When sales reps receive poor leads, the total time and effort they waste in qualifying, engaging, and selling to low-interest prospects is significantly more expensive than the time and money spent in pursuing better quality leads.

High Quality Leads vs. Low Quality Leads

Marketing and sales departments are now more intertwined than ever in the sales process. Marketers, pressured to meet individual quotas, often turn over low-cost, low-quality leads to the  sales organization. However, these leads don’t convert well and instead make the company suffer hidden costs that can damage interdepartmental trust.1

High quality leads (HQLs) are sourced from buyers who have shown more interest in finding out more, mostly by consuming quality content provided by the seller, have expressed interest in following-up, come from within the right market space and types of accounts, and have the right buying roles. Low quality leads (LQLs) are often scraped online, mass collected, are primarily collected as a result of email opens or clicks–there is no real reason to believe they have purchase intent. 

Experienced sales people are able to ask the right questions in order to identify a potential customer’s true interest in the solutions provided: Are opt-ins based on content downloads, or were they sourced from promotions that incentivize responses? Is there detailed research activity for each account? Does the data illustrate high probability for conversion?

The False Economy of Low Quality Leads

The current sales process exposes the false economy of low quality leads, or the notion that more low-cost leads lead to higher conversion rates at a fraction of the cost. Ultimately, if these leads are mostly made of false-positive LQLs, it can cost more to blindly pursue a number of leads in hopes of engaging the small percentage of companies who are genuinely interested in a product.

Below is a breakdown of lead conversion rates for low, strong, and top quality leads throughout the marketing and sales processes using data from SiriusDecisions.2

Lead quality has a progressive effect on each conversion rate throughout the sales funnel. The total closed deals per 1000 leads for average is only two, maybe three if lucky. Assuming the average lead quality is mostly composed of low-cost LQLs, the number of closed deals for every 1000 leads per year for HQLs is five times greater than deals closed form LQLs.

What the data shows is that while low-cost leads may present upfront savings, it can cost up to five times more to convert than HQLs in the same time frame; even if low-cost leads cost a third of what a quality marketing offers, representatives will still spend almost twice as much to convert them in the long run. Starting with HQLs can result in lower cost per conversion and increased number of closed deals, both factors that contribute significantly more to a company’s revenue.

Hidden Costs of LQLs

The hidden costs associated with LQLs come from wasting time, resources, and human capital. On average, bad lead prospect data costs sales departments 550 hours and $32,000 per representative.3 Assuming the average cost of $60,000 per year for a sales representative, not including additional payroll-related expenses, this means individuals are spending over 50% of their time and payroll working with low-interest customers—for SMEs, this number can often be higher at 85%. According to SiriusDecisions, each bad lead can also cost as much as $100 per record.2  For instance, the cost of 5,000 bad leads is about $500,000. These numbers can add up very quickly.

The Solution to Meeting Sales Projections

The big B2B question: How can companies consistently meet sales projections?

The solution to this problem statement is not hiring more people, even though this continues to be the traditional response. At its core, sales projections are caused by insufficient high quality lead generation. Salesforce reports that 57% of sales reps expect to miss their yearly quotas, with the actual average quota attainment rate falling slightly lower at 54%.4, 5 Employee dissatisfaction stems from potential low opportunities for commission ultimately caused by inability to close deals. These are all likely factors contributing to the 27% annual turnover rate among US salespeople—twice the rate in the overall labor force.6

Given the data, there are two potential solutions. The first is hiring only stelar sales reps experienced in differentiating between low quality and high quality leads. The problem with this approach is that stelar sales reps are at a premium–there aren’t enough of them to fill a sales organization, even if a company could afford paying top prices for all its sales reps.

The second solution lies within the data: focus efforts on lead quality and the cumulative nature of HQLs to potentially increase the number of annual leads by tenfold. In other words, build your sales organization based on the average sales competency level, but feed all your sales reps with HQLs. The difference is dramatic, as we shall see below.

Cumulative Nature of HQLs

As demonstrated, HQLs have an undeniable effect on conversion rates that trickle down to revenue, profit, and valuation.

Not only do top HQLs increase the number of closed deals, but they also often shorten the overall sales cycle. The data below has been modified to reflect this change in each respective buying cycle, assuming that strong and top quality leads take the upper and lower range bounds for the average B2B buying cycle, respectively.2

These numbers illustrate the full, cumulative effect of HQLs in the sales pipeline. Given the higher conversion rates and shorter buying cycle, top HQLs can lead to a representative closing 10 times more deals in a single year. Another way of putting it is that low quality leads can cost as much as ten times more than high quality leads.

Next Steps

Contact us to discuss how we can help you begin generating High Quality Leads to significantly improve your sales productivity and profitably hit your sales targets each quarter. Read more bout the impact of High Quality Leads on sales and profits here.

B2B Selling in the Era of the Digital Buyer

digital selling in the B2B marketplace

 

The B2B marketplace is evolving faster than ever. In an increasingly automated world, sales representatives must leverage technology and analytics to adapt to changing customer needs and drive higher-value strategic sales through digital selling. Emerging research from McKinsey shows that B2B sellers often struggle between choosing a great sales force and great digital capabilities. In today’s digital age, they will need both.

What is Digital Selling?

The new era of B2B sales is defined by digital selling, the integration of AI technologies and/or predictive analytics that enhance the productivity and effectiveness of a company’s sales reps. 

In the past five years, sales productivity continued to decline by 14% despite billions invested in sales operations.1 Digital selling technologies give companies new opportunities to add value in customer experience and overall business growth as more traditional outreach channels become obsolete; 92% of B2B decision makers do not respond to cold calls and 53% of B2B buyers prefer going online to interacting with salespeople.2 Providing consistently high-quality customer experiences is now a telling competitive differentiator in the B2B market.3 Ultimately, digitization has become a sales team’s key to managing sale profitability, optimizing customer analytics, and prioritizing actions based on insights about top priorities.

The rise of digital selling can be attributed to recent changes within the B2C industry. With the emergence of Google, Amazon, and Uber, companies have completely reshaped customer interactions within their industry, and those changes are spilling over into B2B companies. Now more than ever, B2B customers expect the same level of personalization and frictionless interactions.4

From Selling to Digital Selling

The B2B digital selling experience is relatively low in maturity, especially when compared to B2C businesses. While 73% of companies recognize that new and returning customer expectations for more meaningful services and sales experiences are much higher than before, only a little over half of companies have initiated efforts towards digital strategies that address customer acquisition and retention in the past three years.5 Furthermore, only 10% of companies surveyed by McKinsey stated that digital was a top investment priority.3 This continued reliance on a SDR’s personal client relationship puts incumbents in a disadvantageous position against digital natives who prioritize customer expectations. 

The fastest-growing companies will harness the power of advanced analytics and machine learning to address fundamental strategic issues: new high-value sales opportunities, effective resource allocation to existing clients, actions that directly result in sales productivity, etc. These digital leaders are expected to generate 3.5% more in yearly revenue and average 15% more in profits than the rest of the B2B field.3

Leveraging Human and Digital Capabilities

The emphasis on digital selling can also be attributed to a disconnect in buyer needs and seller actions, which can compromise even the strongest B2B relationships. Sellers who solely focus on digital updates can find themselves disconnected from long-time customers; those who solely focus on traditional sales cycles lack initiative on digital investments critical to modern commerce.6

To be successful, it is important for companies to leverage both human and digital capabilities to provide an intelligent, personalized level of service. A 2019 Accenture study found that companies who adopted this service-over-sales mindset saw quick benefits, with over 95% reporting higher profitability or increased market share. Additionally, companies were almost 20% more likely to employ new technology platforms to help overcome service barriers, and twice as likely to store centralized data sets that personalize customer offering and engagement across omni-channel selling.6

Digital selling strategies can complement B2B companies by standardizing a sales approach that provides more control over allocating resources and investments to high-value opportunities. The rise of service-first and self-service selling can not only give buyers autonomy over the sales experience, but also optimize the usage of customer data in the sales process.3 Combining these digital tools with traditional sales intuition can modernize a business’s process in a constantly changing market with shorter product life cycles.2

Drivers of B2B Sales Growth

The top two priorities that are driving B2B sales growth are empowering customer-facing sales teams and integrating digital technologies.7 AI and data analytics are common denominators in both of these processes.

Empowering Customer-Facing Sales Teams

Digitization gives customer-facing sales teams more data—and consequently more information—on how to better acquire new clients and engage existing customers.

This shift towards human-AI collaboration enables sales teams to pivot towards higher-value opportunities by automating tedious and repetitive activities. Representatives can then use advanced analytics to help potential customers understand how products or services provide added value by augmenting their knowledge on successful sales tactics; an example is using deal analytics to enhance pipeline and opportunity management. Through these processes, companies can harness customer data about sales efforts and modify behaviors to better optimize revenue growth.

Advanced analytics also helps sales teams achieve results in an increasingly crowded market. Propensity modeling and automated forecasting can intelligently identify where high-potential sales opportunities are for new and existing clients. On a higher level, analytics support the evolution of new sales models. By understanding the profile of high-margin digital sellers and identifying their strong points, companies can change employee experiences to see results in recruitment and compensation KPIs.

Integrating Digital Technologies

Digital technologies are the gateway into developing new business models and empowering sales teams to drive higher-value strategic sales.7 Again, the greatest benefits are realized when both human and digital capabilities are used to their full advantage.

Search-engine marketing activities, performance analytics, and digital assistants can be used to collect a “Golden Record” view of customers that continuously feeds into AI and machine learning algorithms. Information is then reanalyzed to make targeted marketing automation offers, such as personalized landing pages. With the potential to cut an SDR’s time spent on sales administration by 60%, significant reductions in cost per sale can be achieved. 

True digitization in the new era of sales is a continuous process and faces the strong challenge of legacy pradigims.4 However, it is imperative for companies who have not prioritized digital to begin now. The B2B sales process is defined by digital selling, and those who have already invested in digitization will continue to do so at a more aggressive rate.5

Sales Metrics and KPIs in B2B Sales

sales metrics and KPIs displayed on a laptop screen

Optimizing sales productivity requires a top-down approach that synthesizes business sales goals with an individual representative’s daily performance. Sales metrics, specifically key performance indicators, provide visibility into the fundamental factors that ultimately drive sales initiatives and scalable growth. 

What are Metrics and KPIs?

Sales metrics and key performance indicators (KPIs) are oftentimes used interchangeably, but are more accurately described as two sides of the same coin. 

Sales metrics are data points that represent performance, whether it be for an individual, team, or company. They are broadly used to track progress towards goals, predict future growth, and identify any complications that may arise with sales plans and targets midway through a sales cycle.1 Many companies set goals based on lagging indicators, a type of metric that reports on previous time periods such as total sales or revenue per time period. Leading indicators—number of follow up calls, number of calls to prospects—are metrics that can have a real-time impact on course corrections.4

KPIs, however, are the key sales metrics specifically identified to best track the performance of a business or individuals with their respective objectives. Understanding these key indicators can turn numbers like first response time into actionable growth plans. Because there are many common metrics across managing sales teams, it is important to identify KPIs that are relevant within the specific industries and company departments. 

Sales metrics and KPIs are the backbone of an increasingly data-driven sales industry. On their own, KPIs are just numbers on a dashboard; they become meaningful only when analyzed for underlying trends and themes that can contribute to making a sales team more efficient.2 By examining drivers for successful goal attainment, B2B businesses can use strategic insights from KPIs as a means to align key targets with company growth.3 Without metrics, nothing else matters.

Best Practices in Managing Sales Performance

Monitoring the right KPI metrics can be the difference between driving scalable growth and fighting a flatlining revenue. A Salesforce study revealed that high-performing sales teams are 3.5 times more likely to use sales performance analytics than underperforming teams, which enable them to measure performance during a set time period against goals.4 Around 97% of B2B marketing decision makers also say growing revenue, a common KPI, is a top priority.

Metrics are not intended to be the final outcome, but rather a measure of progress. Consequently, it is important to translate sales KPIs into initiatives that make sense to both the executive team and sales representatives themselves. By choosing a mix of lagging indicators and leading indicators, companies have access to data they can interpret in relevant contexts; action-oriented KPIs inspire action and can help uncover possible causes when goals are not met. Managers and executives can then compare dashboard analytics with previously established benchmarks in order to assess trends in sales activity and give the directions necessary to yield the best results. 

With many companies increasing their use of KPIs and sales metrics, only the smart companies will see their sales increase as a result. For example, the number of follow-up calls that directly result in sales is a clearly defined and measurable KPI, allowing sales managers to tweak this variable and measure the results.4 

Clearly defining KPIs is an effective first step, but what is truly powerful is using these indicators as strategic levers towards a greater initiative of driving new sales growth. Only after establishing KPIs that monitor productivity can a business make strides towards their overall business goals.

Sales Team KPIs

General B2B Sales KPIs

At baseline, KPIs can connect how a B2B sales team directly relates to a company’s overall performance, health, and growth potential. It is important for sales executives and managers to interpret and use KPI data about their teams continuously throughout the sales cycle.

  1. Marketing qualified leads (MQL) to sales qualified leads (SQL), also known as lead to opportunity, is a KPI that requires synergy between marketing and sales departments. In the MQL stage, businesses have expressed interest in products or services through signing up for the email list, downloading website content, or other avenues. A company moves into the SQL stage after they have been vetted to speak with a salesperson and have potential to become a prospect client. The MQL to SQL conversion rate can determine if marketing efforts are leading to a high-quality pipeline, as well as provide visibility into the quality and volume of leads handed over to a sales team.6
  1. Net new revenue attainment, the total additional revenue generated from acquiring new customers and investing in existing businesses, can reflect the overall contribution to a business’s revenue growth. By comparing planned and actual revenue performance, sales leaders can then identify the changes needed on a representative level in order to increase organizational attainment percentage (percentage of the revenue plan that was achieved).3
  1. The Net Promoter Score (NPS) is a growth-focused leading indicator that measures company health from customer loyalty and satisfaction. If revenue is dropping and/or the number of leads decreases, the NPS can assist sales KPIs in understanding their customer base. Knowing if and why customers lack loyalty enables businesses to uncover what is turning away potential customers and improve the sales experience of existing clients.5
  1. Sales cycle length offers information about where the sales process is stalling, time-to-onboard, and churn rates. With data on the average time taken from first contact to closing the deal, managers can identify what sales cycle length produces the highest number of closed-won businesses and the success rate of those deals down the line to adjust accordingly. For example, if a representative is closing deals in record speed but frequently have dissatisfied customers who churn after a few months, a longer sales cycle length could result in a higher retention rate.7

Prospecting

Lead generation and pipeline creation KPIs are useful metrics for sales prospecting as representatives make outbounding efforts in hopes of creating opportunities.

  1. The number of accounts contacted is a leading indicator of how many opportunities the sales team will move forward to account executives; this can include the total number of companies prospected, as there may be multiple points of contact, and total number of companies that have responded to outreach. A conversation between sales representatives and account executives should occur to establish the level of contact needed before the moving converting a prospect into a sales opportunity.3
  1. Average lead response time is how long it takes for a sales representative to respond to a contact made from a lead. A Harvard Business Review study “The Short Life of Online Sales Leads” comments on the idea that time kills all deals, revealing that the average company responds to leads within 42 hours of an inquiry—if at all.8 Every minute matters in sales. Ideally, representatives should follow up with leads quickly to increase the chance of it being high quality. To decrease lead response time, representatives can explore options in live chatbots and automated email workflows.
  1. An ideal sales process is defined by low system touch, or low customer interactions that indicate salespeople are efficiently closing new leads. Salesforce estimates it takes six to eight touches to generate viable sales leads, while other sources report seven to thirteen.10 If an individual has missed their target quota and additionally has a high number of touchpoints per closed-lost deals (ex. 4 video meetings, 15 email correspondences, 8 phone calls), they may benefit from restrategizing their techniques which can refine the overall team’s average sales cycle.
  1. Opportunity creation by lead source is a KPI that should be consistently monitored. For outbound SDRs, this metric is commonly the percentage or number of sales opportunities created through proactive outreach on different platforms. B2B sales have a low average conversion rate of only 10 to 15% of opportunities typically leading to sales. Tracking the common sources of sales opportunities gives representatives the data that shows what efforts are effective in driving sales opportunities.
  1. Pipeline creation is an important predictor of revenue generation, and should be monitored on a weekly, monthly, and quarterly basis; the more visibility into a sales pipeline, the more visibility into revenue. If the opportunity pipeline is decreasing in size, representatives have the information to identify where in the process prospects are leaving and improve those areas; insight may lead back to the quality of opportunity creation from certain lead sources.10

Field Sales and Inside Sales

Metrics on new businesses and existing businesses are critical for field sales and inside sales representatives. These KPIs not only position efforts as contributing to larger team goals, but also stimulate healthy motivation to reach on-target earnings.

  1. Once sales development reps (SDRs) track where leads are coming from, a KPI on estimated revenue by lead source can measure what portion of a company’s revenue derives from major sources. If a company has $40,000 revenue in sales with half from social media engagement, then social media outreach would account for 50% of total revenue. Comparing current metrics with historical data can both show profitability of each source and figure out where sales representatives should be dedicating efforts in order to meet revenue targets.
  1. The average revenue per account (ARPA) is the average revenue per customer upon closing a deal. Tracking ARPA by business segment is useful for comparing average sales prices or transaction sizes within respective market averages. ARPAs can expose trends in account expansion and contraction and evaluating effective or changing pricing plans within monthly cohorts. This metric varies depending on product and pricing levels, so constant data collection from past quarters and years can serve as effective benchmarks and target predictions.11
  1. A new business win rate assesses how efficiently account executives are turning qualified leads into new customers and revenue. Important things to keep in mind when analyzing new business win rates are lead source and cohorts: inbound opportunities will inherently have a higher win rates than outbounding efforts, and win rates will fluctuate as companies in the pipeline mature at different stages. Ultimately, the goal of new business win rates is to establish reliable benchmarks to predict future targets. Representatives can improve win rate calculations by cross-referencing win rates of cohorts with past data or computing the metric on a rolling basis.3
  1. Together, gross customer churn rates and churn dollars provide insight into customer behavior. Because it is anywhere between five and 25 times as expensive to acquire a new customer than to retain an existing one, customer retention and expansion are key for driving sustainable revenue growth. Recognizing patterns in large churn events or the occurrence of many smaller churns across an existing customer base indicate what products and services inspire customers to return and contribute to company revenue, which allows representatives to optimize that information. 
  1. SDRs can determine if certain verticals are responding well to products or service pitches by tracking upsell and cross-sell numbers. Established credibility and knowledge of client preferences provide encouragement to expand customer accounts and decrease the likelihood that a company will churn. The more integrated a customer is, the more difficult it becomes for them to switch vendors.12 
  1. Percentage of time spent demoing is a KPI that can provide insight into an SDR’s productivity and help understand how long it takes to reach revenue targets. This metric tracks how much time is spent demonstrating products to potential customers. The faster an individual can hit sales targets, the faster a company can hit sales productivity.10

Case Study: Intercom

Intercom is a business chatbot unicorn that provides a platform for businesses to communicate with customers. Since its founding in 2011, the company has used KPIs to drive business closer to the next level of sales growth.

As Intercom’s customer base moved upmarket in 2014, the company utilized KPIs as a way to monitor new outbound initiatives that would help reach global revenue targets. LB Harvey, Intercom’s SVP of Sales & Support, hired outbound sales representatives to sell to larger companies, working with the finance team to establish realistic metrics and timelines. This process of explicitly defining KPIs on win rate, new net revenue, and number of opportunities created allowed the department to plan for how they could achieve an ROI of 4X on each outbound SDR.

Harvey also shared the importance of KPIs during product launches. When Intercom launched their new sales and marketing chatbot, setting a specific target for new net revenue gave sales managers the opportunity to come up with a clear amount of pipeline each representative needed to create. Tracking a dedicated KPI ensured that their “investment in our product has a positive financial impact.”

These Five Factors Are Affecting Revenue Growth

five factors affecting revenue growth

A study by Bain and Company shows an alarming trend: the cost of sales and marketing is growing faster than revenues. Half of the companies surveyed experienced their sales and marketing costs rising faster than revenues. Ironically, when companies achieved high revenue growth, their costs of sales and marketing, as a percentage of sales, remained flat or even declined.

This study, along with others, proves a fundamental shift in the B2B world: Buyers have dramatically changed how they buy, while sellers continue to sell as they always have.How do sellers adapt to the changing demands and preferences of the modern buyer while pursuing continuous revenue growth?

Through the Five Factors that accelerate revenue growth; these factors are:

Factor 1: Chose the Right Market Focus for Revenue Growth

This first factor advocates that you select, market, and sell to the right industry segment for your unique business’ products and services. Of all of the five factors, this segmentation and focus has the greatest potential to increase or decrease your revenue growth.


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Factor 2: Remove Friction from the Sales Process

The old selling process is being replaced. Today’s buyers want to work exclusively with vendors who align their selling process to the buyer’s preferences. Buyers prefer to research and reach out to companies that the like. To capture the attention of this new brand of buyers, sellers must align their sales and marketing processes with their buyer’s expectations and preferences.


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Factor 3: Tightly Align Sales & Marketing

To achieve high revenue growth, companies should perceive their marketing and sales efforts and departments as intimately linked. If your marketing and sales teams see themselves as a united force, at least 75% of your leads should be directly generated by marketing.


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Factor 4: Leverage Intelligent Sales & Marketing Data for Revenue Growth

With the overwhelming amount of data present in sales, you must be careful to only provide sales reps with intelligent data. Intelligent data is numbers and figures that enable sales reps to be relevant, engaging, and convincing in their interactions with buyers. The targeted capabilities of intelligent data enables your sales team to more effectively speak to leads and prospects, increasing the likelihood of their conversion into buyers.


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Factor 5: Manage Sales & Marketing Operations by Metrics

Most B2B companies today track some form of metric, but usually only in regards to sales departments. To generate revenue growth at a faster rate than costs, companies should invest in tracking the performance of their marketing campaigns. Factor 3 informs us that marketing is just as important, if not more important, than sales at generating leads and revenue growth.


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In short, buyers are demanding more from sellers. They want a real partner that can ceaselessly add value to their own offering, enabling them to renew non-stop their own competitive advantage. In other words, they want to work with a top tier provider. This is no easy demand—which is why, for most B2B companies, the cost of marketing and selling is growing faster than revenues.

To fully learn how to best leverage these Five Factors to reduce your costs and grow your revenue, download our full whitepaper.

Read more about revenue growth strategy here.

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