Running a B2B business is challenging when your customers are small and competition is fierce. Only the best can achieve the coveted high conversion rates and convince other companies to join their group of suppliers.
The journey to transform a potential customer into a customer is long and characterized by several discussions. And because of their high value and long-term commitment, B2B sales tend to have lower conversion rates than B2C.
Reaching business customers requires planning and a highly focused approach.
1. Customer Acquisition Cost (CAC)
Before creating an effective marketing strategy, you need to know what it costs to add more customers to your business. Your goal should be to keep the number, as this indicates that your strategies are working and you need to spend less to get customers.
You can calculate CAC by taking the total sales and marketing costs for a given period and dividing them by the number of new customers added during the same period. For example, if you spend $1,000 in marketing costs in one month to reach 100 customers in the same period, your CAC will be $1,000/100 or $10.
2. Conversion rate
The conversion rate is probably the most important selling point you’ll find. Represents the ratio of actual purchases or subscriptions to the number of potential visitors, site visits, visitors, channels, or emails received to drive sales pipeline conversions.
Conversion rate is particularly helpful in determining the effectiveness of your marketing efforts. Let’s say you use a combination of email marketing, social media, and unsolicited calling to announce a product launch. Divide the number of conversions (or purchases) you receive from each channel by the number of emails, social media posts, and calls you to make to see which channel fits your niche best.
3. Sales Pipeline Velocity
The sales pipeline is the entire sales process, from the first contact with the buyer to the completion of the transaction.
You can compare the sales pipeline to a race. A boat’s speed is the distance traveled in a given amount of time – if your boat travels 20 feet in 2 seconds, that’s 10 feet per second. Since an average rowboat has a speed of just under 2 meters per second, your boat (and the rowers and equipment they row with) is very fast.
Sales pipeline velocity applies the same logic to your sales and marketing process.
4. Average response time for Leads
You know where your lead is coming from, but what if it’s in your sales funnel? Does your sales team respond promptly? This is the average measurement response time.
Early risers catch the worm, so your sales team should be following you within minutes. Half of all potential customers choose the company that responds first, estimates a study by Dealhub. Failure to follow the 61-hour business-standard; you lose a large percentage of your lead that way.
5. Customer lifetime value
You have a new customer and your sales funnel is working fine. But do new customers stay with you? Customer Lifetime Value (CLV) is a measure of whether your marketing efforts go beyond acquiring new direct customers and contributing to long-term growth.
CLV is an important measure to consider because customer retention is just as important as customer acquisition. If you take the time to acquire new customers while existing customers are leaving en masse, you can always pump money into your sales funnel and keep your CLV low.
The Insight of B2B Sales Metrics
With statistics, you can take a look at your practices and identify where you’re doing wrong and what you’re doing right!
Use these data insights to fine-tune your marketing strategy and your customer base will skyrocket.