Running a B2B business is difficult when you have few customers and a lot of competitors. Only the top businesses are capable of achieving those sought high conversion rates—convincing other businesses to include a business in their vendor pool.
Converting a potential consumer into a client is a lengthy process that involves several interactions. Additionally, due to the high value and long-term commitment associated with B2B sales, conversion rates are often lower than those associated with B2C sales.
Acquiring corporate customers needs forethought and a laser-focused strategy.
Seven Sales Metrics to Help You Develop a More Effective Marketing Strategy
I’ll highlight B2B sales metrics in this post that will help you achieve the desired 10% conversion rate. Because data is your greatest friend, ensure that you use the insights gained from these metrics to strengthen your marketing strategy.
- Cost of Customer Acquisition (CAC)
Before you can develop an efficient marketing strategy, you must first determine the cost of acquiring new consumers for your business. Your objective should be to maintain the number down, since this indicates that your techniques are working and that you can acquire clients for less money.
CAC is calculated by multiplying the entire sales and marketing expenditure for a certain time by the number of new customers acquired during that time. For instance, if you spend $1,000 on marketing expenditures in one month to gain 100 clients, your CAC is $1,000/100, or $10.
- Rate of Conversion
Conversion rate is almost certainly the most critical sales metric you’ll measure. It calculates the ratio of actual transactions or subscriptions to the number of leads, site views, visits, articles, or emails required to generate such conversions in your sales funnel.
Conversion rate is very valuable for assessing the efficacy of your marketing activities. Assume you’re announcing a product launch using a mixture of email marketing, social media, and cold calling. Divide the conversions (or sales) you get from each channel by the number of emails, social media postings, and phone calls you send to determine which channel is the most effective for your niche.
- The Velocity of the Sales Pipeline
The sales pipeline is the complete sales process, beginning with the first contact with the buyer and ending with the closing of the purchase.
The sales pipeline may be compared to a boat race. A boat’s speed is defined as the distance it goes in a certain length of time: When your boat travels 20 feet in two seconds, it travels at a rate of ten feet per second. With an average rowboat traveling at just about 9 feet per second, your boat (together with the rowers and the equipment they need to row it) is rather fast.
The same rationale applies to the sales and marketing sales.
Due to the complexity of your sales process, estimating the pipeline velocity will be a little more challenging. To determine the velocity of the sales pipeline, apply the following formula: SPV is (Number of leads * Average deal value * Win rate) / Days in the sales cycle.
You want to maximize your SPV number.
The longer your sales cycle is (as is the case for B2B firms vs B2C firms), the more leads, a greater win rate, or a larger average transaction value you must generate to compensate.
For instance, if you want to maintain a $10,000/day sales pipeline velocity with just a few leads every sales cycle, you must either complete more high-value transactions or reduce your sales cycle.
- Lead Response Time on Average
You understand where your leads originate, but what happens to them after they enter your sales funnel? Is your sales staff timely in responding? That is what the average lead response time metric identifies.
Because the early bird does really get the worm, your sales staff should respond within minutes. According to Dealhub’s analysis, half of all potential buyers prefer the business that answers first. Avoid adhering to the industry norm of 61 hours; you will lose a significant portion of your leads this way.
Utilize an effective email workflow system that routes questions to the appropriate person and, more importantly, that monitors social media enquiries. Your B2B Web design firm should be able to assist you in setting up a procedure that includes email alerts and a live chat system that enables site users to promptly engage with a representative.
- Customer Loyalty
You’ve acquired a new client, and your sales funnel is operating normally. However, are new customers loyal to you? Customer lifetime value (CLV) is a metric that indicates if your marketing activities are helping to long-term growth beyond the immediate acquisition of new customers.
CLV is calculated by multiplying the average duration of a client’s relationship with you by the amount of money they spend on your business throughout each period. You want that figure to remain high, since it indicates that you are keeping customers. For instance, if a customer stays with you for ten years and spends an average of $1,000 each year, the CLV is $10,000.
Customer lifetime value is a critical metric to examine since customer retention is just as critical as client acquisition. If you spend all of your time gaining new customers while your old customers abandon you in droves, you will continually be pushing money through your sales funnel, resulting in a poor CLV.
- Success Rate
Earlier in this essay, I discussed win rate in regard to sales pipeline velocity. Many individuals make the mistake of conflating the two; nevertheless, although win rate and sales pipeline velocity are connected, they are not synonymous.
In comparison to sales pipeline velocity, which takes into account average transaction size and sales cycle time, win rate is a more simpler metric: Divide the number of wins during a certain time period by the total number of sales chances generated during that time period, regardless of whether they were successful.
The win rate is especially valuable when comparing sales success over many periods or market groups. For instance, you may discover that your win rate for widgets is greater on Black Friday and Cyber Monday than it is the week after Christmas, or that you sold more lawn mowers per head to suburban clients than to apartment dwellers.
The win rate enables you to determine the periods and regions in which you are most likely to make a sale, as well as the sectors or seasons in which you should market your product more heavily.
- Source of Lead
This critical sales metric enables you to have a better understanding of the source of your lead generation and the contribution it makes to your revenue.
The typical conversion rate for a B2B business is roughly 10%. Because the window of opportunity is so tiny, your marketing must be precise and your investment in the appropriate channel must be substantial. Email marketing—with a 62 percent conversion rate—is an efficient technique for many businesses to obtain excellent leads.
Track the source that generates the most sales opportunities to determine your strengths and weaknesses.
Once you have the data, you can further segment it by the amount of income generated by each source. The statistics will assist you in maximizing your return on investment. Knowing the anticipated income from each source also provides a baseline against which to judge the success of your efforts.
Keep track of your major lead sources, such as inbound marketing, paid search, and sales development initiatives, to determine where your prospects are coming from.
Once you’ve identified which sources are attracting potential purchasers, it’s much simple to analyze outcomes and calculate the investment return on those sources. Additionally, it assists you in allocating your finances to the acquisition source that attracts the most interested purchasers.
Conclusion
Metrics enable you to examine your processes more deeply and pinpoint where you’re going wrong—and where you’re succeeding!
All organizations, whether B2B or B2C, must understand who their buyer is, how to contact them, and what they want. The preceding B2B sales metrics will assist you in answering such queries while also providing insight into your sales funnel and its performance.
Utilize those data insights to fine-tune your marketing strategy, and you’ll see your customer base grow.
