It’s easy to think that marketing and sales are completely different functions of a business. But both share a common denominator of engaging customers and integrating the value you offer into their lives.
That said, every business needs customers. Not just any customer, though — but ones you can serve and who can get behind your product or service offering. When done right, sales-informed marketing can be a catalyst in delivering more qualified customers and optimising a customer journey that makes them stay and buy more. But with the nuances of sales and marketing, how do you know which aspects are relevant to the other? This is where the Funnel Metrics tool comes in.
Insight: When marketing and sales come together, they deliver the right customers suitable for businesses to thrive.
Data: Organisations with a service level agreement (SLA) between marketing and sales are three times as likely to be effective. (Hubspot)
Key Action Point: Utilise the Funnel Metrics to master the key pieces of information needed to align marketing with sales efforts and deliver more qualified customers.
WATCH: Let Step Change CEO Ashton Bishop walk you through the Funnel Metrics tool.
Why Funnel Metrics
Sales and marketing are two sides of the same coin. While some may argue that they serve different functions for the business, the marketing funnel solves the gap between the two departments by focusing on the goal of bringing on new customers.
Almost every single business across every single industry has adopted the funnel concept or some form of it. A quick Google search will churn out derivatives of the same model.
But whether you’re using it for content, marketing, or your sales strategy — the funnel essentially starts out with awareness and narrows down into consideration and eventually conversion. That’s the journey you want your customers to take when it comes to interacting with your business.
And while the funnel serves as a good starting point for any business, marketers argue that solely relying on the model without further reinforcement can lead to blind spots. Which is a fair point since not all companies who adopt the model actually see results that translate to the bottom line.
To make up for these blind spots, the Funnel Metrics tool covers a set of key metrics needed to make the right strategic choices in delivering more qualified customers. Its intention is to help you better understand and identify the best strategy to adopt when investing in your marketing and sales.
A Step-by-Step Guide to Funnel Metrics
Complete your Funnel Metrics in five steps. Here’s how.
Step 1: Set your benchmarks
The biggest mistakes in business, military and political history are thanks to the application of previously proven practice to a changed context. After all, what is seen as an opportunity in some situations may actually be a glaring red flag for another.
While businesses can always benefit from looking ahead, it’s also essential to get real about how things are actually doing so you get a better picture of what’s working and what isn’t.
For the first step, start by setting your benchmarks. This means pulling out the numbers from the last financial or calendar year as a point of comparison.
Step 2: Pull out your key metrics
Once you’ve decided on the timeline, take some time to examine the following metrics according to the last financial or calendar year.
- Number of prospects – The total realistic number of customers you can reach in a defined pool.
- Number of leads – The people in your pool of prospects who are showing interest in you through their actions.
- Number of customers – The people you’ve closed a sale with.
- Customer conversion rate – The rate at which your prospects become leads and how your leads become customers.
- Total sales – The number of sales closed within the period. Note that a single customer might close multiple deals.
- Total revenue – Your top-line revenue amount.
- Average sale value – Your total revenue divided by your total sales.
- Average gross margin percentage – The difference between your total revenue and total cost of goods sold, divided by total revenue.
- Average number of transactions per customer – The average number of single transactions an individual customer might make.
- Total spent on marketing and sales – How much you’ve spent on your all marketing and sales effort within the period.
- Customer lifetime value – How much you can earn from a customer throughout the entire relationship.
- Cost to acquire a customer – How much you spend on gaining new customers.
Step 3: Examine your business health
All of these metrics build on top of each other to give you a clear picture of two critical metrics — customer lifetime value and cost to acquire a customer. These are considered the pillars of your business health and opportunities to scale.
It’s different for every business, but ideally, a good customer lifetime value is anywhere up to three times the cost to acquire. That’s how you know you are able to sustain your business moving forward.
As a general goal — you’ll want to develop strategies to drive the cost to acquire a customer down, while driving the customer lifetime value up. The greater the nexus between the two, the more confidence you will have in spending to scale.
Step 4: Align with strategy
The intention of revisiting the given metrics is to help you come up with a sound sales-informed marketing strategy to design a more effective customer experience. Now your customer experience will have a direct impact on your sales. This is how the two functions can begin to work in sync.
When crafting your strategy, keep in mind these words from effectiveness expert Les Binet.
Step 5: Interact and recalibrate as necessary
Having a dashboard of key metrics helps paint a clear picture of how things are going. But it’s not enough to have one — you should also be able to understand what the numbers and telling you and know how you can move them.
These key metrics serve as a scoreboard that inspires you to think and play differently. But you’ll never know what works or what doesn’t if you don’t interact and recalibrate as necessary.
Tying It Together
When people say they want more customers, what they actually mean is that they need to reach the right ones. You’re already spending resources on your marketing so might as well make sure it contributes to your bottom line.
While the sales funnel serves as an overarching guide, it helps to get specific and examine the metrics that take your unique performance and needs as a business into account. The Funnel Metrics tool defines these metrics for you and gives you the opportunity to tap into your business health and the ways you can win instead of pumping out your marketing efforts and expenses into the void.
Focusing on five key business areas including Funnel Metrics, Lockstep Baseline is a clear, simple and insightful diagnostic tool that helps you understand where you are so you can get crystal clear on what needs to align for you and your business to win.
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Drive meaningful results by getting your marketing and sales to work in sync. Download our Funnel Metrics Tool PDF for free today!