A recent article in Entrepreneur online discussed the importance of six sales metrics. Three of the metrics are particularly important to entrepreneurs:
1. Sales by Lead Source
There are several platforms that allow businesses to track Leads by Lead Source, but it is usually a more difficult task to track Sales by Lead Source. Let me explain the relevance with an actual experience. A company had a customer base primarily in the U.S. and Europe. They did a fair amount of PPC advertising, and one of their lead sources was producing a large number of leads at a low cost per lead. A consultant suggested that they increase their spending on that lead source. But the company was not tracking sales per lead, and when I did my own manual research, I found that not a single sale had resulted from any of those leads. They were coming from foreign countries that were not the company’s targeted geography. So rather than increase ad spending on that lead source, we discontinued the campaign and saved significant marketing dollars with no impact on sales.
2. Revenue per Sale
3. New vs. Returning Customer Sales
These last two metrics have a common theme. As noted by legendary marketing guru Jay Conrad Levinson, companies can increase sales in three ways: get more customers, increase the average sale amount, and increase the lifetime sales from existing customers. Most companies focus their efforts (and expense) on acquiring new customers, when they would be better off focusing on #2 and #3. So tracking those two metrics is important in order to develop strategies for increasing both. New customer acquisition is always important, but it is often the most expensive and time consuming marketing effort. Developing strategies for increasing the average sale amount and the lifetime value of a customer can have a bigger and more cost-effective impact on the bottom line.