Revenue and performance are not equal and should be considered mutually exclusive. The total amount of dollars or even total number of sales generated on a weekly, monthly or yearly basis may give you an accurate account of your sales growth, but in order to measure efficiency and to identify and improve on weak areas, you need a more holistic approach – Key Point Indicators (KPIs).
With the help of various B2B sales KPIs, you can look beyond the number of products sold or even their monetary value and start focusing on building a solid sales team that will ultimately be responsible for long-term success.
Here’s a list of the 6 most important B2B KPIs your sales team needs to track.
Customer Conversion Rate (CCR)
This KPI measures the effectiveness with which your brand is able to convert leads to customers. Customer Conversion Rate can be calculated as follows:
(Number of leads converted into sales/number of qualified leads) x 100, or simply
(Number of conversions/Number of visitors) x 100
CCR directly represents your ROI (Return on Investment). A high CCR means you’re investing time and resources in the right prospects, while a low CCR is a sign of loopholes in the sales process.
Here’s an example: You need 10 new customers to achieve your sales goals. You decide to reach out to 200 of them, hoping that 10 will commit to purchase.
Following the sales process, you do earn 10 new customers. In this case, your CCR will be (10/200) x 100 = 5%. You got the required sales, but ended up wasting time and resources.
Rather, if you narrow down by reaching out to say, 40 leads who fit your ideal audience, your CCR will be (10/40) x 100 = 25%. Your end sales are the same, but aiming at improving CCR instead of total sales will save you time and resources.
It is important to calculate CCR on either a weekly or a monthly basis.
Average Order Value (AOV)
With this KPI, you can determine whether the average purchases from your customers have seen any growth over time. AOV can be calculated as follows:
Total Revenue/Total number of orders
Have your sale,s on average, improved after implementing a B2B portal? Are you making the most of the cross-selling and up-selling opportunities that a B2B platform offers? This KPI will help you answer these questions.
Online CRR (Customer Retention Rate)
This KPI measures the rate at which your customers have accepted your B2B portal. It helps you to enhance each customer’s buying experience so they keep coming back. CRR can be calculated as follows:
([number of online customers at the end of the period – number of new online customers gained during that period] / number of online customers at the start of the period) x 100
Since a B2B online portal is a possible replacement for other sales channels (emails or calls), measuring online CRR will help you know if your existing customers have embraced this shift.
A low CRR is a sign that your customers are moving back to offline buying channels because your website is unable to meet their purchasing requirements and therefore needs improvement.
Online Order Frequency
This KPI measures the frequency with which your business receives orders during any specified period. The formula for calculating online order frequency is as follows:
Total number of orders placed in the given period/time units (days, weeks or months) in the time period
For a business, simply gaining customers is only one part of the whole picture. Tracking how responsive your present customers are and how you can enhance your brand’s profitability are equally important.
Order frequency can be improved by developing retention email campaigns (for example, “One-day Sale”, “Limited-edition Offer”); starting a loyalty program (for example, Loyalty program of Smile.io) and introducing gamification tactics (for example, gamification elements of Sephora’s ‘Very Important Beautician’ loyalty program).
Average Order Processing Time
With this KPI, the sales team can track the average time it takes to process an order. To calculate this metric, the time from when the customer places an order to the final delivery of the product to the customer must be taken into account. This KPI helps you to determine whether your B2B ecommerce portal has proved to be time-effective. If there has been no fall in average order processing time, you need to scrutinize your workflow and make the necessary alterations to assimilate your B2B portal into it.
Net Promoter Score (NPS)
How did St. Louis-based ‘Enterprise’ become the largest car-rental company in the world? Well, its CEO Andy Taylor conceived a simple way to receive regular customer feedback.
Enterprise asked its customers two simple questions – “How would you rate your rental experience (On a scale from 1-10)?” and “How likely are you to rent from us again (on a scale from 1-10)?” The full-blown version of the Enterprise metric was invented by Frederik F. Reichheld – Net Promoter Score (NPS).
This metric determines the readiness with which your customers are likely to recommend your ecommerce portal to others. Based on their responses, customers fall into either of the three groups – Detractors, Passives, and Promoters. NPS is then calculated by subtracting the percentage of detractor responses from that of promoter responses (disregarding the passive responses). Tracking NPS will align your team, quantify word-of-mouth traffic, and measure customer loyalty and areas for product improvement.
The above is a list of objective KPIs – those that every B2B sales team needs to measure. Besides these, every business’s unique objectives will determine the various subjective KPIs that need to be measured.
The bottom line is: When it comes to KPIs, no one-size-fits-all approach will suffice. It all comes down to reviewing your business objectives, analyzing current performance, setting short-term and long-term KPIs, reviewing targets with the team, and readjusting based on progress.