KPIs Made Simple: Understanding 8 KPIs for Sales and Marketing Success

KPIs Made Simple: Understanding 8 KPIs for Sales and Marketing Success

Written by Sakti Violy Kumar | Illustrations and Layout by Acer Ann Amansec | July 03, 2023

Understanding 8 Important KPIs for Sales and Marketing

If you’re part of a sales or marketing team, you’ve probably encountered the ever-present discussions surrounding Key Performance Indicators (KPIs). Whether you’re scrambling to meet end-of-quarter goals or planning for the next quarter, KPIs dominate the world of sales and marketing.

For newcomers, KPIs can be bewildering. Which of the KPIs truly matter? Which data points should you focus on? Even seasoned professionals sometimes find themselves lost in the KPI creation process, but in this article, we’ll make things easier for you by listing the most important KPIs for sales and marketing teams that should be tracked each quarter.

Before we dive in, let’s clarify – what are KPIs exactly?

Key Performance Indicators, commonly known as KPIs, are the metrics that businesses use to gauge the overall effectiveness of their marketing and sales endeavours. These metrics provide valuable insights into the performance and success of various business strategies.

The beauty of KPIs lies in their flexibility. They can be customised to align with the specific needs and goals of your business and individual teams. By carefully analysing these indicators, you can gain a clear understanding of which strategies are yielding positive results and which ones are falling short.

Cost per Lead (CPL)

Cost per lead (CPL) is a metric that tells businesses how much they spend, on average, to get one potential customer interested in their products or services. It helps them understand the effectiveness of their marketing efforts by calculating the cost of generating leads.

A lower CPL means it’s cheaper for a business to attract potential customers, but it’s also important to focus on the quality of those leads. CPL helps businesses figure out which marketing strategies are working best and how to allocate their resources wisely to get the most value out of their marketing campaigns.

Need help with prospecting? Here’s where you can start: Sales Prospecting for Dummies: A Beginner’s Guide to Unlocking Sales Opportunities

Marketing Qualified Leads (MQLs)

A marketing qualified lead (MQL) is a potential customer who has shown enough interest in a business’s products or services to be considered more likely to make a purchase. MQLs are identified through specific actions such as submitting a form, engaging with website content, or showing interest in a product demonstration.

These leads have met certain criteria that indicate they are ready to be passed on to the sales team for further nurturing and conversion. Recent statistics show that email marketing is the most popular B2B lead generation strategy, with 78% of businesses using it, followed by event marketing at 73% and content marketing at 67%.

For more tips on generating MQLs through email marketing, dive into our previous article: How to Increase Sales through Email Marketing

Customer Retention

SOURCE: Hubspot

This statistic proves that this KPI is crucial as retaining existing customers is often more cost-effective than acquiring new ones. What customer retention does is measure a business’s ability to retain existing customers over a period of time, helping determine the effectiveness of efforts to keep customers engaged, satisfied, and loyal. By focusing on customer retention, businesses can build long-term relationships, increase customer lifetime value, and foster brand advocacy.

Customer Acquisition Cost

Customer Acquisition Cost (CAC) is a metric that considers the expenses incurred at each stage of persuading a potential customer to make a purchase. It encompasses not only the cost of the product itself but also includes the expenses related to behind-the-scenes activities like research and marketing.

By understanding the amount of money spent on acquiring each new customer, businesses can assess the efficiency of different strategies and channels. Comparing the cost per customer acquisition allows businesses to identify their product priorities and allocate resources effectively.

You can calculate customer acquisition cost by using this formula: Customer Acquisition Cost = Cost of Sales and Marketing divided by the Number of New Customers Acquired. (Hubspot)

Marketing ROI

Marketing ROI is a way to figure out if a marketing campaign or initiative is making money. It shows how much money a business is making compared to how much money it spent on the campaign. By calculating marketing ROI, businesses can see if their marketing efforts are profitable and successful.

Simply put, marketing ROI is like taking care of a vegetable garden. Imagine you plant many different seeds hoping to grow lots of vegetables. The ROI is how many vegetables you get compared to how many seeds you planted. If you have a high ROI, it means you got a lot of vegetables from the seeds you planted.

Check out these key statistics:

Sales Qualified Leads (SQLs)

Sales Qualified Leads (SQLs) are potential customers who have been identified as having a high likelihood of making a purchase. These leads have been qualified and evaluated based on specific criteria, such as their level of interest, engagement, and readiness to buy.

SQLs are considered valuable because they have moved further along the sales pipeline and are closer to becoming paying customers. They are typically passed on from the marketing team to the sales team for further nurturing and conversion. This step is vital because SQLs often make up a smaller portion of the initial MQLs.

According to a recent study by MarketingSherpa, 61% of B2B marketers send all leads directly to Sales, but only 27% of those leads end up being qualified.

Struggling to find the right channels to gather more MQLs that convert? Start here: Five Marketing Campaign Ideas for B2B Outsourcing

Opportunity Win Rate

Opportunity Win Rate is a simple yet powerful metric that helps you understand how effectively your sales team converts qualified leads into actual sales. Imagine you have two sales representatives: Jane and John. Jane is great at generating leads and creating opportunities, but she struggles with closing deals. On the other hand, John is a master closer, but he’s not as effective at initiating contact with potential customers.

By analysing this KPI, you can identify these strengths and weaknesses within your team. This allows you to provide targeted training and support to Jane in improving her closing skills and helping John enhance his prospecting abilities. Ultimately, this metric helps you optimise your sales team’s performance and drive more successful conversions.

Want to improve your closing techniques in cold calls? Give this a read: 6 Sales Closing Techniques: Seal The Deal Every Time

Sales Revenue

Last but certainly not least, let’s talk about sales revenue. This KPI is all about the money your business earns from selling its products or services. It’s a crucial metric to pay attention to because it reveals how well your sales efforts are performing and how much money is coming into your business.

The more sales revenue you generate, the better it is for your bottom line. In fact, according to a recent study conducted by Statista, global retail sales are projected to reach a staggering $30 trillion by 2024!

That’s an enormous amount of money being exchanged; so, if you want your business to thrive and achieve success, make sure to closely monitor your sales revenue and strive to keep it on a steady upward trajectory. Remember, more revenue means more opportunities for growth and prosperity.

Wondering how else to propel your sales forward? Here are more tips for you: What Drives Sales Growth?

Simply Your KPIs for Sales and Marketing by Outsourcing

To wrap it all up, understanding and effectively utilising Key Performance Indicators (KPIs) is the secret sauce to achieving sales and marketing success. Remember, KPIs are not just numbers on a spreadsheet. They represent the pulse of your business, revealing the effectiveness of your marketing campaigns, lead-generation efforts, customer retention strategies, and overall revenue growth.

With the right KPIs in place, you can unlock the true potential of your sales and marketing teams.

To help you navigate the intricacies of KPIs for sales and marketing and maximise your business’s success, look no further than The Point Company. As a leading B2B outsourcing company, we have a proven track record of attracting and qualifying potential customers from all corners of the globe.

Get in touch with us today and let’s make things happen!