Data is everywhere in today’s electric and connected world. Every user of a website, owner of a phone, or resident of a social media community leaves data in their wake. It only makes sense that sellers and marketers take advantage of data to better push products, bring in new customers, and better meet the needs of those already enrolled or interested in a product. So, how can data help us in sales?
Data-Driven Sales is the practice of collecting and using data to inform every decision made around making a sale. This includes information like the time of day to reach out, what products to sell, and even who to contact in the first place.
One example of data metrics a sales team may take advantage of is to focus on conversion rate, and retention rate of sales. This is especially useful for e-commerce platforms, where most leads come through a website or are recommended by third-party partners.
Let’s say that a sales team was focused on a conversion rate of 3-5%, with a retention rate of 50%. This would mean that 3-5% of leads directly translate into sales made, and 50% of customers retain services provided going forward. A conversion rate in this range is not bad, especially when you consider that 50% of those sales will be retained. But, a business cannot grow by only counting on existing customers. New customers are needed to increase revenue, and while focusing on these metrics may mean a higher retention rate, it overall leads to less new sales being made on a yearly basis.
Knowing these metrics, a sales team could strategize to improve their conversion rate to better promote long-term growth. But, all the while, they would need to be aware of how their new strategy altered their retention rate, or else risk losing existing accounts.
All metrics have their pros and cons, as you can see in the example above. This was just one example of how a team may examine their metrics, but there are many more to be aware of. Below are further examples the metrics any sales team should be aware of.
Positional Metrics
This set of metrics looks at conversion rate, dollar terms, and the sales cycle.
Conversion rate, otherwise known as Opportunity Win Rate, is the percentage of total sales opportunities that go on to become paying customers. Knowing your OWR is important for a sales team. For instance, if on average your team makes 100 calls a week, and closes 20 of those 100 calls, then you end up with a win rate of 20%. Knowing this is key to understanding and predicting your long-term win rate. Once you know your long-term rate, you can better set obtainable quotas and motivations for your team.
Your OWR also directly relates to a team’s sales cycle. What is different about that 20% that you closed? For an e-commerce platform, most notably they would be individuals targeted by their online browsing of your product’s platform. To reach out to such an individual, who is already familiar and who has shown interest in your product, would drastically increase the chances of a win. By reaching out to these customers, your team shortens your sales cycle, which increases your opportunities.
Customer Retention Metrics (CRR)
It is very important for a sales team to be aware of their CRR for many reasons. Knowing this metric will enable you to predict revenue, analyze customer service, and strategize loyalty programs.
Beyond that though, it’s important to understand that simply having a high OWR is not an indicator of a thriving business. What happens to those sales is important too. You can make as many sales as you want as fast as you want, but if only a small number of those customers return, you’re not going to be able to keep a sustained sales model in the long run. This is especially true of a product being sold in a high competition environment.
If you don’t retain your sales, they may end up going to another provider, erasing your possibility of retention and decreasing new opportunities.
In other words, while a sales team’s Opportunity Win Rate is important, just as important is their Customer Retention Rate.
Data Metrics are important for all businesses, especially those directly involved in sales. Some of the most important metrics to be aware of are your Customer Retention Rate (CRR), your Opportunity Win Rate (OWR), and in understanding how these metrics affect the sales cycle and operations of your business team.
There is always more to be aware of, and a lot goes into making a sales team the best it can be, but if you learn these metrics you’ll be in a good starting position for success.