Author Archives: Ben

4 Must Have SaaS Metrics for Your Software as a Service Company

Software as a service, or SaaS, is one of the fastest growing industries in the world. It can include anything from analytics dashboards like Cyfe to marketing automation companies like HubSpot to industry specific software. Because of the nature of a software as a service company, data has to be a driver in every single decision from adding new features or products to marketing spend. Data is the lifeblood of any business, but that is especially true of SaaS companies. The problem here is that SaaS companies have access to, dare we say it, too much information. It’s difficult for some software as a service businesses to understand which SaaS metrics to track closest and how they impact their business.

While many businesses rely on a recurring revenue (or retainer) business model, software as a service businesses almost exclusively rely on it. It’s something that can be a huge benefit, but also a huge problem if a customer isn’t happy with the service shortly after signing up. Due to the increasing costs of acquiring a customer (across all industries) because of continuously increasing competition, SaaS companies are investing more in customer acquisition. This isn’t necessarily a big issue if the company delivers on its promises and keeps their customers happy. Doing so increases the customer lifetime value (CLV) and the longer a customer is with a SaaS company, the more the profit margin increases. The problem comes in when a customer leaves the SaaS company within a short period of time after signing up. When this happens it is possible (even likely) that the company lost money on that customer.

Due to this unique business model, SaaS companies need to monitor several specific SaaS metrics in order to make sure they’re operating profitably, adding new customers, retaining their current customer base, and spending their money wisely.

Let’s dive into four must have SaaS metrics that your software as a service company should be monitoring very, very closely.

 

  1. LTV

Due to the recurring nature of SaaS, you can’t simply look at what you charge a new client to onboard and their monthly fee as their value. You’ve got to consider the lifetime value of each customer to get a much clearer picture of what that customer is worth to your business. Depending on your type of model, MRR or ARR (monthly recurring revenue or annual recurring revenue), you’ll likely calculate the lifetime value of your customers a little differently. With an MRR model, you’re likely charging your customers on a month to month basis (though you may have a contract in place for a year or longer). With an ARR model, you’re charging your customers once per year (likely with just a one year agreement).

No matter the way you have structured your business and fee schedule, your customer lifetime value is one that can’t be overlooked. You need to understand how much the average customer is worth to you over the entire time they work with you. Let’s calculate that number…

For MRR:

LTV = [(Avg. Monthly Transactions X Avg. Order Value) Avg. Gross Margin] x Avg. Lifespan in Months

For ARR:

LTV = [(Avg. Annual Transactions X Avg. Order Value) Avg. Gross Margin] X Avg. Lifespan in Years

This metric is actually one that may change over time as you get (hopefully) better at pleasing your customers and they hang around longer. It can also change if the cost of your services increases or decreases or if your costs change. We recommend monitoring this value closely and recalculating it on a quarterly basis to have as accurate of information as possible throughout the year.

PRO TIP: Set up a Google Spreadsheet that calculates the time each customer has been with you as well as their monthly or annual costs. Doing this, you’ll easily be able to monitor your LTV throughout the year. You can also set that sheet to feed into your business analytics dashboard.

 

  1. CAC

Now let’s talk about adding new customers. Adding a new customer is NEVER free, especially in the SaaS world. With so much competition out there in every SaaS niche and market, monitoring your Customer Acquisition Cost (CAC) is vital to your success. Your CAC is the average cost that you’ll pay to acquire one new customer. This can be in the form of advertising costs, marketing, time spent, and more.

If you’re a SaaS startup, you’re likely underestimating this metric because you’re blinded by how excited you are about your software. You’re likely expecting customers to adopt your software at a higher rate than they actually will and thus underestimating your costs. Especially in the startup phase of your SaaS company, you can’t afford to be overly optimistic, you need to rely on hard data in order to stay in business and become profitable. Let’s take a look at how to compute this number.

 

CAC = (Sum of all Sales & Marketing Expenses) / (Number of new customers added)

This is another metric that you should be monitoring constantly because it will also likely change fairly frequently as your marketing and sales expenses increase or decrease and as your business is introduced to the market. Especially in the early years, your CAC will likely fluctuate almost daily!

 

  1. LTV:CAC

Probably the most important ratio that you need to understand in your SaaS business is your customer lifetime value to your customer acquisition costs. This ratio will give you an honest evaluation of the viability of your business (which is very important in when you’re starting up a new SaaS company). Many businesses, especially in the tech space, rely on investment money early and don’t start producing a profit until around year four, but relying on that investment money without understanding when (and if) you will ever turn a profit is playing with fire. So many businesses in the SaaS space flame out due to not understanding the viability or LTV to CAC ratio of their business.

So, really there are two pieces to this pie. You need to understand your customer lifetime value and how it relates to your customer acquisition costs (hopefully it’s a positive number!) and you also need to understand how long it will take to recover the CAC spent to acquire each customer.

 

Let’s do an example to illustrate:

Say you figure out that you’re spending on average $300 to acquire a new customer (using the equation above) and your average customer lifetime value is $1,500, you can calculate your LTV to CAC value as 5x.

But is 5x a good or bad ratio? This means that your business is making five times what you’re spending on each customer to acquire them. Obviously, the higher this ratio, the better and more successful your business will be.  As a good rule of thumb, a viable SaaS company should have a LTV to CAC ratio of 3x or greater.

 

Next you want to determine the time it will take to recover the amount spent on acquiring the average customer. In order to do this you’ll need to calculate the average gross margin (which you did to get your customer lifetime value) and map it out until you reach your break even point.

So, say you have an average monthly gross revenue of $100 per new customer, you can see that it will take you three months to recover the investment that you paid in order to acquire that new customer. As another rule of thumb, you should shoot to recover your investment within the first year.

Now, taking this data back to our first point, if you are to lose this customer within the first two months, you are losing money on that customer.

 

  1. MRR or ARR Churn

Like we talked about earlier, we want to make sure that customers are staying with your SaaS company for as long as possible because the longer that they are with you, the higher your margins will be.

In order to understand your lost business, you’ll need to calculate your monthly recurring revenue or annual recurring revenue churn rate. This is a calculation of what percentage of revenue was not renewed or was cancelled throughout the year (or quarter or month).

MRR Churn can be calculated as follows: (substitute ARR if needed)

MRR Churn = (∆MRR cancelled contracts) / (∆t X MRR total)

Essentially, here if you have $1,000,000 in monthly recurring revenue at the beginning of the quarter and 2 of your customers cancel or don’t renew and they represent $200,000 in MRR, your quarterly MRR churn is 20% (which is extremely high).

As your business grows, becomes more sophisticated, and better understands your customers you should be able to increase the lifetime of your customer as well as decrease your MRR churn rate, at least those should be goals that are very high on your priority list.

 

Now, that we’ve gone through our top four must have SaaS metrics that you should be monitoring, you need a place to actually monitor those metrics, right? Get started with Cyfe now for FREE! Build out your SaaS metrics dashboard right within Cyfe and feed information from over 200,000 applications to help you seamlessly calculate and monitor these metrics!

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11 Ways to Put Your Business Intelligence Analytics to Work Growing Your Company

On its best day business is fuzzy. If it were simply black and white, everyone would be crushing it. Instead, we do our best to make intelligent guesses that keep us moving forward, but the smartest among us use metrics and automation tools to help clear up the fuzziness allowing for informed, intelligent, data-driven, action plans.

Metrics may be applied to help improve any and every part of the business process from sales and marketing to human resources, productivity, and finance. There is no need to take a best guess when data is precisely pointing us in the best direction.

The key here is that when used properly, analytics save us the two most important components of business: time and money. Assuming you’re interested in both of those assets, read on…!

What Are Business Intelligence Data Points?

Good question — what do we mean when we’re talking about business intelligence? Investopedia defines business intelligence as a “… a broad term that encompasses data mining, process analysis, performance benchmarking, descriptive analytics, etc. ”

While entirely accurate, that sounds a bit complicated, so to simplify, business intelligence (often referred to as BI) data points focus mostly on internal company processes. We will specifically focus on project management, the sales cycle, and finance, but understand that business intelligence data points may reach far beyond this scope. It all comes down to your company’s unique mission, goals, and key performance indicators.

How to Improve Business Decisions with Business Intelligence Data Points

For better or worse, the numbers don’t lie. Once business goals are defined, targets are either hit or missed. Sure, the goal may change, but knowing exactly where the company lands is essential in measuring success, finding out what to improve, and achieving continued growth.

Pro tip: Useful at-a-glance metrics are by default immediately actionable. So, take action!

Project Management

Measuring and analyzing project management data points are essential to any successful business running any type of project from agile scrum and product development to the most basic of event planning or coordination. Finding opportunities to leverage project management productivity can be a tremendous cost- and time-saving endeavor as it speeds up processes and boosts efficiencies.

Here are a few key metrics worth analyzing and reasons why you should be monitoring them.

  1. Task management and to do’s:

This may seem straightforward, but tracking tasks and due dates, while seemingly the most simple of organizational procedures, often gets left behind when multiple people and teams are working fast on various projects. Task management analytics help people stay on track, prevents blockers, and holds everyone accountable throughout the project until it is complete. Tracking these data points additionally makes for easy project review when looking at lessons learned and potential improvements for next time.

  Manage your Projects with Cyfe

  1. Time management:

Track how much time is needed for each task. Be sure you are charging or paying for your time accordingly and always be sure of where the overall timeline of the project stands. With accurate information, you can manage overall timeline expectations and adjust the scope of the project accordingly. For many businesses, charging by the hour is the norm and accurately tracking your hours will help you to provide more accurate and profitable estimates and proposals in the future.

  1. Benchmarking:

Most projects require benchmarking or healthy baseline check ups before, during, and even after developing particular tasks. Use business intelligence metrics to track competitors and analyze audience or potential customer data. Uncover user-persona trends that may inform your business’ marketing and sales strategy. Maintain a dashboard that holds this information so that it may be easily shared among your team members and other key stakeholders.

The Sales Cycle

Here’s a glimpse of a business intelligence analytics dashboard from Cyfe that showcases the kinds of sales cycle metrics worth tracking to find pockets of growth potential. This particular dashboard is showcasing a sample company’s sales metrics.

Sales dashboard to motivate employees

Now let’s break some of business intelligence analytics down into actionable insights.

  1. Top sales representatives (measured by total earned company revenue): Knowing (and not guessing) which sales representatives land squarely in, for example, the top ten percent of total company revenue generation will help you make more informed managerial decisions. And these are easier decisions to make because they are based on data. Do you know who your best (and worst) salesmen really are? I’m sure your gut tells you one thing, but the data may actually reveal a different story. Let your analytics tell the true story.
  1. Top sales opportunities (determined by total target value):

If you don’t know what your goals are, it’s nearly impossible to achieve them. Use an analytics dashboard to thoroughly understand your target market and share that data with your team in real time. Giving your sales team a better understanding of which prospects and leads are closest to the sale will help them better utilize their time and prioritize bottom of the funnel opportunities.

  1. Lead to customer conversion rates: Know your conversion rates. Know your cost per conversion. Use this data to make marketing pivots, personnel shifts, and hiring decisions. Focus your budget on attaining the type of leads that are most likely to convert and do so with confidence. Through this data you’ll be able to identify which types of leads, which sources, and which conversion paths will likely yield more customers.
  1. New customer acquisition: Learn when and from where your customers are being acquired. Tweak your sales and marketing strategies accordingly so that you can get the most bang for your buck. For example, if you find that yours is a seasonally based business and that the majority of your new customers sign up during the summer months, target that time to give your branding a boost.

Finance

Maintaining a healthy financial status is the ultimate goal of business. It’s a simple formula — make more than you’re spending. But when companies fail to make time to properly track financial business intelligence data points, they fail. Here are some key financial metrics to know and some insights that will drive success…

  1. Business expenses: If you don’t know what is being spent, you’re in trouble. Properly sorted data points will analyze business expenditures broken down by department, team, and even individual. Use metrics to discover where cash is moving and to determine if it’s being appropriately allocated and spent.
  1. Invoices: Be sure to get paid! By tracking invoice payments and schedules, you’ll know when you are owed money, how much, and by whom. One of the easiest ways for a business to fail is to have lots of overdue accounts receivable. Being too lenient or passive in collecting on your accounts is a recipe for disaster. Understand what you’re owed and implement strategies to get paid, on time.
  1. Overall company revenue:  This is a big one, and perhaps it’s a bit obvious, but knowing gross and net total company revenue is a no brainer for any business interested in improvement and growth. Use this metric to learn what company challenges may need immediate attention. It’s important to understand, especially for a brand new business, that sales and revenue are not the same thing as profit. It’s very important to know your gross numbers, but taking it a step further to understand your net sales numbers will help you implement procedures to move into the black.
  1. Budgets: While it’s important to understand total company revenue and expenses, the ability to track departmental budgets at-a-glance is incredibly useful in making predictions or when needing to cut costs. Know where the financial health of the business stands at any given point in time. Do you have departments or areas of your business that are surpassing their budgets? How will that be handled when it comes up? Figuring all of this out now will eliminate major issues in the future.

What If the Data is Less Than Stellar?

If the data shows something that you or your CEO doesn’t like — and this will happen — think of it as an opportunity for growth. First, consider shifting perspectives; adjust the date range, change filters, adjust your overlays. (Heck, be sure to check the numbers)!

But mostly, be open and willing to pivot to achieve your business goals. And if your primary business goal is growth, business intelligence analytics is a critically essential way to expand by saving time and money and by discovering ways in which to boost productivity.

Success demands a pointed strategy and the data will get you there, but it also requires finesse along with a healthy dose of creativity. After all, business can’t be entirely black and white. If that were the case, it would be incredibly dull. By its very nature, business will always be at least somewhat fuzzy, and we wouldn’t want it any other way.

Get started with Cyfe today for free. Go ahead, give it a try and discover how business intelligence analytics deliver the hard core data needed to grow your business. No credit card. No obligation. Just insight!

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How a Data Dashboard Can Serve as an Employee Motivation Tool

How a Data Dashboard can be an Employee Motivation Tool

It’s no secret that motivated employees are more productive, happier and all-around better employees. In fact, according to a study done by the University of Warwick, happier employees can improve productivity 10 – 12%

We’ve all dealt with employees who were great at their jobs, and those employees who couldn’t have cared less. If businesses want to maintain a competitive advantage and continue to grow their business, engaging and motivating employees is crucial. Sure there are those employees who are generally enthusiastic, those are the people who are easily motivated and work hard to grow the business regardless of what’s in it for them. But what about those who are less driven overall or cynical by nature? How do you, as an organization, motivate everyone on your team? It might come as a surprise, but utilizing employee data to engage and give ownership to individual employees can be a highly successful, if currently under-utilized approach to employee motivation.

When done in the right way, tracking, analyzing, and sharing employee performance metrics can be hugely beneficial to you, as a business owner, and your staff. We think that the number one reason this is so effective is because data allows you to empower your employees to do their job better and can help encourage them to better feel ownership over their position in helping the company grow. When employees feel as though the organization or job is “theirs,” then they feel a responsibility towards growing the company. This is sometimes referred to as pyschological ownership and many studies have shown that the feeling of ownership is an important indicator of employee motivation and performance.

Ok, but how do you use your data to help motivate and encourage ownership for each and every employee in your organization? Well that really depends on what data points you want to track and how you use those data points to improve performance throughout your business. There are some analytics that will be exceptionally helpful when shared with your team and some that you will want to keep all for yourself.

4 Data Dashboards for Employee Motivation

  1. Celebrate Milestones 

You might think that you are great at celebrating your employees, but are you really? Maybe you take them out for lunch on their birthday or give them a big bonus check in December. These are great ways to make them feel special, but you should also be recognizing them for work related milestones. Is Sally’s five year anniversary coming up in May? Did Michael just get promoted to Director of Sales and Marketing? These are great opportunities to recognize your employees for the work they’ve done for you.

How can you keep track of all these milestones? For any date based milestones, consider setting up a dashboard using your Google Calendar. You can put all employees anniversaries, birthdays, etc into your calendar and then create a dashboard so you can get a clear snapshot of upcoming and past events.

 

  1. Recognize Individual Achievements

Employees who are recognized for their work tend to feel more appreciated and have an easier time taking ownership for their portion of the company. So, did David just score a big contract that the company has been working on for six months? Recognize that!

Achievements for individual employees will probably differ based on your company, industry, the employee’s position within the company, etc. One of the most straightforward achievements is sales and it will probably be most relevant to your sales team. Consider building a dashboard that tracks your leads, accounts, opportunities, etc. Whether you choose to share this dashboard with your employees so they can track progress on their own or keep it to yourself is up to you. If you choose to keep it to yourself, however, it’s incredibly important to make sure you’re paying attention and recognizing those achievements. How are you going to motivate your employees using this if you aren’t actually using it?!

By contrast, if you choose to share this dashboard with your sales team, it becomes something that your entire team can regularly reference to see the progress everyone is making on their sales.

Your data dashboard used to recognize individual achievements will differ based on the sales software your organization is using, but here’s an example of a great sales dashboard.

Sales dashboard to motivate employees

 

EXPERT TIP: Not sure how to make a dashboard using your sales software? Let us help! Email us at support@cyfe.com and we’ll help you set it up. And if your software isn’t one of our current widgets, we can work with you on that too.

 

  1. Company-wide Achievements

We know that you, as the business owner or department head have ambitious goals you’re striving for each month, quarter, year or however else you measure time in your company, but are you sharing those goals wth your employees? What level of ownership do invidual employees have over the business goals in your company? How are you ensuring that your employees feel like they are contributing to those goals? Sure you are probably tracking your progress towards those goals on a consistent basis, but you should also be sharing that data with your employees! When you share the overall goals of the company with your employees and talk to them about how you plan to reach those goals, you’re bringing them into the fold. You’re basicallly showing them that they are important to helping the company reach it’s overall goals. Remember when we talked about psychological ownership earlier? This is a great way to help give that to your team.

 

As with #2, your dashboard for this item will need to be pretty custom to your organization. You need to ensure you’ve identified the key performance metrics important to your overall goals and build a dashboard around those metrics. Here are a few examples that help measure common KPIs:

 

Finances

These are helpful for companies who are trying to increase revenue, sales, etc. over a period of time.

Motivate Employees with a Finance Dashboard

Website

Trying to increase your overall website traffic or conversion rate? A marketing dashboard will help you measure the performance of your website.

Website Analytics Dashboards Help with Motivation

There are many other KPIs that your company can measure in order to track your overall goals for the year. Just make sure that you’ve identified your goals and the key performance indicators you’ll use to measure them and use that information to set up your dashboards.

EXPERT TIP: Not sure how to choose your KPIs? Let us help! Check out our FREE The Beginner’s Guide to Choosing the Right Marketing KPIs for Your Business ebook.

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Company-wide achievement type analytics are perfect for sharing with your whole team. Think of it like a football game where everyone is cheering for the same team, but in this case your business is the team. By getting everyone in on the fun and being able to visualize the data and progress you’re making, your employees will feel like important team members. If you really want to encourage staff to pay attention to these analytics, consider displaying them on a TV in your conference room or break room for people to check regularly.

  1. Identify Struggling Employees

In addition to the ability to identify and acknowlege your top performers, applying analytics to your employee’s performance helps you find the struggling and unhappy workers as well. As we discussed in the introduction, happy employees are more productive employees so you are probably safe assuming that those who are struggling in their work are probably unhappy as well. If you notice that certain employees aren’t meeting their numbers consistently, it’s probably a good time to pull them aside and talk to them about how you can help them perform better. They might have some insights into your processes that you haven’t thought of before. And just think, identifying the unhappy employees (especially when you run a large organization) would have been so much more difficult without data.

You can approach this dashboard in the same way that you approached the dashboard example in #2. Being able to track leads, opportunities, etc for a sales team (or other important metrics for other teams) will help you see the top performing players as well as those who are near the bottom of the heap.

Regardless of what approach you take towards using data to encourage your employees, the bottom line is that involving employees in the down and dirty of your business will help them take ownership of their job and the company. Those who take ownership of their position are ultimately more motivated and productive employees. Who knows, if you continue that encouragment, you might just end up with a team of people who stay with you for years to come.

Ready to start using data dashboard to measure your employees performance and start motivating them? Check out our FREE trial and start building a employee motivation dashboard today!

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5 eCommerce Metrics You Need to Grow Your Business

5 ECommerce Metrics that Matter

  • The Pro of managing an ecommerce business: it’s entirely measureable!
  • The Con of managing an ecommerce business: it’s entirely measurable (and those metrics need to be tracked and interpreted). Ugh…

Ecommerce metrics, or KPI’s (key performance indicators), are legitimate game-changers provided you know which ones demand your focus. But before we get too far ahead of ourselves, let’s kick things off with this in mind:

You can’t manage what you can’t measure,

and you can’t improve what you can’t manage.

 

This axiom permeates throughout all aspects of digital marketing, but is especially poignant when it comes to ecommerce solutions that directly boost the bottom line.

Sales are the name of the game and if there’s a way to measure how your audience responds to your online store and how that might affect your revenue, then it’s worth using those metrics to your advantage.

The data is available; it’s only a matter of investing time into understanding what to measure and how to interpret those measurements that may stand between you and your online business’ next big shift to greatness.

 

How to Begin Tracking Ecommerce Metrics

Get a baseline. Start off by understanding where you are right now. See if you notice any trends or interesting data. If something surprises or confuses you (for better or worse) make a note of it. Diving into data won’t do very much if you don’t have a firm baseline from which to measure against. So, it’s helpful to get a quick point of reference and determine which data points interest you the most.

Stick with a consistent measurable time frame. While looking at actionable ecommerce data on a daily basis is a reasonable goal to work towards, to begin it’s more important to grasp the bigger sales trends at play. Days and even weeks can be volatile, so breaking measurements out into monthly data, or more specifically, groupings of weeks (because months often end at mid-week) will be most helpful.

Example: Collect and review data every Monday through Sunday and then evaluate the overall picture over a four-week span of time.

Define your goals. Who are any of us kidding? When it comes to running an ecommerce-based business, the top goal is likely to increase sales. We get it and we support it! However, in order to drive your bottom line, you may need to boost your website traffic and boost conversion rates and boost click-through rates…it goes on and on, but it’s helpful to start off by defining some (small) goals. Have an attainable target or targets in mind. Then, as you learn more, you can (and should) adjust and add.

Which Ecommerce Metrics Matter Most?

The answer you don’t want to hear is that it depends. But really, your professional business goals will dictate what matters most to you, your customers, and your bank account. That said, here’s a rundown of what are typically the most relevant ecommerce metrics to track and understand. Ready? Let’s dive into some data…

 

#1 Ecommerce Metric: Total Ecommerce Site Traffic

This is, after all, a numbers game. More website visitors equal more sales conversions (more on that later), so start by understanding the big picture. More specifically…

  • How many people visit your website each month?
  • Where are these folks coming from? Are they finding your website through digital marketing ads, social media networks, Google searches?
  • How long are visitors staying on your site?
  • What is their journey? Which pages are they visiting and in what order?
  • What is your ecommerce site’s bounce rate? (Bounce rate measures the percentage of viewers who leave — or bounce — after viewing only one web page).

Having this ongoing snapshot view of your ecommerce site will help guide you to better decision-making when it comes to marketing, advertising, and design — ultimately getting a better understanding of your audience and how to best sell to them.

And speaking of your audience…

 

#2 Ecommerce Metric: Audience Analysis

It’s essential to know exactly who your audience is so you can understand how to best engage them and sell to them. Things to measure:

  • Age, sex, location? Getting a grasp of audience demographics makes a tremendous difference from a sales perspective. Are these rural or city folks? Can their geographical location tell you anything about their annual income or how much they might be willing to spend on your services? Different messaging should be used to target specific audiences.
  • Time of day? Is your audience more apt to shop in the wee early hours on Thursdays? Are they weekend afternoon shoppers? If you don’t know, you can’t target and make the most of these timely opportunities.
  • Seasonality? Do you get more visitors during the holidays? Major sales events? Is yours a seasonal business? This info will inform your marketing strategy and let you know what’s working or flubbing, so know these answers cold.
  • Device type? Are people viewing your site through mobile devices, laptops, phones, and what kinds? This is good to know so you can tweak your ecommerce site design to maximize your viewer’s user experience and most efficiently lead them to your call to action.

Here’s a sample web analytics dashboard from Cyfe that analyzes audience demographics at a glance. Number of visitors, geographic location, and more are featured in this custom dashboard.

Cyfe Web Analytics Dashboard

 

#3 Ecommerce Metric: Conversion Rate

This is the big one. Because you’ve been so astute and already know your total ecommerce site traffic (see #1 Ecommerce Metric), you can figure out your total conversion rate by measuring how many of those site visitors make a purchase. Divide your number of sales by total visitors and voila! you have your conversion rate. Your sales conversion rate instantly measures your ecommerce success or shortcomings, so get on this metric fast.

EXPERT TIP: Once you become an ecommerce metric master, you can track conversion rates from all different sources to determine which sources of traffic are most profitable to your company.

Dive into sales that convert from visitors who came from each source of traffic and pit them against each other. Such as LinkedIn vs. Facebook vs. Reddit vs. email vs. organic search. All of these will help you determine your overall marketing strategy.

To start, focus on increasing your conversion month-over-month.

 

#4 Ecommerce Metric: Average Order Value (AOV)

Hopefully it’s a given that you should know how much revenue you’re bringing in on a regular basis. Assuming you have that key data, check out your AOV next. AOV tells you the average of how much your buyers are spending per order. It’s up to you to determine what’s spending a little vs. what’s spending a lot, but knowing your AOV will dictate your next steps.

Example: If you have a lot of ecommerce site visitors spending a little cash, you need a lot more visitors to earn more cash. Conversely, if you find that visitors are spending a great deal on one or two items, perhaps it’s time to rethink how to either focus your marketing strategy on those products or to sell related add-ons that will keep your AOV on an upward trajectory.

 

#5 Ecommerce Metric: Shopping Cart Abandonment Rate

Understanding your customer’s journey through your ecommerce site is perhaps most relevant at the final point of sale — the shopping cart. It is (unfortunately) common for shoppers to fill up their cart and hit the road before confirming a final purchase. It’s naturally in the best interest of online business owners to avoid this!

Some (kind of) good news: The average shopping cart abandonment rate for major corporations is a whopping 69%, so don’t be alarmed if you think yours is high. The key here again is the act of measuring data. Knowing your shopping cart abandonment rate is half the battle. If you know what it is, you can work at reducing it. How you reduce it is up to you. You might find that you need to adjust your messaging, reminders, or your targeted email marketing campaigns, if that’s your thing. But remember that you can’t do anything worthwhile, other than guess, without first analyzing the metrics.

 

Stop Guessing! Use Ecommerce Metrics.

There are infinite more ecommerce metrics to study up and learn, but these five will kick you off in the right direction before you’re ready to tackle more.

Know this: ecommerce metrics, perhaps more than any other digital marketing metrics, are directly linked to your bottom line. They are incredibly powerful insights into your audience that are immediately actionable and should be taken very seriously.

If you’re not measuring your ecommerce site metrics, you’re guessing. And sure, you’re smart and you can probably make some fairly intelligent guesses, but the data will undoubtedly guide you to eliminating costly errors. So, what are you waiting for? Get in there, get the data, and get the sales!

Not sure what metrics you need to be measuring for your ecommerce goals? Check out our FREE Beginner’s Guide to Choosing the Right Marketing KPIs for Your Business.
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Marketing Agency 101: Proving Marketing ROI to Your Clients

Marketing Agency 101

One of the hardest things for any marketer or marketing agency to do is to prove their worth, or the return on investment (ROI) of their marketing campaigns. Sure, there are some generic metrics that some clients may be happy with, but what about those clients that have to justify their spend with you each month and need to understand exactly what their ROI is and whether it’s trending up or down? You need a better system of proving marketing ROI in order to better understand your campaigns, keep your current clients happy, get your current clients to re-sign with you, and even to sign new clients in the future. So where do you start?

Well, the first step is to understand what ROI is. Sure we’ve all heard the ROI buzz word as it gets thrown around by every business and marketer in the world, but do you actually understand how to calculate it? Do you understand what a “good” return on investment is? Well, if you don’t (even if you’re too embarrassed to raise your hand), we’ve got your crash course ready. Here we go!

Return on investment (ROI) is a measure of the profit earned from each investment or campaign. You should be calculating the ROI on each campaign whether it’s inbound or outbound marketing and reporting on it. Some marketing tactics can be much more difficult to calculate than others based on their outbound nature. Campaigns like billboards, television commercials, radio ads, and direct mail are typically much harder to track than digital tactics like email campaigns, content offers, and search engine optimization, but your clients are going to want to know and understand their marketing ROI no matter what kind of campaign you’re running.

To calculate your marketing ROI the formula is:

(Gross Profit – Marketing Investment)

Marketing Investment

Return on investment is typically expressed as a percentage (which is why you would then multiply it by 100 at the end of the expression). [MarketingMo]

Like we mentioned before, some tactics and campaigns can be much easier to track than others. If you’re a “traditional” marketing agency and you are running a “traditional” marketing campaign for your clients including some of those outbound tactics that we outlined above, there may be some guess work involved in your return number in the equation. Most marketing campaigns like this try several tactics in order to get a better understanding of their effect such as using a special phone number dedicated to that campaign, unique landing pages, and even “code words” that are used at the time of purchase for a discount. These can be fairly effective in helping you to understand the return on the campaign.

For campaigns that are easier to track, typically digital campaigns, we just need to collect the data, analyze it, and report on it. But, how do we do that exactly? Let’s check out our 7 step plan to produce marketing ROI for your clients!

 

  1. Determine your KPIs

Though this is not necessarily part of the marketing agency’s job in marketing for their clients, it’s important that the agency clearly understands which KPIs (key performance indicators) are most important to the success of their clients. KPIs are a set of quantifiable measures that a company uses to gauge its performance over time [Investopedia]

These metrics, whether you’re developing them with your client or they already exist, will go a long way in understanding what is important to the business and what you will need to work on producing in order to keep them happy, profitable, and a client as long as possible. Though KPIs aren’t necessarily included in the ROI calculation, they will be considered by your client as if they were. If a KPI for your client is organic traffic to their website, it may not be used directly to calculate gross profit, but actually takes it another step past that ROI calculation to see where that gross profit actually came from and answers questions such as:

  • How much traffic must you produce in order to grow our profit by 10%?
  • What would happen if we invested in increasing our organic traffic by 1,000 visitors per month?
  • How many organic visitors must we attract in order to convert one lead? And, how many leads must we produce in order to close one sale?

This is all very important information that you should be able to report on to your clients.

 

  1. Determine your client’s marketing costs

Now it’s time to really dive into the marketing return on investment equation.

First, we must understand what the client is paying in costs for every piece of the campaign. This will number will likely include many of these items:

  • Media costs
  • Creative costs
  • Printing costs
  • Software or technical costs
  • Management time (such as account management charges from your agency)
  • Cost of sales
  • Labor costs
  • And many others depending on your client’s unique business, setup, and your relationship with them.

When you’ve determined the overall costs for each tactic in your marketing campaigns you can then extrapolate that for each campaign as a whole. Remember – successful agencies will report on overall ROI of their campaigns as well as ROI of each tactic. This will help you and your client to understand where potential areas of growth are, tactics that may not be performing like you’d expect (good or bad) are, and tactics that may be outperforming your expectations that you may want to focus more on.

 

  1. Determine if you’ll use customer lifetime value & calculate CLV

One of the hardest things to get business owners, especially small business owners, to understand is customer lifetime value.

Customer Lifetime Value (CLV) is defined as a prediction of all the value a business will derive from their entire relationship with a customer. [Custora University]

Many business owners will look at a single sale as the value of that customer so it’s likely going to be your responsibility to help them to understand that the value of that one sale is likely not all of the value that that individual customer provides. As with any marketing campaign, you are likely attempting to create a long-term customer, not just a single sale.

Once you’ve got buy in from your client on the importance of looking at CLV, not just the value of one purchase, it’s time to calculate the lifetime value of a customer from each campaign. For a predictive CLV, we use this calculation:

[(Avg. Monthly Transactions X Avg. Order Value) Avg. Gross Margin] x Avg. Lifespan in Months

 This will likely be a process you’ll need to work with your client in order to produce and you’ll need to measure your results for each client as you gain them, but using your client’s CLV will help you identify where your most valuable customers are coming from and show the value of your agency past that single purchase.

 

  1. Establish ROI threshold

The process of establishing a floor and goal for the ROI of each campaign will help you work towards better and better ROI and keep your clients happy. By doing this, you’ll do several things that are helpful for your internal process including:

  • Set reasonable expectations
  • Gain more control over the marketing budget
  • Gain more control over the campaign with autonomy to cut and increase spends as necessary to reach your ROI goals

Every marketing agency has had struggles with clients around each of these points, but taking the time to establish your ROI thresholds will help you temper client expectations (because we all know they expect the world) and it will also open the door to conversations about higher budgets for high performing campaigns. Win – Win!

 

  1. Create ROI dashboard

Next, we recommend creating a return on investment dashboard for each client (or campaign) depending on how intricate the tracking will be.

One thing that separates good agencies from great agencies is giving clients the ability to monitor their performance in real time. It’s great to be an agency that provides monthly analytics. It’s better to be an agency that allows their clients to continuously monitor results, it is after all, their money at work.

Need a good solution to help you build out your ROI dashboards and share them in real time with your clients? Give Cyfe a try! You can get started for FREE!

 

  1. Measure ROI of each tactic AND campaign

Like we’ve mentioned several times already, it’s important to measure not only campaign success and ROI, but the success and ROI of each tactic individually. Doing so will help you identify tactics that may be costing your client a lot of their budget, but is not resulting in leads, customers, and revenue like expected as well as tactics that may be outperforming your expectations and deserve more of the budget.

 

  1. Optimize based on your findings

Measuring the ROI of each tactic and each campaign leads right into optimization. Taking the data that you’ve produced through these exercises will help you be more flexible with your campaigns and align your client’s budget with tactics that perform well and result in generated customers and revenue.

No client wants to work for an “order taker” type of agency. You’re supposed to be the expert and thus should be making ongoing recommendations based on your analytics. Measuring ROI for your clients and their individual tactics and campaigns will give you all the information that you need in order to make recommendations to reallocate budget to better performing tactics or campaigns and even request higher budgets (meaning more money in your pocket) for campaigns that are performing like rock stars. Who doesn’t want more money?

Now, this whole process kind of falls apart if your clients don’t understand the KPIs that are most important to their success in marketing and business. Help them develop their unique KPIs with our FREE eBook, The Beginner’s Guide to Choosing the Right Marketing KPIs for Your Business. Download it now!

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3 Financial Metrics Every Small Business Should Track

3 Financial Metrics Every Small Business Should Track

Small businesses need to find the edge over the competition wherever possible. A major element in that concept is tracking the right business metrics. There are several key indicators that help you decide when your business is due for growth, whether you have a bottleneck in your path to success, or if there is a hole in your strategy. In this post, we will go over some of the most important financial metrics to keep an eye on.

 

1. Cost of Goods Sold (COGS)

This is key. Without breaking out your cost of goods sold over time, across different products, and through other difference-makers, you won’t understand where your profits come from. It is all very well and good to see big revenue numbers, but without taking into account your production costs, you aren’t really learning anything about the health and long-term viability of the business model. This is especially important for a young and growing business, because it is tempting to generate a lot of revenue with low prices to gain market share early on. However, if you can’t start generating an actual profit over your costs, you will eventually burn through your cash.
There are a few things you can learn from your cost of goods sold. First of all, you can see how your costs are changing. Even in isolation, this is useful to know. You can see if your production is getting more efficient and reducing your costs, for example, or if switching suppliers affected costs. That helps you make sure your costs aren’t creeping up or eating into more of your margin unexpectedly. This is especially important during expansion, because new products often cost the most to sell at launch, with costs coming down. If you expect costs to decrease over time, then you should see indicators of that in the cost of goods sold.
You also need to be able to break out the margins of each product. It is okay to have a loss leader that you take a thin loss on if that leads to more purchases of profitable items later on, but you can’t handle sustained losses. The last few years of the tech sector should be enough to show anyone how dangerous it is to build your business model around years of losses, especially when there is no concrete plan to swing into the black.
Cost of goods sold is one of the most crucial financial metrics both in aggregate and in fine detail, so keep a close eye on it. It could be the key to many things, from pricing and growth to R&D and support.

2. Customer Acquisition Cost

Next up we have another cost. Customer acquisition costs are all the costs associated with converting a lead into a customer, and they generally consist primarily of marketing and sales dollars. This is an area where it’s easy to overspend. If your CAC is too high, then you need to find a way to increase conversions or to spend less money and get the same results. Spend too much on sales and marketing and you will run into problems; the margin of revenue over cost of goods sold will get wiped out when you take into account CAC. Sales and marketing are both highly complex fields in today’s business world, so it isn’t easy to find the best and most efficient approaches for your needs, but spending some time on sharpening your strategy is key.
Most marketing (and much of the sales process, especially at big companies) today has at least some online component, and it might be completely online. Online marketing tactics such as email and social media tend to be cheap and high-volume, so they are attractive to small businesses. Some of the big costs come in, however, on larger tactics such as SEO and web design. It is increasingly common to outsource these to marketing companies. This is not necessarily a bad move. It’s rare for a small business to have the internal talent and time to spend on SEO-oriented web design so it makes sense to seek out those who do and partner with them. However, costs can potentially run high when working with outside vendors, and what makes matters more difficult is the necessity of paying for the work before the increased revenues from new sales come in. In addition, accounting can be a little tricky as well, if you don’t remember to include some of these costs in your total CAC.
As with cost of goods sold, CAC is useful if you can break it out by type of customer, the channel, the things the customers buy, and so on. That will help you see where your marketing is most effective, what kind of groups you are efficiently converting, and whether high-CAC customers go on to buy enough to justify the costs to acquire them. This last point is important. If you are trying to increase conversions among a particular group and are spending a lot on marketing, more conversions don’t mean more profits if those customers are buying low-margin items. When possible, increase the efficiency of your marketing by funneling potential customers to products with better margins.
CAC is also a key financial metric to keep you focused on retention. Visualize how much you need to spend to bring in a new customer and how much uncertainty there is associated with that process. For less money and less effort, you can keep existing customers and make them into repeat business. The saying in business is “the best customers are the ones you already have” and that holds true even today.

3. Cash Burn Rate

You’ve heard the phrase, “you have to spend money to make money.” Nowhere is this phrase more relevant than in business. If you want to expand and make a splash, you need to be willing to invest early on in the life of your business. However, that doesn’t mean you have to use up all your cash in the first six months, either. Half of all small businesses fail in the first year and one-third fail in the first two years. The main reason for this high failure rate is a lack of cash flow. Businesses simply run out of money to sustain. The founders fail to foresee how long it will take before their company starts to turn a profit, or underestimate the day-to-day costs of operating. To be safe, always go into a new business with the mentality that you might need to eat a year’s worth of costs before profit comes in. The cash burn rate is the right metric to monitor how much longer you can stay afloat.
While the first two metrics we discussed were specific types of cost, the cash burn rate is more overarching because it provides an all-inclusive look at sustainability. It’s easy to calculate how much longer you can maintain your current state and when you will need to start turning a profit.
The cash burn rate is also a good reality check for business owners. It’s easy to get excited in the early days of big spending and growth. Checking in with your burn rate helps you see just how unsustainable that is, keeping you grounded and in tune with long-term realism. That initial growth phase won’t last forever, and by looking at your monthly or annual pace for spending, you’ll see that your revenue will fall short of expenditures until you start to convert efficiently and build a loyal customer base. Cash burn rate doesn’t tell you where your money is going or whether it is being well spent, so you’ll need to connect the dots a little to decide whether you are making good use of your resources. It is most useful as a sort of ticking clock, a countdown of when you’ll be forced to seek exterior financing or shut down. The more you can reduce your burn rate while increasing revenue, the quicker you can swing into profitability.

All three of these metrics are costs. You want to focus on costs because they guide many decisions in all realms of business. These are also metrics that many owners underappreciate. They key in on helping you reach profitability and avoiding burnout. In the modern, heady market with startups and online platforms making entrepreneurship accessible, it’s more important than ever to stay calm and locked-in on the long-term sustainability goal. For every Facebook, there are a thousand new businesses that flame out and go unnoticed because they never developed a way to make a profit. By focusing on these three core metrics, you’ll see exactly where and how you can improve your efficiency. Consider this an introduction to the world of business intelligence. The right data can change your entire perspective and deliver powerful insight across each part of your business. That includes visualizations and graphs as well as raw data. Look into getting a good BI dashboard that can bring these and other metrics within easy reach.

Ready to start building out your BI dashboard and start measuring these important KPIs? Take Cyfe for a test drive! Build your first dashboard for free! No credit card. No obligation. Just insight!

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What are Closed-Loop Analytics?

What are Closed Loop Analytics?

It’s no secret that analytics are the one of the most powerful tools we, as marketers, have access to today. Between tracking website traffic using Google Analytics to measuring the cost-per-click of your latest Facebook advertising campaign, companies have access to more information about their business and their customers than ever before. This is great news because not only does it mean that you can prove the effectiveness of your marketing, it also means that, given the right amount of analysis, you are able to uncover powerful insights about your customers and your sales process giving you more power than ever.

The sheer volume of metrics and analytics available allows us to track nearly everything our businesses do in a given time period but that can be somewhat overwhelming. After all, wouldn’t it be more beneficial to be able to connect all of your campaign and transaction data together so you can more easily determine which platforms and channels are delivering the most value and track your entire customer lifecycle from beginning to end? Good news! You can. It’s called closed-loop analytics. Let’s take a look at what this means, how you can implement it into your organization and how it will help you draw more educated correlations and insights about your business.

 

What are closed-loop analytics?

Closed-loop analytics lends insight into the entire customer lifecycle – from the time they first interact with you, to the time they become a customer. When implementing closed-loop reporting, you are “closing the loop” between the data collected by marketing and the data collected by sales. Implementing a closed-loop reporting process allows markerters to make decisions on actions that occur further down the funnel than they are normally able to.

 

Why closed-loop analytics are important

Historically marketers have dealt primarily with top-of-the-funnel lead generation tactics and analytics and salespeople have dealt with the lead-to-customer transition and metrics. With closed-loop analytics, marketers are able to evaluate how their efforts are performing through the entire business lifecycle from visitor all the way through customer. This allows marketers to draw insights and make decisions based on actions further down the funnel on what drives the greatest ROI for the business. This is great for marketers and for high-level executives, as marketers are able to make more informed decisions about how to spend their marketing budgets and high-level executives are able to more accurately measure the effectiveness of marketing in driving bottom-of-the-funnel conversions.

Closed-loop analytics help companies transform (and track) anonymous web visitors into leads who can then be converted into customers. It also allows us, as marketers, to see what channels and tactics are ultimately creating leads, conversions and sales.

 

Where to start with closed-loop reporting

Now that you understand the benefits of closed-loop analytics, how do you implement them into your organization?

In practice, closed-loop analytics is comprised of comparing data between two or more analytics tools. As you probably know, marketers typically track their campaigns using an audience-tracking tool such as Google Analytics. Likewise, the sales team usually tracks their prospects and leads using a CRM platform. Closed-loop analytics require that the person measuring the metrics look at tracking platforms that both the marketing team and sales team rely on in order to get a full view of the customer lifecycle.

While there are some audience-tracking tools and CRMs that work together, since sales and marketing have historically been separate departments and functions within a company, many businesses are using softwares that don’t talk to each other. That’s ok! You can still implement closed-loop analytics and you don’t even have to upend the company processes by implementing all new software. Sure it’s going to take a little more effort on your part to analyze metrics in two different places, but it is possible. Let’s take a look at how you can use your existing process to implement closed-loop analytics:

A successful sale (at it’s most simple) usually has four stages:

  1. Visitors arrives at your website
  2. Visitor browses your website
  3. Visitor converts to a lead by filling out a form
  4. Lead becomes a customer

Most marketing tools track your customer through stages one and two, some will bring it all the way through stage three but few will track through stage four since leads typically are turned over to the sales and taken away from marketing completely at this point. So how can we track all four stages? Let’s go stage by stage:

  1. Visitor arrives at your website
    As a marketer, you are probably already familiar with metrics that measure visitors arriving at your website but since each step of the process is a crucial component of closed-loop reporting, allow us to explain anyway.

    Even the most simple audience-tracking tools will track the source of a visitor when they land on your website. Whether your visitors are coming from organic results, PPC, social media, email marketing or any of your other marketing tactics, it’s important to understand where your visitors are coming from first and foremost.

    Here is a pretty basic sample report pulled from Google Analytics showing the sources of this website’s visitors. You’ll notice from this report that the majority of visits are direct (or there’s no known source) followed by organic search.
    Google Analytics Visitor Source

    Your results might indicate that you’re receiving more traffic from your social media profiles than your SEO results. Regardless of where your traffic is coming from, understanding your sources is the first step in determining what efforts are most effective in bringing in new customers.

  2. Visitor browses your website
    Once you have captured your website visitors, you can begin tracking additional information about them and how they navigate your website. Some valuable information that you’ll want to look at includes what pages they visit, in what order they visit those pages and how long they stay on each page. Ideally you would be able to track this information for each individual user, but if your audience-tracking software provides this information in aggregate (as Google Analytics does), that’s a good starting place too.

    Here is a sample of how Google Analytics provides page view information:

Google Analytics Page View Information

Page visit information will help you determine what content is valuable to your visitors and how they are engaging with the content on your website.

  1. Visitor converts to a lead by filling out a form
    Most simple audience-tracking software does not, by design, show you which visitors on your site convert by filling out a form. Instead, these people will be converted to leads and sent to a salesperson by email and/or entered into the sales CRM. Most companies stop their marketing efforts here as the leads are turned over to salespeople for nurturing. When implementing closed-loop reporting, however, you want to continue your tracking through this stage and the next. The good news is that although simple audience-tracking software isn’t set up to track these conversions, there are a few options for you to capture and analyze information on visitors who become leads:

    1. Implement a software that tracks form conversions
    2. Customize your current software to track form conversions
      Many audience-tracking softwares will allow you to create a way to track conversions. For example, if you are using Google Analytics, you can set up a Goal to track conversions in addition to all of your other metrics.
    3. Track them in the sales CRM
      One way that many salespeople receive leads is through visitors on the website converting by filling out a form. When this happens, it’s likely that the salesperson will either get an email with information about that lead and manually enter it into the CRM, or it will be automatically entered into the CRM.
  2. Lead becomes a customer
    Traditionally, marketing’s job ends once the lead enters the CRM and sales picks it up from there. But with closed-loop analytics, marketing continues to track the lead through to becoming a customer (or to becoming a closed – lost deal) to determine which of their efforts result in leads that do buy and which result in leads that don’t buy. This is the step in which it starts to become complicated to determine which tactics lead to sales and which don’t without software that tracks actions of individual users.

 

Closed-loop marketing not only allows marketers to better understand their efforts, it also helps the entire company determine whether what they’re doing is effectively bringing in new customers or not, something that businesses are traditionally not great at understanding. In fact, according to the Content Marketing Institute, only 21 percent of B2B marketers are successful at tracking ROI. Shifting to closed-loop reporting is a huge step in solving that challenge. In addition to better understanding your customer metrics, closed-loop reporting also enables marketing and sales teams to work more closely together. This is sure to lead to more effective marketing and more informed salespeople.

Whether your company measures using closed-loop analytics or not, choosing the correct KPIs to measure is crucial to ensuring that your efforts are targeted towards your overall business goals. Not sure how to choose which KPIs to track? Check out our FREE The Beginner’s Guide to Choosing the Right Marketing KPIs for Your Business eBook today!

7 Sales Analytics Metrics Every Company Should Be Monitoring

Sales Metrics to Kick Your Business into Higher Gear

All businesses are looking to increase sales, right? We’ve certainly never encountered a business who’s told us that they would like to decrease sales. Whether your busienss is suffering from a decrease in sales or just looking to kick it into higher gear, sales analytics metrics are the first step towards increasing your sales.

Sales analytics metrics exist to help you understand the effectiveness of your current sales process. Understanding your current process and the health of your sales pipeline will help you identify areas of opportunity or pieces that aren’t as effective as they could be and improve the overall success of your pipeline. Tracking these metrics historically will help you to analyze trends in your results with more clarity and you will even begin to start forecasting future trends and opportunities.

Let’s take a look at the seven sales analytics metrics every company should be monitoring and how they can help you understand the strength of your overall sales process and pipeline.

 

  1. Number of Open Opportunities

One of the most important numbers to look at is the number of open opportunities each representative is working at a given time. By determining how many opportunities are created and available to your sales reps, you can get an idea of whether you are generating enough new opportunities.

Is this number low? That means you aren’t providing your sales representatives with enough opportunities for them to pursue. Given that 79% of marketing leads never convert into sales, a low number of open opportunities will lead to a low number of overall sales and lower revenue.

In this case you want to take a look at your MQL-to-SQL (link to content offer when live) ratio. If this percentage is decreasing over time that means you’re having a problem converting marketing qualified leads into sales qualified leads. This might mean that your definition of a sales qualified lead is too strict or that your ideal customer is changing and the sales process needs to change in concert with that change. Take a look at the criteria you’ve put in place for converting a MQL to a SQL and determine whether it’s time to make a change in that criteria.

EXPERT TIP:

Another thing you can use this metric for is to evaluate the spread of opportunities amongst your different sales reps. Reps working too many open opportunities aren’t able to spend much time on each opportunity to qualify and close those people and will thus become ineffective salespeople. Making sure opportunities are divided adequately amongst your sales team (after taking experience level, time needed to service an opportunity and deal size under consideration) will help ensure that your salespeople have enough time to work with each prospect until they are ready to make a purchase.

 

  1. Total Closed Opportunities

Just because you have a lot of open opportunities does not mean that you’re sales process is working correctly. That’s why you want to also consider the total number of closed opportunities (both closed – won and closed – lost opportunities).

Imagine, for example, that you have a sales rep that’s being provided with 10 open opportunities per day but only closing 10 of those per month. In that scenario you need to determine why your rep is closing so few of their open opportunities. It’s possible that they don’t understand how to properly close a deal or they’re just letting potential business fall through the cracks. No matter the reason, this is cause for concern and is something that you should address with that sales rep so that future opportunities aren’t left by the wayside.

 

  1. Win Rate

Win rate will help you understand the success rate of your sales team and can be calculated using a simple equation:

(Closed Won Opportunities)/(Total Closed Opportunities) 

This metric will help you identify which, if any reps, are struggling to close deals. By identifying the sales reps that are struggling to win deals, you can work with those reps to determine where they are struggling and how you can help them win more deals. If conversion rates are low in the early stages, your team might be struggling with rapport building, qualification or even product knowledge and demos. By contrast, if conversions are low in the latter stages of the funnel, they might be struggling with managing objections, gaining commitment, or their negotiation or closing skills.

 

  1. Deal Size

In the short term, knowing the average sales price of all closed – won deals will make it easier for you to identify opportunities that fall outside the normal deal size. Larger (3x or greater) opportunities tend to have smaller win rates and longer sales cycles and should be called out as such in the your system so it can be monitored adequately.

In the long-term, this metric will help you track when and by what margin you start beginning to win bigger deals. If you average deal size increases significantly, that might mean you’re attracting larger deals and your pipeline is changing. Larger deals also might cause your pipeline to change as deals of a larger cost tend to take longer on average to convert than those of a smaller cost.

EXPERT TIP:

If you notice an increase in smaller deals, it might be something you want to look into. It’s possible that your sales team is foregoing larger deals because smaller deals are easier to win. Or they might be giving too many discounts that are affecting your pipeline.

 

  1. Sales Cycle Length

Your sales cycle is the average time it takes your team to win a deal. This metric should be measured starting from when the lead comes in and ending when the deal is closed. Sales cycle lengths depend on a lot of different factors including your industry, sales price, etc. As such, no one sales cycle length works for all industries or even all businesses in the same industry. Therefore, it’s most important here to measure this from a historical perspective so you can identify whether your sales cycle is increasing or decreasing in length.

This will also help you identify any place in the sales cycle where prospects get hung up or spend an unusual amount of time. This will inform you which skills you should coach your sales team on to decrease the amount of time a prospect lives in that stage of the sales cycle.

You can also use this metric to identify the likelihood that new prospects will become buyers. After all, there is a high correlation between the amount of time an opportunity spends in a stage and the likelihood of it becoming a won deal. Use historical data to identify deals that are less likely to close based on the amount of time they have remained in a particular stage of the pipeline.

 

  1. Cost of Sales to Revenue Ratio

This metric reflects the overall efficiency of the sales division without having to look at numbers for individual sales reps. Total costs should include salaries, commissions and expenses for your sales team. Over time, evaluating the cost of sales to revenue ratio will help you understand the level of investment needed to reach a certain performance level. This will, in turn, help you estimate how much money you need to put into sales in order to reach certain revenue goals.

 

  1. Specific Actions

While analyzing big picture metrics is incredibly important to understanding the overall performance of your team, it’s also crucial to evaluate performance based on measurable actions taken by the sales team. Identifying the most influential actions and setting KPIs based on those actions will keep your sales team on track and will help them understand what actions they should be spending their time doing.

Here are a few examples of action-based metrics you can measure for your sales team as a whole or even for individual reps:

  • Number of outreach emails sent
  • Number of first contact calls made
  • Number of follow-up calls made
  • Number of follow-up emails sent
  • Number of meetings scheduled
  • Number of demos given
  • Number of proposals sent

There are tons of additional sales analytics metrics that a business can measure but starting with some of these high-level metrics will help you get a feel for your overall pipeline and determine whether your overall process is effective or needs to be revised in order to be more successful. Businesses are always looking to hit revenue numbers and manage their teams successfully. In order to do both of these, it’s important to start focusing on some of the most critical sales metrics. The seven metrics above should be a good starting point for understanding your overall pipeline and identifying any areas of opportunity within your overall sales cycle.

 

Tired of looking at data in 100 different places? Wish you could access all of your analytics in one business dashboard? We can help! Check out our FREE trial today and get ready to more easily view and analyze all of your business data.

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What is the Difference Between Business Intelligence and Business Analytics?

Business Intelligence vs Business Analytics

Business intelligence and business analytics both revolve around how a business can tap into available data to improve its decision-making. However, many people are unsure what separates the two terms, if anything. In this post, we’ll explain the difference between business intelligence and business analytics so you know what each of them is referring to and what that means for your own business. We will examine two different viewpoints. The first involves how business intelligence and business analytics describe different approaches to using data and gathering insight. The second focuses on how usage of the terms themselves has changed and what that means for their application.

Business Intelligence vs. Business Analytics: A Difference in Time 

One way to differentiate business intelligence and business analytics is that both use data, but business intelligence uses historical data to learn from past decisions while business analytics is forward-looking and attempts to predict what will happen in the future. For example, business intelligence might describe a company’s attempt to examine why a marketing campaign did not draw as much interested as expected. Business analytics would use marketing data to predict how consumers would respond to a different campaign in the future.

Both approaches are important, and one is not greater or lesser than the other. The two are complementary in that they provide different insights and draw upon different sources. Neither one can answer all of the questions and solve all the problems a business has. They also call for different statistical techniques: forecasting is a different form of statistics compared to drawing conclusions from past data.

The difference is, to a degree, academic. Any business needs to understand its past and be able to look into the future if it wants to succeed. But it is still worthwhile to separate them because they require different datasets, skills, and tools. That means different employees will be working on each and each may use different vendors to supply the necessary software. From a logistical perspective, then, BI and BA can be defined by the extent to which they need different resources. This can vary from company to company. In some organizations there might in fact be considerable overlap, while in others the gap might be large. This comes down to the IT culture of each company and how it prefers to collect and process its data.

The insights drawn from each approach play into the company’s overall strategy. Business intelligence helps to show what works and what doesn’t work in retrospect. That’s critical for honing in on strengths and shoring up weaknesses. It’s difficult for a business to thrive when it cannot understand what attributes of its product are the most and least attractive. BI also guides how well the company met its goals. For example, products and campaigns typically have intended audiences that are the targets of marketing and design. Proper use of BI allows the company to determine if it succeeded in reaching that audience. Business analytics then carries the insights into the future. The company can attempt to model a particular change or new campaign to see how well it will do based on projections.

While the goals and tools in each approach differ, both rely on gathering as much data with as high quality as possible. Not having enough data means that you cannot rely on the conclusions you draw because the sample size is too small. Low sample sizes just don’t provide enough evidence to support insight. Likewise, if the data is hard to access, stored in a difficult format, or isn’t detailed enough, then it will be difficult to arrive at useful conclusions no matter what approach you are taking. The company needs to make an active effort to gather and clean data so that both processes can proceed smoothly. To that end, the exact border where business intelligence ends and business analytics begins perhaps matters less than a company’s data culture. Data is a resource and the business needs to be prepared to make full use of it in whatever capacity it can. That takes effort and investment of staff time and infrastructure. Moreover, as data and analysis in general becomes increasingly accessible thanks to cloud computing and inexpensive storage, the boundary will continue to blur. The end result is that it boils down to data and exploiting that data for all the information and guidance it can yield, no matter what the name of the process is.

A Difference in Terms

That leads us into another viewpoint on the difference between business intelligence and business analytics, which is that there is no real meaningful difference. According to this view, making use of data and information has been a part of business for many decades. The only thing that has changed is the terms we use to describe that process. The evolution comes as a result of vendors and other stakeholders who want to distinguish their new offerings from what came before. They introduce progressively newer ways to describe their products in order to convey how the most recent edition adds more value than previous generations. As a result, business analytics has simply begun to replace business intelligence as the way to discuss business-data products and services.

There is some evidence for this effect. If you use the Google Trends tool to compare “business intelligence” with “business analytics” you will immediately observe that usage of BI has been declining steadily while the usage of BA has been increasing over the last several years. That might indicate that the two are not really complements, but that industry use has shifted from one term to another. In other words, BA is just the newer version of BI, but they both refer to the same thing: using data to solve problems.

That is not to say that the distinction is without any meaning at all. It does matter that the business world wants to change how it describes data, because there is a real shift occurring now. Several recent advances have made it possible for more and more businesses to collect, store, and analyze data at a scale that was previously too expensive to contemplate. At the same time, giants like Google have demonstrated that it is entirely possible to let data lead product development and improvement. Data can lead you toward growth even before you have a completely settled business plan. Simply coming up with a way to collect data and then figuring out how to monetize it later has become a common theme in many startups. While that approach has its limitations, it certainly demonstrates just how powerful it is to come up with a unique way to gather or organize data.

The newest data products and services can handle greater sizes and scales of datasets than ever before and can do so with simpler interfaces and more powerful tools. That means less staff time and less training is necessary to tap into data’s power. A clean GUI and simple, approachable analytical tools means you do not need to have a fully-trained data scientist on staff to take advantage of the data you have. On top of that, the emphasis on cloud readiness means that the company does not need to own its own data architecture. That is a significant improvement because data storage and administration in-house can be expensive and time consuming. Cloud solutions are increasingly cheap, secure, and remotely accessible. The new world of business analytics is not just about coming up with new techniques or applications, but the open access to those tools.

Another major new trend is the ability to integrate different data projects together. For example, while it may be useful for marketing, sales, and customer support to all collect data, there are even more gains to be had by combining all of that data together into a single birds-eye view of the customer encounter. That concept is known as customer relationship management, or CRM, and it’s transforming how businesses approach their operations. CRM software draws data from every department and combines it for new insight that would not have been visible from one alone. CRM as an analytical toolkit is becoming cheaper and easier to use just like other forms of analytics.

All of this comes down to saying that the change from using the term “business intelligence” to “business analytics” denotes an important change in the relationship between business managers and data. Now, managers and owners need to be more conversant with what data can do and how they need to proactively harvest data to generate future returns. The importance of data hasn’t changed, but its accessibility has.

The bottom line is that the question of business intelligence vs. business analytics is secondary to the greater point: now is the time to commit to establishing standards and a method for using data. There are more tools and solutions available than ever before. Whether it comes from social media interaction, website and app interaction, purchasing and financing, email marketing, support, or any other source, it is hard to justify not taking advantage of the available data to guide how you create and market your product.

There are tons of different business intelligence and analytics metrics you can track. It can get a little overwhelming! Setting key performance indicators can help you spend your time analyzing only the most important metrics for your business. Not sure where to start?

Download our FREE The Beginner’s Guide to Choosing the Right Marketing KPIs for Your Business eBook today!

6 Tips to Create the Perfect Data Dashboard

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So you’ve taken the plunge and you’re diving into setting up a data dashboard (and hopefully several) to track your business, operations, financial, and/or marketing metrics and KPIs. Your problem now is that you’ve got SO MANY OPTIONS! We understand. In today’s digital world, we’ve got an information overload. We can track almost anything so thinking about adding all of that to a data dashboard is a little overwhelming.

The trick is being efficient, targeted, and organized in your dashboards. Let’s dive into 6 tips that we’ve developed to help you report on what you should be reporting, to whom you should be reporting, and in a digestible way that isn’t overwhelming to the recipient.

  1. Determine the purpose

There are a seemingly endless number of data dashboards that you could build. The first step to creating the perfect dashboard is determining its purpose – and if a dashboard is actually necessary. Forcing a dashboard when one isn’t really necessary is a great way to waste a couple hours. We’ve seen it done several different ways, but here are three dashboard purposes that we think are pivotal for any business:

  • Operational Dashboard

An operational dashboard is a dashboard that you would use to monitor information that helps you identify efficiencies, issues, and opportunities in real-time. This type of dashboard would likely include information like website traffic through Google Analytics, messages through Basecamp, bank balances through Quickbooks or Freshbooks, customer support through Desk or Zendesk, and even upcoming events through Google Calendar.

This dashboard is one that will likely be monitored each day and will drive some of your actions and decision processes.

  • Strategic Dashboard

A strategic dashboard is one that will likely matter most to an executive, business owner, or board of directors. It’s a dashboard that would likely monitor items related to your businesses’ KPIs (key performance indicators) and should give you a high level view of the health of the business. This type of dashboard would likely include information like trending information through Google Trends, sales through Infusionsoft, Shopify, or Eventbrite, and even information on your conversion funnel through Unbounce.

A strategic dashboard will be different for each industry and each business because there are different metrics that matter most to each business, but these are some of the most common that are associated with most business’s key performance indicators.

  • Marketing Dashboard

A marketing dashboard is where you’ll track the effectiveness, progress, and return on investment of your marketing initiatives through all different channels. Really any sort of marketing campaign can be (and should be) tracked in a marketing dashboard, including traditional or offline marketing initiatives like print advertising and radio ads. This type of dashboard would likely include information like pay-per-click costs, clicks, impressions, and conversions through Google Adwords and Bing Ads, call logs through Marchex, email marketing effectiveness (opens, unsubscribes, bounces, clicks, etc.) through any of the many email marketing programs available, Moz ranks, social media analytics, and search engine optimization progress including keyword ranks and crawl errors.

This dashboard should give you a good idea of what is effective and what is lagging. A marketing dashboard should help you identify not only the tactics that are performing best and worst, but also the campaigns and content types that are performing best and worst.

  • Financial Dashboard

Your financial dashboard is a way to keep up with the financials of your business and have a snapshot at hand at all times. This can include information like your income, expenses, sales, customers, invoices, balances, vendors, subscriptions, deals, and proposals. It can be very inconvenient to have to log into each bank account, your accounting software, your ecommerce shop, and anywhere else your financial information may be in order to get a snapshot of how well you’re performing. Creating a financial data dashboard is a great way to get that information conveniently and to also measure it against previous cycles.

  • Competitors Dashboard

A competitor dashboard is an underutilized type of dashboard, but can be very enlightening and beneficial to your business growth. Within this dashboard you can monitor your competitor’s content through an RSS feed, social media growth and content, Moz rankings, keyword rankings, traffic ranking, reach, and even page views per user.

We all want to know what our competition is doing and understand what they’re doing well and not so well so that we can capitalize and grow our business. Creating a competitors dashboard is the first step.

 

  1. Determine the recipient

Next, you want to determine who the dashboard is actually for. Who is going to be monitoring it? As you can imagine, a dashboard for the CEO of the company and a dashboard for the marketing manager are likely going to be very different and the information that is important to each of these people is likely vastly different. It will also help you determine how in-depth the tracking and analytics actually need to go. Does it need to be just an overview or does it need to go into more specifics? Is it meant to be a very targeted board or a 30,000 foot view of the business?

As with any kind of content or report, keeping in mind who your audience is, is extremely important to the overall effectiveness of the material.

 

  1. Left to right

Now you’re on to building your data dashboard. Making sure that your content reads left to right is very important. We will all start at the top left (the most prime position on your dashboard) and move right. It seems logical and obvious right now, but it’s a very common mistake. So, because this is our natural course of reading, putting your most important or highest priority information on the top left is a best practice. Building out your dashboard should involve a fair amount of strategic placing. Information should be organized from most important on the top left to least important on the bottom right. Just thinking about it, if your viewer is going to skip something, get distracted, or not finish reading through the dashboard, the information in the bottom right is going to be the information that is missed. Don’t let that be your most important information.

 

  1. What’s actually important?

Like we talked about before, what’s actually important to one person may not be important to another. We also talked about the information overload that we’ve all got as businesses.

So – just because you can report on a metric doesn’t necessarily mean that you should. Building out a super elaborate data dashboard is likely not your best course of action. It’s better to focus on your five to ten most important metrics and report on those for that particular dashboard. This obviously isn’t a strict cut off, but the more information you have on one dashboard, the more likely it is that something will be overlooked.

 

  1. Design

We’ve all seen the beautiful and amazingly designed dashboards that have tons of different colors, images, fonts, and backgrounds, and if you’re like most people, you were probably extremely distracted. There is just so much going on that it’s hard to actually focus on what’s important – the data. When it comes to the design of your dashboard, less is always more. Pick a handful (at most) of colors to focus on, stick to a single font, keep your images to a minimum (likely just a logo is necessary – if even that), and don’t use a background that overpowers the data.

You didn’t put all this effort into setting up useful dashboards that can help your business or specific divisions of your business grow just to have the data go unnoticed.

 

  1. Grouping

When you’re creating your data dashboard(s) you should really focus on specific topics and groups. Grouping content together in a comprehensible way is important to getting a complete overview and to making sure that your reader can actually digest the information presented.

For example, if you’re presenting on finances, grouping your Quickbooks information like income, expenses, recent payments, outstanding balances, customers, and vendors together will help you understand the information better in context than it will if that information is scattered throughout the financial dashboard with your leads, opportunities, proposals, and ticket sales from several other services or softwares.

 

Setting up a data dashboard, or several, can be a fun and exciting process, but it’s important to understand these six tips and utilize them from the start. With so much information that each of our businesses has, so many different sources of information, and all the extra clutter and design options, it’s easy to get carried away and end up undoing all of your work because it’s not a well set up dashboard.

 

Now that we’ve gone through all these tips, it’s time for you to start your own! Get started with Cyfe now! It’s FREE!

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Still a little unsure of where to start with your dashboards? Check out some of our favorite examples:

Startup Dashboard

Social Media Dashboard

Marketing Dashboard

Client Dashboard

Web Analytics Dashboard

Finance Dashboard

Sales Dashboard

Project Management Dashboard

IT Dashboard