Sales or Revenue Metrics will be viewed by the Sales or Marketing departments and show how well (or badly) the company is performing at selling its products or services in the marketplace. All sales-related numbers are included, including those which look at sales from the top-most, big-picture level (e.g. how much did we sell in USA last month), right down to the most granular (how many people responding to one particular pay-per-click campaign went on to buy the product being advertised).
Typical sales metrics may include:
1. Number of units sold in a given period, and how this compares against planned or budgeted sales, and/or against actual sales made in the same period last year (and the year(s) before that).
This may be looked at in terms of both number of units sold and revenue value made, and reviewed for a specific product, a category of products, or for all product sales in aggregate.
It may be broken down by customer segment, for example sales to new customers versus sales to customers who’ve been trading with the company for a number of years, with this last segment being further broken out into bands based on years of trading history.
Similarly, sales may be sub-divided by geographic region (county, state, country, continent, etc.)
2. How many potential customers are coming on stream (known as the sales funnel or the sales pipeline) and where they are in the customer journey, i.e. how close or how far away they are from making a confirmed purchase.
3. How effective the company’s marketing efforts are at both acquiring new customers, and retaining existing customers and persuading them to make repeat purchases.
In acquiring new customers, efficiency of marketing effort can be reviewed in terms of ability to find customers, gain and hold their attention and, most importantly, convert them into new customers.
With existing customers, marketing efficiency can be measured in terms of how many existing customers are persuaded to repurchase (improved retention rate), how well they can be persuaded to buy more product, more often (increased order frequency) or to buy more expensive product (increased average order value).
Some specific examples would include: how many marketing campaigns, emails or mail pieces have been mailed and to how many people, how many people responded to those marketing campaigns, and how many of those responders actually made a purchase (with a similar tracking of how many purchasers subsequently returned the product for a refund).
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Sales are seen by many as the key driver of commercial success since, without sales generating revenue and cash, the fixed costs of the business (such as salary and overhead/premises costs) cannot be funded and the business will not be sustainable over the long-term. It therefore forms THE key metric for most businesses. However, there’s a danger in only reviewing sales metrics or viewing them in isolation, since they don’t tell the whole picture, and can often mislead and result in wrong business decisions.
Hence it’s important to also consider Profitability or Efficiency Metrics to give a broader picture of the company’s overall performance.