When we chart intermediate conversion steps through the end to end revenue cycle, we can see trends that help us with improving the overall sales process. Regardless of stage or team that is interacting with the prospect.
When we think of Analytics we often think of web-based metrics that provide data on user behavior on a site. When a company’s data gathering and trend analysis needs to cover the full sales cycle from prospect to customer. A fuller term for this is Revenue Analytics. The metrics and measurements that provide insight on our sales funnel and pipeline. To have this full picture we need to chart revenue analytics across the full buying journey of how a lead becomes a sale. This is the revenue cycle.
It’s challenging because its a cross-functional exercise. Often involving several teams in the company, including marketing, sales and support. Each teams may use different tools to store information and record their per-stage activities. Often using different systems to count the person in a list, or opportunity or account, depending on their focus. It is often difficult to find a solution that fits all needs and stays within budgets. Data collection often grows organically as a company grows in size, revenue and sophistication.
Regardless of how the data is collected, stored and analysis generated, there are some key points to keep in mind as to requirements to gain a holistic view of the sales cycle.
Design the path to final conversion as a series of intermediate conversions
It’s important to understand the buying behavior of customers and the path normally taken to final sale. It can be difficult to tract this for specific customers. They often obtain information about our product or service even before we are aware of them as a potential lead.Setting up smaller steps for the customer to take can help guide them along the path. As well, this can ensure that they are getting the right information from reliable sources in the company.
Chart the path by setting up mini-commitments along the way, such as webinars, newsletters and whitepapers. Wherever possible gather details on the customer. Depending on the path to buying, these conversion points may be automated steps from the website. Or they may be interactions from the sales team. It’s important to have a method to collect and record all interactions with a customer.
Metrics can help understand trends in conversion rates. A simplistic example of a trend might be that for 500 clicks on a Facebook ad, 20 people will opt-in to the lead magnate, 5 will respond to a follow-up and 1 will buy the product. Each of these is a conversion in it’s own right.
Forecasting future revenue comes from understanding the end-to-end cycle
Every product or service has its own unique sales cycle. Some B2C products may take hours or days, and some large B2B sales take months or years. Though this may vary from customer to customer, viewing the data does provide information on trends in a market. It may help inform a bid/no-bid decision point when information is indicating the customer is not likely to buy. It will also help with forecasting future revenues, if we are able to measure and gate a customer progress through the sales cycle.
ROI / MROI
For a specific revenue opportunity it is important to calculate a cost of sales, so that a return on investment can be weighed against the efforts taken. Marketing may also calculate a cost per marketing lead that would contribute to a marketing’s share of the cost of a sale.
There are various ways to look at these figures that are potentially impacted by the nature of a company’s business. A company may want to measure a specific cost of sales based on actual interactions with a specific customer. They may do this when it is a large revenue opportunity. Or they may look at a fix cost per stage in the sales cycle based on trends over time. Looking more at a an average or typical customer acquisition cost.
This type of information can help indicate if the efforts taken in the path to conversion are financially viable. Metrics and the analysis of the trends helps to inform our efforts to improve the overall sales process.