Key Metrics for Successful B2B Sales Teams in Digital Times – Five Unmissable Tips with Examples
Sales productivity metrics and key performance indicators for B2B Sales teams.
Managing a sales team in B2B (Business-to-Business) is a challenging job. The endless list of task and responsibilities sales managers are getting nowadays makes it exciting and stressing at the same time.
Digitalisation in sales is gaining pace, customers are changing their buying patterns, and new innovative technologies are emerging. Sales managers used to be super-sales people years ago, today they are a mixture of a data scientist and a sales coach, both characters born in a digital era. Sales teams are not exempt from these changes.
Key Performance Indicators (KPI) play a crucial role in successful sales controlling and corporate management. Particularly noteworthy are they in B2B sales, where sales cycles are long, relationships between business valuable and sales teams expensive. Unfortunately, choosing the right KPIs for a B2B sales team is still more a craft than a science. It depends on every sales situation, the company’s goals and industry standards.
Each business should determine, based on its strategic objectives, which KPIs its sales team should measure. KPIs are just a means to an end. Controlling activities, performing indicators, and software tools are all instruments dedicated to analysing, predicting and improving the performance of sales teams.
Here we offer you five tips to choose the best performance metrics for your B2B sales team you could measure – together with a short list of specific KPIs. Sales leaders should regularly report this performance to higher management.
Tip Number One: Measure first what matters most for your company.
No matter how advanced your sales KPIs are if you do not measure what is essential to your enterprise. The most critical circumstance for your business can come in many forms and with many sales team metrics. You might be the one setting these indicators, or your top management might set them to you top-down.
Measuring what matters most for a company sounds simple, it is not. First, a sales manager should have a crystal-clear understanding of what is the most significant challenge facing her B2B sales team. Difficulties in B2B sales range from revenue growth to pipeline coverage, from customer satisfaction to the average margin per customer.
Paradoxically, you should set this sales team metric first and ignore all lists or tips. You are the one that knows your business and sales team better. It cannot be more than one – maximum of two KPIs. If you need to measure “what matters the most” with more than three metrics, then you probably do not know what matters.
Examples of KPIs to Measure: Sales per salesperson, Margin, Pipeline Coverage, Average Deal Lifecycle or any other performance indicator that could make your company bankrupt within half-a-year. Pick only one or two. Be transparent with your sales team. Make sure you this sales team metric is continuously available for sales reporting.
Tip Number Two: You should get a basic understanding of the value each Key Account Manager provides.
A sales team is one of the most valuable resources any B2B organisation has. Expensive, well-trained and experienced sales professionals usually integrate it.
As a sales leader or general manager, it is your job to understand how to define and measure the characteristics of successful salespeople in your company.
A crucial metric to gauge the effectiveness of your sales team is to assess the value each Key Account Manager provides to your business. You can define value in many forms – choose a financial definition. For example, many organisations define value as the sum of all future discounted expected benefits, something commonly known as Discounted Cash Flow (DCF).
As a more straightforward but limited proxy for value, many companies measure revenues per salespeople. It is uncomplicated to measure if you have a team of Key Account Managers (KAM) dedicated exclusively to specific accounts. It is, however, a limited KPI, for it does not take into consideration the actual buying potential of each customer, neither the costs of each KAM or the future revenues.
Pick a measure for the value that is relevant to your sales team and set realistic sales targets. Discuss them regularly with your sales team. Report the results versus the sales targets of each Key Account Manager. Motivate them to achieve their sales goals.
The results can be broken down by month, week or even by day, depending on what suits your business model best. Breaking down targets and results in small parts gives you an overarching understanding of what your sales team can deliver.
This process not only helps to set realistic target going forward, as a pleasant by-product it can also serve as a motivator for employees to put in maximum efforts and be more productive. Make sure you reward good results.
Examples of KPIs for sales controlling: Productivity per salespeople, Active Accounts per KAM, Number of Sales Activities, ROI per KAM, revenues per employee, among others. Choose a definition of value. Discuss the KPI with your sales team. Motivate your sales team to reach their goals and reward good results.
Tip Number Three: Being fast pays off. Lead response time is crucial in B2B sales.
According to Harvard Business Review, a new business opportunity or lead that is followed up on within one hour of coming in is seven times more likely to qualify than those that followed up later than that.
Sales leaders should, therefore, use lead response time as one of their key performance metrics for their teams. Consequently, a reduction in reaction time should see an overall increase in sales revenues.
Further metrics along the line of this sales acceleration principle should also be measured. Your sales team should not only quickly respond to leads, but it should also accelerate closing deals along the entire pipeline.
There are thus several possible KPIs to measure. The main point is first to split the activities that make up your customer acquisition and your pipeline. Then measure the key metrics to accelerate them.
Parameters to measure sales acceleration could include measurable sales activities, such as the number of visits and calls, and metrics such as the number of offers sent, average deal lifecycle, Lead-to-Deal and implementation time if needed.
A crucial point here is to strike the right balance between simplicity and necessity. Include what is required to react faster and no more. Understand the causes of your team’s delays and act accordingly. And recognise that your sales team will not become faster overnight just because you measure sales acceleration now.
Remember also that key account management seeks to improve long-term relationship returns by investing in customer relationships. Of course, you want your Key Account Managers to react faster to new leads and opportunities, but you want to care for valuable customer relationships at the same time.
Examples of KPIs for sales controlling: Conversion rate, Average Deal Lifetime, Win-Rate, Average Size Deal, Pipeline Coverage, Orders per Call (hit ratio) per Call and Key Account Manager, for instance. Here the emphasis should be put on boosting the sales acceleration “attitude” of your sales team.
Tip Number Four: One of the best KPIs for sales growth? Know your acquisition cost per customer
All successful sales team need to grow sales. A clear indicator to determine whether a sales growth strategy is working is to figure out how much it costs you on average to acquire a new customer. This sales growth KPI can have many names. In Software-as-a-Service, cloud services and e-commerce is usually known as Customer Acquisition Cost (CAC): the cost of a new customer. The more favourable this is, the more efficient your marketing measures are.
To calculate the CAC, add up all the sales and marketing expenses, including the salaries of your Key Account Managers over a fixed period – say one year – and divide this by the number of new customers acquired during the same period. In other words, split the total cost of sales by the total number of new clients. Sales cost should include all expenses related to salaries, commissions and business travels, together with your marketing budget and management overhead. This KPI will sufficiently help you to estimate the effectiveness of your sales team.
For example, assume an SME that is making €5m of revenue. Knowing that the average marketing budget of a tech company is around 4.3 % of its total turnover, we can estimate around 200,000 Euros invested in Marketing. Add to this the salaries and overheads of a five guys sales team for around 500,000 a year.
If the company is gaining ten new businesses a year, each cost 70,000 Euros to acquire (700,000 / 10). On the other extreme, if it is yielding 100 new customers, each cost 7,000 Euros. You can see the difference in sales growth these two extremes can make. The number alone does not make much sense unless compared with the average deal size in Euros.
Targeting sales growth is a must for all sales teams. However, if you spend more than you will earn, you are writing red numbers. There are, of course, exceptions to this rule, but it is a fairly guideline in established B2B industries. Knowing the cost per customer acquisition will provide you with a more in-depth insight into the effectiveness of your sales efforts.
Examples of KPIs for sales controlling: Customer Acquisition Cost (CAC), Customer Lifetime Value (CLV), Close-Win Ratio, Estimated Fulfilled Cross-Selling and Up-Selling Sales Potential, Average Deal-Size (in Euros/US Dollars). Compare these metrics across your sales team and channels to understand what is more productive.
Tip Number Five: If you have a B2B social media marketing strategy, always watch your conversion rate.
The implementation of a social media marketing strategy can be beneficial to the overall sales results. According to Forbes Key Account Managers using social media platforms such as Xing, LinkedIn or Facebook are more likely to outperform their peers who do not use these tools by 78 %. Consider also, that three in four enterprises already implement social media for B2B sales in, for example, Germany. We can assume similar figures across other OECD countries.
What consequences does this have for your sales team? First, sales managers should encourage their teams to actively include social media platforms into their qualification and discovery efforts. Discuss with your sales and marketing teams on how to use social media. However, remember that Social Media alone will not remedy the lack of other critical sales activities or KPIs.
Therefore, it is crucial to keep a close eye on your social media marketing strategy by controlling your conversion rates.
It is relatively simple to calculate the conversion rate for each of your social media channels. Just divide the number of qualified leads by the number of conversions. If you split this KPI across your sales team, you can easily spot patterns and determine the ROI each salesperson provides. However, a low conversion rate does not automatically mean that a social media channel is not working. Some leads might take longer to convert, particularly in B2B, where higher revenues and longer sales cycles are usually involved, regardless of the acquisition method.
At the heart of this Social Media Sales Controlling are, of course, KPIs. There are here several sales team metrics to measure, ranging from low-level marketing metrics to high-level sales conversion rates (the ones that matter). For example, Facebook likes, the number of retweets, new contacts in XING or LinkedIn, number of videos on YouTube are all easy to measure, but they are still unrelated to your sales efforts.
You should consider the overall costs of all your social media activities, including the time your sales representatives invest on it, together with investments in advertising. Afterwards, you should map the journey of your new sales leads, to calculate the return each of these social media channels and the conversion rates of your Key Account Managers. Work together with your marketing team and share with them the financial results of the campaign.
Examples of KPIs for sales controlling: social media usage, new leads per KAM and channel, total social media costs (including personal and advertising), conversion rate per social media channel and KAM. Do not fall for the Social Media hype. Encourage your sales team to use it to find more leads efficiently. Keep a close look at their conversion rates and rentability.
Key Metrics for Successful B2B Sales Teams in Digital Times – Conclusion
B2B sales have a different meaning in digital times. There are several examples of why the job of a sales manager has radically changed. Customers are shifting their buying patterns, and therefore B2B sales processes must adapt. New technologies, such as predictive analytics, are entering the mainstream and they require different B2B sales techniques.
The unstoppable digital trend in B2B sales also impacts how sales leaders should set metrics for their sales teams. It changes, of course, the sales team metrics themselves.
Nevertheless, sales managers should always measure first and foremost, what matters most to them, be it sales growth, efficiency or sales productivity. Only then can managers move up a place and define metrics to understand the value each Key Account Manager provides to their organisation.
Nowadays, being fast in B2B pays off. Sales leaders must, therefore, define and measure sales team metrics that ensure a competitive lead response time and that accelerate sales. Sales acceleration KPIs include knowing how much a new customer cost to acquire.
Lastly, since social media marketing is growing in importance, managers should encourage its usage and simultaneously define appropriate metrics to control it, including at least a conversion rate.
Do you have any further questions about B2B sales KPIs? We are happy to help!
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Further Read:
Kennzahlen im Vertriebscontrolling – Springer Fachmedien (in German)
A framework for key account management and revenue management integration. Xuan Lorna Wanga, Ross Brennanb.
The Twelve Sales Metrics that Matter Most – Harvard Business Review
Marketing- und Vertriebscontrolling: Grundlagen, Konzepte, Kennzahlen, Best Practice (in German)