Play #051 Best KPIs to Measure Sales Transformation
Level Up Your Sales Team
Each week, I bring battle-tested sales tips from my experience as a 3X Sales Leader and 4X Founder with 3 Exits.
Try HubSpot CRM for Free
Sales transformation involves improving sales operations in your company to achieve specific goals. But how can you measure the success of your transformation efforts? By providing insights into organizational performance, KPIs let you track your progress and understand the effectiveness of various sales techniques. Here are some of the KPIs I think you should monitor.
Customer Acquisition Cost
Customer acquisition cost (CAC) measures how much money it costs to obtain a brand-new customer. That includes the price paid for sales, marketing, and technologies when converting prospects.
You can measure CAC by dividing the amount you pay to acquire customers by the number of people who become customers within a specific time. Say you spent $500,000 on acquisition last year and managed to generate 100,000 customers. Your CAC would be $5, which I think is pretty good.
The churn rate is the number of people who stop doing business with your company for one reason or another. It's an essential metric for customer retention — the number of people who remain loyal to your organization. Calculating the churn rate is pretty straightforward. Just divide the number of customers you've lost within a given time frame by the number of customers you had at the beginning of that period. Then multiply that total by 100.
Say you had 100 customers at the beginning of the year but lost 20. You'd divide 20 by 100 and multiply that by 100. That would leave you with a churn rate of 20%, which is considered high.
This measurement reveals how many prospects you've converted into customers compared to the total number of website visitors you've received. Say 10,000 people browsed your site yesterday, and 500 completed a conversion event, such as purchasing or signing up for a service. You would divide 10,000 by 500, resulting in a conversation rate of 20 or 20%.
Customer Lifetime Value
Customer Lifetime Value (CLV) tells you how lucrative a customer is to your business. Instead of calculating the amount of money that person has already spent on your products, this metric considers how much value they will bring to your company.
You can work out CLV by multiplying the average transaction size of a customer by their number of transactions by their retention period, which is the amount of time they will continue doing business with your company.
Tracking your transformation efforts is crucial because you can evaluate the effectiveness of your sales strategies. CAC, churn rate, conversion rate, and CLV are among the best KPIs to monitor, helping you measure success in your business. You don't have to calculate the above KPIs manually, however. The latest data analytics software does all the hard work and provides performance insights on reports, charts, and other visualizations.