A few days ago I introduced you to an ASAP framework of tracking business metrics. Today, I’d like to pull back the curtain on the acquisition metrics we track at SystemsRock.
I’ve found that a service-based business like ours – we have a core service that gets delivered over a period of a few months – needs lead generation and conversion metrics that will give us insight into what we can change to get more clients. This is what works for us …
1. Lead Source
This is where we track where our customers are coming from:
- Referrals (and specific names of our referrers)
- Email list
- Events (physical or online)
This is invaluable data because it allows us to identify our best-performing lead sources. A while back, for example, we noticed that referrals accounted for 82% of our business, which pushed us to explore new lead sources so as not to be reliant on one single way of getting new business.
As we test new lead sources, we are tracking not only the number of clients that come from that new source, but also the value of each contract, in order to analyze which are our most profitable lead sources.
2. Conversion Rate(s)
As the name implies, this is the number of deals you close over the number of leads you contact. It was a bit of a revelation to me to find out recently that our conversion rate for outbound leads (which means cold leads we’re contacting through LinkedIn, for example) is much lower than the conversion rate for our inbound leads (people who contact us??). It’s logical, but because we hadn’t been dealing with outbound leads before, it never occurred to me. Now we are tracking conversion rates individually – source by source!
Conversion rates are a great metric to keep an eye on because they can reveal a lot. For example, if I normally close 1 out of 2 referrals, but then, suddenly that number drops to 1 out of 3, it’s a sign that something is not right. By keeping track of the names of the referrers (see #1), I can easily spot, for example, that I’m having trouble closing sales coming from a specific person. This is a sign that I should explain to my referrer what types of clients they should send us or how they should explain what we do.
Closing outbound leads is a whole other beast, so I’ll be curious to watch my numbers there!
3. Sales Cycle
This is, basically, the number of days, weeks, or months it takes us to convert a lead into a client. Again, we are tracking the sales cycle duration for both inbound and outbound leads separately. For the most part, the sales cycle of our inbound lead ranges from 0, if I close the sale directly on the call, to a few days.
I’m expecting that the average duration it takes to close an outbound lead will be from several weeks to several months. I’ll make sure to report back when I have more accurate numbers!
5. Retention Rate
This is another useful number to track. In our business, retention rate doesn’t only imply the level of satisfaction with the work we did for the client during our first project. It is also the level of our understanding of the client’s journey with us.
Back when we started creating customer hubs and meaningful metrics dashboards for our clients, that’s what I’d sell them – a solution to a specific problem. Typically it was centered around creating greater capacity without adding new team members or restructuring the entire backend of their business.
After watching the transformations of those businesses, I realized that increased capacity is a wonderful side-effect. The actual deliverable, though, is allowing the business owner to have access to complete managerial control that she can dial up or down when she wants to receive desirable outcomes.
Analyzing our retention numbers helped me map out the entire customer journey for our clients – from just “winging it” to having complete and utter control of their business.
6. Sales Cycle Stages
The Sales Cycle Stage, more commonly known as the Pipeline, tracks a lead through the stages they follow before making a decision to become a client. Together with the Sales Cycle duration (how long it takes us to close the lead) and Lead Source (roughly speaking, whether it’s an inbound or outbound lead), we can use our pipeline metrics to make revenue projections.
This is where we also track next steps for each open lead, so we don’t forget to follow up and move them along the sales cycle.
That’s our lead generation and sales metrics dashboard in a nutshell.
What about you? What customer acquisition numbers do you rely on?