Now that you’ve spent some time pondering the first four of my recommended key predictive indicators for forecasting your company’s growth and success, it’s time to look at the last four in the series – and prepare to lift the anchors. The next KPIs of utmost importance to nearly every B2B enterprise are the following:
5. Average Sales Cycle
A command of your average sales cycle will keep your sales organization honest (and humble) – and will also provide you with more confidence in sensibly predicting new revenues. It’s also especially helpful to examine when it’s coupled with the Lead to Client Conversion Rate.
Measure every deal that goes into the sales pipeline and track how long it takes for each to close. Average the combined figure (# days to close) – and voila, you have your metric, and with it, a prudent expectation! It’s not a perfect science, but it establishes a KPI you really need.
You might be tempted to look at this in terms of products, services, and customer groups, and I would encourage you to do so. But first, start with the overarching metric—how long does it take my sales organization to close a deal?Next, track the progress and set goals for better sales efficiencies. Once you have your baseline, you can dig in to uncover the subtleties of the metric. For example, how long is the sales cycle for XYZ product, ABC customer type, or your East Coast sales team?
No matter the length of the average sales cycle, you’ll want o shorten that timeframe. Don’t allow yourself to be satisfied! Heck, whether the sales cycle is 180 days or 18 days, you’ll still want to see improvement. A word to the wise – if you don’t track this important metric, you can’t drive growth, nor can you predict or forecast your future!
6. Man Overboard: Customer Retention
News about a luxury cruise passenger falling off his ship is always startling – and so is losing a customer. Do you know the average lifetime of your clients? If you don’t, you should. You might want to look at this in terms of products and services, and perhaps even the types of customers or industries you’re in.
Before you get that involved, however, start with the big overall number first. Afterward, you can put steps in place to extend and reasonably forecast your customer lifecycle. With this insight, you can begin to recognize clients who may be standing too close to the proverbial ship’s railing, predictably nearing the end of the customer line. What might you do to nurture and provide some TLC to keep the said client on board? You’ll smell the sweet nectar of goodness when you truly focus on the predictive element of this data.
7. Net Promoter Score
A Net Promoter Score (NPS) is a vital measurement many companies have used with success for years. The Net Promoter Network advises calculating your NPS using a 0 to 10 scale and asking a fundamental question like, “How likely are you to recommend XYZ company to a colleague or a friend?”
NPS respondents are then grouped as:
- Promoters(score 9-10): “We love you!” Loyal enthusiasts keep buying and will refer others to your company.
- Passives(score 7-8) “We like you okay, but we’re not very fired up about it.” Passives are generally satisfied yet unenthusiastic customers and are likely to listen to the competition and jump ship sometime down the road.
- Detractors (score 0-6) “We don’t like you so much, and we’re not shy about saying so.” Detractors in a word are unhappy. “Loose lips sink ships,” as was said in World War II, and the same is true with these guys. They’ll likely tell anyone who’ll listen that they are unhappy with your product or service.
8. Key Digital Marketing Metrics
In this day and age, the topic of digital metrics is both daunting and empowering. It’s imperative to just about every business, and yet it’s horribly misunderstood. For many, it’s downright intimidating.
Website & traffic metrics, SEO optimization data, paid advertising traffic, social media tracking, backlinking, and organic search metrics are all worthy of consideration, depending on your digital marketing strategy. Each can have an impact on driving leads and predicting the volume of your sales funnel and revenue, not to mention customer nurturing.
Frankly, one can argue this list might be way too short – and depending on your business, I won’t get defensive over that critique. In addition to these recommendations, net profit margin, gross profit margin, cash flow, and cost of customer acquisition will make a lot of CEO and CFO KPI lists.
I provide my Chief Outsiders clients with an industry and business specific economic forecast for growth planning purposes. All sorts of operational productivity and efficiency metrics can predict the difference between growth and stagnation – and you’ll need to be all over them!
In closing, I want to say thanks for joining me on this journey full of various travel references, ideas, and advice on how to steer your organization in the right direction. It’s been a pleasure being your CMO and captain. Now that you have the right predictive mindset, possess a better understanding of which tools and metrics will assist you with your forecasting, and know how to empower your team to help you achieve success, you can pull up the anchors, grab the compass and telescope, and head for a new world of achievement, prosperity, and customer satisfaction.