5 Key Sales Metrics for Small Businesses
Here are 5 Sales metrics to help you identify what's working and what's not with your sales efforts. Tracking them regularly can enable you to steadily boost your sales.
Every Small Business owner wants to grow sales as much as possible, as fast as possible. They work hard to try out various sales & marketing efforts. However, without immediate & measurable feedback, it is difficult to know what’s working and what’s not. Sales metrics tell you exactly how your efforts are performing, where to spend more and which areas to fix. Once you start monitoring sales metrics regularly, you can systematically improve them. Sales improve steadily and your competition gets left in the dust.
Here are the 5 Key sales metrics you should track and improve regularly:
Sales Growth over time
It is important to track Sales Growth over time to get the overall direction in which your business is headed. You can start off by tracking weekly or monthly sales. Once you start tracking your sales numbers regularly, you can compare it with the previous period, be it previous week, month, quarter or year. It is helpful to set monthly sales targets and measure your performance against it. Monitoring sales growth over time can reveal trends such as seasonality, additional sales due to new product, impact of new pricing, etc. to your business. If your sales are growing, it is necessary to identify the cause so you can repeat it. If it doesn't grow, you need to find the source and fix it. That brings us to the next metric.
Sales by product or service
Tracking sales by product or service tells you what’s selling and what isn't. Once identified, it is advisable to spend more time promoting what’s selling and less time on what’s not. Tracking them over time gives a good idea about product and market events, and helps you respond quickly. E.g., Decline in sales of certain products might indicate the availability of an alternative. On the other hand, growth in sales may be due to exit of a competitor, and you may need to increase inventory to handle it.
Sales by Lead Source
Marketing is costly and time-consuming. So it is important to track the returns for each channel and spend more on lead generation sources that work. Tracking Sales by lead source clearly tells you which lead generation sources are working. When you compare it with the associated marketing cost, you can easily identify the most effective methods for generating sales. This enables you to optimize your lead generation. Over time, as lead sources start slowing down, you can quickly identify & fix them.
Average purchase value
Average Purchase Value is the average revenue per sale. Tracking average purchase value helps you quantify the value of each lead and assign marketing efforts accordingly. It can be tracked for each lead source to help forecast sales, maintain inventory and budget marketing expenses. If you combine it with other metrics such as type of customer, type of product or service, etc. it can give you a clear idea of customer behavior.
New vs Returning Customers
This metric tells you what percentage of your sales is coming from new customers vs returning customers? A growing business has a healthy mix of both. A steady supply of new customers indicates that your marketing efforts are showing results. It also compensates for some of the existing customers dropping off. A good number of old customers indicate that your product or service continues to remain valuable, and your new offerings are in line with what your customers want.
To begin with, you can create a simple sales dashboard to track these metrics, and share it with your team members. Viewing it daily/weekly will tell you how you are progressing towards your sales targets. You can keep adding more metrics to it as your business grows and you feel the need to track more and more information.
Sales is a hustle and a large part of it is based on reaching out to prospects, trying out various marketing campaigns, etc. However, tracking these key sales metrics enables you to quickly see what's working, so you can repeat it. It also helps you identify what's not working, so you can fix it right away. This motivates you to grow sales faster, achieve your targets and leave the competition behind.
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