Sales Revenue: Your Key Metric
As a salesperson there’s nothing more important for you to focus on than sales revenue: the amount of money your company gets from sales activities. After all, generating sales revenue is the entire purpose of your job and sales revenue is the lifeblood of your company. Even if you’ve raised substantial funding you’ll eventually need to generate money from sales in order to grow.
Because sales revenue is so important to the overall health of your company your sales management will want to understand how much revenue they can expect to see each quarter. The process of predicting how much revenue to expect during a given period is referred to as sales forecasting. Companies create their sales forecasts based off of the information in their sales pipeline or sales funnel – tools that show how many sales leads or prospects are in each stage of the buying cycle and their likelihood of closing.
While it’s often true that “you have to spend money to make money” be aware that sales salaries, commissions and entertaining clients will take out a chunk of your total sales revenue. You’ll therefore need to keep track of those figures. Use a sales revenue formula to tell what your net sales revenue is after subtracting your costs.
Generating Sales Revenue
All sales revenue ultimately comes from sales leads. Leads are people at the top of your sales funnel who may be a fit for your product, but who you don’t know much about. They may have visited your website, stopped by your company booth at a tradeshow, engaged with your brand on social media or something else entirely. The primary purpose of your company’s marketing department is to generate these leads.
Because you don’t know much about them you’ll need a junior sales representative to engage and qualify leads. This involves taking the lead through the BANT system to understand if they have the budget for your offering, the authority to make a purchasing decision, a need for your offering and a clear timeline of when they will be making a purchasing decision.
While the exact process varies from company to company, after a lead has been qualified they’re generally referred to as “prospects” and the relationship is taken over by a more experienced account executive (AE). The AE will take their new prospects through a series of steps that include meeting with the prospect to find out more about their needs and to demonstrate the value of the offering.
Once value has been established an AE will work with a prospect on pricing specifications and ultimately signing an agreement. It’s only once the ink is dry and the prospect becomes a customer that sales revenue can be counted. Afterward, you’ll want to ensure that your customer is continuing to get value from your offering and that you keep an eye out for opportunities to upsell and cross-sell as a means to generate further sales revenue from an existing account.
Tips for Growing Sales Revenue
A surprising number of companies miss out on generating more sales revenue simply because they lack good sales analytics. Despite the common perception of sales as a personality-driven exercise, good sales organizations rely on process, not personality. The key to successfully growing sales revenue is to find a process that works and which you can replicate and scale with more and more salespeople. But you can’t do that if you don’t know what works to begin with. Therefore, it’s extremely important to keep a close eye on your sales metrics.
What is your average deal size? What percentage of leads or prospects at each stage of the sales funnel eventually become customers? How long does it take? How many leads do you currently have in the pipeline? How many leads do you need to meet quota? A company with growing sales revenue is going to be able to answer all those questions and understand what their salespeople need to focus on in order to close more deals.