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Measure for Success

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Sales Channel Management

Measure what can be measured, and make measurable what cannot be measured.  Galileo Galilei

 

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Key metric – Pipeline analysis

Pipeline analysis is used to track the progress of sales efforts in relations to all current and potential customers in order to influence and forecast sales as well as evaluate methods used to generate sales .

If a sales force approaches a large number of potential customers, only a subset of these will actually make purchases.  As potential customers proceed through the purchasing cycle the number of prospects will reduce.  By keeping track of the number of potential customers at each stage of the process, companies can balance the workload within a team, evaluate and identify successful sales techniques and make accurate forecasts of sales.

Key metric – Market growth rate

The increase in size or sales observed within a given target group over a specific time frame. When the management of a business is reviewing the success of a product, it needs to deduct the overall market growth rate from the observed product sales growth.

Quote of the day

Marketing doesn’t make sense without a clear link to revenue and sales.

Key metric – Acceptable acquisition cost

How much are you prepared to spend to acquire a new client? It is important to set this number with the lifetime value of a typical client as the yardstick.

Set a strict limit for your acceptable cost of acquisition using the Lifetime Value of the client as the benchmark, and use the Acceptable Acquisition Cost to rule out or stop those marketing activities which don’t result in securing new clients at a cost which is at, or below your acceptable figure.

Key metric – Cost of acquisition

Different from the cost per lead metric.  Cost per acquisition is focused on the costs associated with warm leads turning into new clients. The key here is that the fees you charge for your goods or service cover your acquisition costs e.g. your market activities as well as the cost of your good and service plus a margin for profit.

Key metric – Cost per lead

For each of your marketing activities, what does it cost to generate a warm lead for your organisation.  If you invest £5000 on a poster campaign and it results in 25 enquiries. The cost per lead is 5000 divided by 25 which is £200.  Not only a great way of measuring how effective an activity was but also a simple way of comparing the effectiveness of different actions.

Key metric – Cost of customer acquisition (CAC)

What does it cost to acquire new customers? While the importance of knowing the cost of acquiring a new customer is obvious, surprisingly a lot of business owners don’t pay much attention to this metric.

Keeping customer acquisition costs top of mind can benefit a business in numerous ways.

For starters, many companies spend more than they estimate on customer acquisition and in many cases, they continue to invest in marketing channels that make little sense given the lifetime value of their customers.

Additionally, meaningful reductions in customer acquisition costs can provide companies with an unfair advantage against their less conscientious and diligent competitors.

Key metric – Customer lifetime value (CLV)

What is every new customer worth over the lifetime of their relationship with your organisation?

Knowing the lifetime value of a customer is a crucial part of understanding how much is reasonable to spend on acquiring new customers.

Measuring CLV is also a good way to determine whether your business is taking full advantage of its customer relationships.

In many, if not most cases, it costs less money to increase revenue from existing customers than it does to acquire new ones.

Yet still, marketers are still more focused on acquisition than retention.

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