April 01, 2021 in Strategy by

While sales and marketing teams each have KPIs that are specific to the department and should be tracked independently, there are some metrics that both teams need to stay aware of. Monitoring and managing certain financial KPIs is important to keep the business growing.

A recent report from Copper and Outfunnel shows that sales and marketing alignment is a key factor in increasing revenue. Of the 300 responding SMB companies, most of those that report revenue increases said that they actively work toward alignment between sales and marketing by holding regular joint meetings with both teams. However, there is room for improvement in a few areas, including integrating tools that provide real-time intent data on leads among both teams, shared ideal customer persona profiles, and shared key performance indicators (KPIs).

KPIs That Sales and Marketing Should Both Be Tracking

Whether you’re in sales or marketing, you know that when you pay attention to the right KPIs, you’re able to create the most effective strategies for increasing revenue to meet sales goals. Here are a handful of the financial KPIs that both teams should be looking at every month.

Cost per Lead

Cost per lead (CPL) is a KPI that indicates the cost-effectiveness of marketing campaigns that generate new sales leads. A dollar amount is designated for each lead that a campaign generates. This metric is important to track to analyze the effectiveness of advertising options like social media ads or Google Ads.

Conversion Rate

The conversion rates of campaigns allow sales and marketing to understand which of their items in a funnel are converting well – those getting leads to take the next desired action. When you know which channels are converting best, you can create comparable campaigns on the same or related channels.

Customer Lifetime Value

Customer lifetime value (CLV) indicates the amount that each customer will spend during their entire relationship with your business. Typically, it’s more cost-effective to sell to existing customers than it is to new customers. As a result, tracking CLV is critical when your teams are creating campaigns related to customer retention. Successful, fast-growing businesses often have one thing in common, a higher CLV than their competitors.

Customer Acquisition Cost

The customer acquisition cost (CAC) is the dollar amount you have to spend to acquire one customer. Knowing this metric allows sales and marketing teams to make good decisions about bringing in customers at the lowest possible expense to the company. Keeping the CAC lower may mean trying different marketing techniques that bring in customers, including SEO, ad campaigns, social media marketing, as well as incentives like free shipping, discounts, and sales.

Customer Acquisition Ratio

The customer acquisition ratio is the ratio of the CLV to the customer acquisition cost. It provides an estimate about the value you’re getting from a customer against how much it costs to acquire the customer. A higher ratio indicates that sales and marketing are performing well at obtaining valuable customers for the business. A high customer acquisition ratio may warrant raising marketing spend for acquiring more customers. That, of course, will lower the ratio, but growing the business requires continuing to grow your customer base.

Revenue by Channel

Sales and marketing teams have to know how individual channels are performing. When they know which channels are providing the most revenue, they can focus on those and adjust efforts on the ones that aren’t working as well. Tracking revenue by channel lets you determine how to best spend your ad dollars and where you can cut marketing costs.

Final Thoughts

If your sales and marketing departments don’t meet regularly to share data and get on the same page, you may be missing the crucial information you need to determine which sales and marketing efforts are working. Sharing KPIs is key to aligning sales and marketing. Doing so allows both teams to see what’s going well and should be continued and what’s not so effective and should be reduced or discontinued. Collaboration may take some work, but it’s work that will pay off when it boosts sales and revenue.

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