Key Sales Indicators

by Kate on December 13, 2010

This morning, I’m afraid I grizzled as I read *another* article on the importance of measuring return on investment from on-line marketing dollars.

Unfortunately, many people don’t track even basic sales metrics, neither do they set clear goals, which makes it really tricky to evaluate the results of any business activity in a useful way.

So rather than continue to grizzle, I decided to do something that might help people out there who are wondering what to do next. You see, it’s easy to neglect the “must know” numbers like sale goals, number of inquiries, conversion rate and average sale value when we get distracted by shiny objects like tweaking Google Analytics, SEO and AdWords (Not that they are unimportant, but they are part of the ‘how’ of driving sales and I we need to start with ‘where are we going?’)

Figuring out what to measure is something of an art, but there are some basics that apply to most businesses, subject to a bit of tweaking. Here are some things to consider:

Step 1: Set a sales target.

You need one (actually one per month). Just do it!

In practice, setting sales targets can take a bit of work and probably involves some budgeting. If you aren’t sure what the target should be, or how to set one, don’t be afraid to get help to work through the conversation and calculations.

Step 2: Look for patterns from the past

Collect some information on past sales activity and consider what patterns are revealed. Here are some suggestions:

  • Monthly sales for the last 12 months
  • Number of inquiries you received last year (by month, if possible)
  • Number of new customers added (also monthly)
  • Number of sales transactions were made (also monthly)
  • Conversion rate from inquiry to purchase
  • Average sale value
  • What did you spend on marketing and sales? What was your average cost per lead?

Step 3: Create a plan to improve results in key areas

Want to sell more in 2011? Direct your activities at improving one or more of the following and continue to monitor the monthly results and trends in each area.

  • Number of inquiries
  • Number of customers
  • Conversion rate
  • Frequency of purchase
  • Average sale value

Oh, and of course track that total sales figure each month too!

Look for ways to improve if you’re not hitting your targets, or seek to maintain them if all is OK.

This is where you are likely to start looking at those on-line tools which can help you. Still, don’t forget basics like customer service, direct mail, newsletters, networking, and asking for the order!

Your thoughts:

What sales metrics do you track?

How do you keep your eye focused on the results?

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