May 2026 Newsletter
Growth and Growth Metrics to Build Shareholder Value
CEOs that put strategy, sales and sales management as their top priority outperform their competitors in Revenue and Net Profits by up to 80%.
While CEOs and presidents of small and mid-size companies play a key role in driving performance across many aspects of their businesses, sales and sales management have either, A) Not been the focus of many CEOs and business owners, or B) Have not been the primary skill set of some CEOs. This is a very costly mistake and hurts the business in multiple ways.
CEOs, presidents and business owners of top performing businesses drive growth, Revenue, Profits and value. Setting forecasts and sales goals are just the beginning. CEOs need to pinpoint a specific sales strategy, sales management techniques, and track metrics, and key performance indicators (KPIs) to ensure targeted growth (at or above industry growth rates) in Revenues, Gross Profit Margin, and Net Profits to substantially increase shareholder value.
If sales and sales management are not your strengths, gain the help you need from a seasoned business advisor such as CEO Advisor, Inc. as failing in these important aspects can cost you millions of dollars in net profits, value and your ability to sell your company in the future.
Strategy, sales and sales management are all an art and a science. By closely managing your sales team and using best practices with your Customer Relationship Management (CRM) software, sales can increase significantly. Below are 12 key sales metrics and KPIs that will create a tremendous return on your investment and grow your business to the next level.
1. Sales Goals
Sales Goals include A) The number of closed customers signed, B) Signed contracted Revenue, C) Bookings and many other Sales Goals for a given time-period. They should be measured monthly, quarterly or annually. Sales goals also include D) The number of new customers, E) Number of renewed customers, F) Number of new opportunities created, G) Number of days of sales cycle and many others.
2. Sales Pipeline
Sales Pipeline refers to the amount of opportunities you have in your Sales Pipeline to ensure you reach your Sales Goals. Every industry is different, but you want to ensure that your Sales Pipeline is robust, growing and advancing through the sales stages to achieve or exceed your Sales Goals. In today’s uncertain economic climate, sales management should track your sales pipeline, close ratio and sales cycle to ensure your Revenue forecast is met.
A rough rule of thumb, depending on your industry, $4 of Sales Pipeline for $1 of Sales Forecast. Knowing this metric for your industry can help sales management to course-correct quickly to ensure an accurate Sales Forecast and successful quarter to achieve your Sales Goal.
3. Sales Cycles
Sales Cycle refers to the average amount of time it takes for a prospect to move from creating a new opportunity in your CRM to a Closed-Won deal. Understanding this metric can help your sales team to determine whether there are any bottlenecks in their sales process, which can not only delay deals but potentially lose them. Refine your sales process for a shorter sales cycle, a better close rate and a more accurate Sales Forecast. Longer Sales Cycles can sometimes be as simple as training your sales reps to close more definitively, and this can be identified by doing sales role plays in sales meetings or separate dedicated Role Play meetings.
4. Close-Won Rate
The Close-Won rate refers to the percentage of opportunities in your CRM that are Closed-Won over time. By tracking sales and sales opportunities in your CRM, you can track and improve on your Close-Win rate.
The Close-Won Rate calculation = Total number of Closed-Won opportunities / Total number of closed opportunities (both Won and Lost) for a calendar quarter or year.
Analyzing how your Close-Won Rate changes over time can help you gauge your sales reps’ performance, as well as, how much Sales Pipeline coverage you need to hit your Sales Goals.
5. Conversion Rate
In sales, the Conversion Rate refers to the number of qualified leads that result in Closed-Won deals.
The Conversion Rate calculation = Number of leads converted into new customers / Total qualified leads
This key metric can measure how well your sales team turns leads into new customers. Tracking Conversion Rates each quarter and year, and the characteristics of those leads, ensures that your company is focused on selling to relevant qualified buyers. Sales teams should track the origin of deals, or the Lead Source, in the sales CRM, as this is very valuable for efficiency in your marketing and productivity of your sales team.
6. Average Deal Size (or Average Selling Price)
The Average Deal Size refers to the average dollar amount of each Closed-Won deal. You want your sales team to focus on larger more qualified leads.
Average Deal Size = Total $ of Closed-Won deals over a specific time-period) / Total number of deals won
If a company closes four deals in a quarter, at $60,000, $60,000, $80,000 and $80,000, the Average Deal Size would be $70,000 for that quarter.
This metric tracks your Sales team’s ability to move upstream to larger deals and to avoid smaller prospects. Is your Sales team able to efficiently manage complex sales cycles with larger deal sizes? Are you generating leads from larger prospects? These are critical questions when growing your business to the next level.
Average Deal Size should be tracked for given time periods (quarterly, annually), as well as broken down by renewals and new deals to get an understanding of where the most profitable deals lie.
7. Annual Recurring Revenue (ARR) / Monthly Recurring Revenue (MRR)
Annual Recurring Revenue, or ARR, is the total amount of contracted recurring revenue that your company brings in each year. It’s a particularly crucial metric to follow for any Software-as-a-Service (SaaS) or managed service company that is subscription based, as it tells you how much contracted Revenue you can forecast to receive from customers in a given year.
The ARR calculation:
Annual Recurring Revenue (ARR) = Total value of annual recurring contracts / Number of contract years
For a 3-year annual contract totaling $75,000, the calculation would be $75,000/3 = $25,000 in ARR. Add up the ARR for each contract to calculate the total ARR. You can also look at ARR by product to gain insight into the performance of specific solutions.
For Monthly Recurring Revenue (MRR), which represents the total amount of contracted Revenue each month, a similar calculation applies. It is simply the monthly contracted subscription Revenue.
8. Average Revenue Per User / Average Revenue Per Account (Customer) Average Revenue Per User (ARPU) or Average Revenue Per Account (ARPA) refers to the amount of Revenue per subscriber/user, or account (customer) in a particular time-period. It is calculated by dividing the total amount of Revenue for that time-period by the number of subscribers/users or accounts during that period.
This KPI is helpful to track for a few reasons. If your ARPU is increasing, it’s an indicator that your pricing is stable. Identifying your highest ARPU customers may also give you an idea of your best product-market fit. For example, if you notice that manufacturing and technology companies are your highest ARPU clients, that may be a signal to double down in those market segments because you know they’re willing to pay the asking price for the value your product brings them.
9. Churn Rate – Customer Churn and Revenue Churn
Customer Churn Rate refers to the number of your customers who either cancel or don’t renew their subscriptions during a specific time-period (monthly, quarterly or annually).
Customer Churn Rate calculation = Number of customers lost during the period / Number of customers at the beginning of the period. Multiply by 100 to get the percent.
Revenue Churn calculation = MRR (or ARR) in dollars lost during the period / MRR (or ARR) at the beginning of the period. Multiply by 100 to get the percent.
Customer Churn and Revenue Churn are critical metrics to track for any business with a subscription model. If you’re losing customers or Revenue faster than you’re gaining them, your net growth is negative. This is the core reason that strong account management for protecting your customer base, providing fantastic customer experience, and continuing to innovate in order to provide value is so critical.
10. Net Revenue Retention (NRR)
Net Revenue Retention is the percentage of recurring revenue that is retained from existing customers over a period of time. It measures how well your company is at renewing or sustaining your existing customer base, as well as, generating additional revenue from these same customers. Below 100% is a negative for NRR, and over 100% is a positive for NRR. A target NRR may be 115%.
The Net Revenue Retention calculation = Beginning ARR + Upsell ARR - Contraction ARR - Annual Revenue Churn / (Beginning ARR). Multiply by 100 to get the percent.
11. Sales Linearity
Sales linearity is the steady and predictable pattern in which deals close throughout the quarter. The idea is that sales linearity helps avoid the end of quarter scramble to get deals in and make quota. Ideally reps attain 30% of quota by the end of the first month of the quarter, 60% by month two, and 100% by the end of the quarter.
Top sales teams strive to achieve this sales targets for a number of reasons:
• Relief from heavy discounting at the end of the quarter just to make their number• More predictable Revenue, allowing more strategic and sound investments• Better cash flow• Customer success teams can plan onboarding resources to support new customers
12. Sales Productivity Metrics
Sales productivity data includes any activity that a member of the Sales team engages in with a customer or prospect. Sales Productivity includes several metrics that assist in tracking and monitoring:
1. Sales calls completed per sales rep2. Sales calls completed per sales team3. Opportunities created per sales rep4. Opportunities created per sales team5. Proposal stage achieved6. Opportunities Closed-Won7. Opportunities Closed-Lost8. Other Sales Metrics
Sales metrics should be monitored on a consistent basis every month. A disciplined approach to monitoring sales metrics is critical. Sales are the lifeblood of your business and will be the difference in reaching your goals and a successful exit.
CEO Advisor, Inc. has the expertise and experience to help you focus on the growth of your business to achieve your goals and build shareholder value. Contact Mark Hartsell, MBA, President of CEO Advisor, Inc. at (949) 629-2520, by mobile phone at (714) 697-3370, by email at MHartsell@CEOAdvisor.com or visit us at www.CEOAdvisor.com for more information.
While CEOs and presidents of small and mid-size companies play a key role in driving performance across many aspects of their businesses, sales and sales management have either, A) Not been the focus of many CEOs and business owners, or B) Have not been the primary skill set of some CEOs. This is a very costly mistake and hurts the business in multiple ways.
CEOs, presidents and business owners of top performing businesses drive growth, Revenue, Profits and value. Setting forecasts and sales goals are just the beginning. CEOs need to pinpoint a specific sales strategy, sales management techniques, and track metrics, and key performance indicators (KPIs) to ensure targeted growth (at or above industry growth rates) in Revenues, Gross Profit Margin, and Net Profits to substantially increase shareholder value.
If sales and sales management are not your strengths, gain the help you need from a seasoned business advisor such as CEO Advisor, Inc. as failing in these important aspects can cost you millions of dollars in net profits, value and your ability to sell your company in the future.
Strategy, sales and sales management are all an art and a science. By closely managing your sales team and using best practices with your Customer Relationship Management (CRM) software, sales can increase significantly. Below are 12 key sales metrics and KPIs that will create a tremendous return on your investment and grow your business to the next level.
1. Sales Goals
Sales Goals include A) The number of closed customers signed, B) Signed contracted Revenue, C) Bookings and many other Sales Goals for a given time-period. They should be measured monthly, quarterly or annually. Sales goals also include D) The number of new customers, E) Number of renewed customers, F) Number of new opportunities created, G) Number of days of sales cycle and many others.
2. Sales Pipeline
Sales Pipeline refers to the amount of opportunities you have in your Sales Pipeline to ensure you reach your Sales Goals. Every industry is different, but you want to ensure that your Sales Pipeline is robust, growing and advancing through the sales stages to achieve or exceed your Sales Goals. In today’s uncertain economic climate, sales management should track your sales pipeline, close ratio and sales cycle to ensure your Revenue forecast is met.
A rough rule of thumb, depending on your industry, $4 of Sales Pipeline for $1 of Sales Forecast. Knowing this metric for your industry can help sales management to course-correct quickly to ensure an accurate Sales Forecast and successful quarter to achieve your Sales Goal.
3. Sales Cycles
Sales Cycle refers to the average amount of time it takes for a prospect to move from creating a new opportunity in your CRM to a Closed-Won deal. Understanding this metric can help your sales team to determine whether there are any bottlenecks in their sales process, which can not only delay deals but potentially lose them. Refine your sales process for a shorter sales cycle, a better close rate and a more accurate Sales Forecast. Longer Sales Cycles can sometimes be as simple as training your sales reps to close more definitively, and this can be identified by doing sales role plays in sales meetings or separate dedicated Role Play meetings.
4. Close-Won Rate
The Close-Won rate refers to the percentage of opportunities in your CRM that are Closed-Won over time. By tracking sales and sales opportunities in your CRM, you can track and improve on your Close-Win rate.
The Close-Won Rate calculation = Total number of Closed-Won opportunities / Total number of closed opportunities (both Won and Lost) for a calendar quarter or year.
Analyzing how your Close-Won Rate changes over time can help you gauge your sales reps’ performance, as well as, how much Sales Pipeline coverage you need to hit your Sales Goals.
5. Conversion Rate
In sales, the Conversion Rate refers to the number of qualified leads that result in Closed-Won deals.
The Conversion Rate calculation = Number of leads converted into new customers / Total qualified leads
This key metric can measure how well your sales team turns leads into new customers. Tracking Conversion Rates each quarter and year, and the characteristics of those leads, ensures that your company is focused on selling to relevant qualified buyers. Sales teams should track the origin of deals, or the Lead Source, in the sales CRM, as this is very valuable for efficiency in your marketing and productivity of your sales team.
6. Average Deal Size (or Average Selling Price)
The Average Deal Size refers to the average dollar amount of each Closed-Won deal. You want your sales team to focus on larger more qualified leads.
Average Deal Size = Total $ of Closed-Won deals over a specific time-period) / Total number of deals won
If a company closes four deals in a quarter, at $60,000, $60,000, $80,000 and $80,000, the Average Deal Size would be $70,000 for that quarter.
This metric tracks your Sales team’s ability to move upstream to larger deals and to avoid smaller prospects. Is your Sales team able to efficiently manage complex sales cycles with larger deal sizes? Are you generating leads from larger prospects? These are critical questions when growing your business to the next level.
Average Deal Size should be tracked for given time periods (quarterly, annually), as well as broken down by renewals and new deals to get an understanding of where the most profitable deals lie.
7. Annual Recurring Revenue (ARR) / Monthly Recurring Revenue (MRR)
Annual Recurring Revenue, or ARR, is the total amount of contracted recurring revenue that your company brings in each year. It’s a particularly crucial metric to follow for any Software-as-a-Service (SaaS) or managed service company that is subscription based, as it tells you how much contracted Revenue you can forecast to receive from customers in a given year.
The ARR calculation:
Annual Recurring Revenue (ARR) = Total value of annual recurring contracts / Number of contract years
For a 3-year annual contract totaling $75,000, the calculation would be $75,000/3 = $25,000 in ARR. Add up the ARR for each contract to calculate the total ARR. You can also look at ARR by product to gain insight into the performance of specific solutions.
For Monthly Recurring Revenue (MRR), which represents the total amount of contracted Revenue each month, a similar calculation applies. It is simply the monthly contracted subscription Revenue.
8. Average Revenue Per User / Average Revenue Per Account (Customer) Average Revenue Per User (ARPU) or Average Revenue Per Account (ARPA) refers to the amount of Revenue per subscriber/user, or account (customer) in a particular time-period. It is calculated by dividing the total amount of Revenue for that time-period by the number of subscribers/users or accounts during that period.
This KPI is helpful to track for a few reasons. If your ARPU is increasing, it’s an indicator that your pricing is stable. Identifying your highest ARPU customers may also give you an idea of your best product-market fit. For example, if you notice that manufacturing and technology companies are your highest ARPU clients, that may be a signal to double down in those market segments because you know they’re willing to pay the asking price for the value your product brings them.
9. Churn Rate – Customer Churn and Revenue Churn
Customer Churn Rate refers to the number of your customers who either cancel or don’t renew their subscriptions during a specific time-period (monthly, quarterly or annually).
Customer Churn Rate calculation = Number of customers lost during the period / Number of customers at the beginning of the period. Multiply by 100 to get the percent.
Revenue Churn calculation = MRR (or ARR) in dollars lost during the period / MRR (or ARR) at the beginning of the period. Multiply by 100 to get the percent.
Customer Churn and Revenue Churn are critical metrics to track for any business with a subscription model. If you’re losing customers or Revenue faster than you’re gaining them, your net growth is negative. This is the core reason that strong account management for protecting your customer base, providing fantastic customer experience, and continuing to innovate in order to provide value is so critical.
10. Net Revenue Retention (NRR)
Net Revenue Retention is the percentage of recurring revenue that is retained from existing customers over a period of time. It measures how well your company is at renewing or sustaining your existing customer base, as well as, generating additional revenue from these same customers. Below 100% is a negative for NRR, and over 100% is a positive for NRR. A target NRR may be 115%.
The Net Revenue Retention calculation = Beginning ARR + Upsell ARR - Contraction ARR - Annual Revenue Churn / (Beginning ARR). Multiply by 100 to get the percent.
11. Sales Linearity
Sales linearity is the steady and predictable pattern in which deals close throughout the quarter. The idea is that sales linearity helps avoid the end of quarter scramble to get deals in and make quota. Ideally reps attain 30% of quota by the end of the first month of the quarter, 60% by month two, and 100% by the end of the quarter.
Top sales teams strive to achieve this sales targets for a number of reasons:
• Relief from heavy discounting at the end of the quarter just to make their number• More predictable Revenue, allowing more strategic and sound investments• Better cash flow• Customer success teams can plan onboarding resources to support new customers
12. Sales Productivity Metrics
Sales productivity data includes any activity that a member of the Sales team engages in with a customer or prospect. Sales Productivity includes several metrics that assist in tracking and monitoring:
1. Sales calls completed per sales rep2. Sales calls completed per sales team3. Opportunities created per sales rep4. Opportunities created per sales team5. Proposal stage achieved6. Opportunities Closed-Won7. Opportunities Closed-Lost8. Other Sales Metrics
Sales metrics should be monitored on a consistent basis every month. A disciplined approach to monitoring sales metrics is critical. Sales are the lifeblood of your business and will be the difference in reaching your goals and a successful exit.
CEO Advisor, Inc. has the expertise and experience to help you focus on the growth of your business to achieve your goals and build shareholder value. Contact Mark Hartsell, MBA, President of CEO Advisor, Inc. at (949) 629-2520, by mobile phone at (714) 697-3370, by email at MHartsell@CEOAdvisor.com or visit us at www.CEOAdvisor.com for more information.
The Importance of Planning for Growth
CEO Advisor, Inc. provides expertise in helping CEOs, presidents and business owners of small to mid-size companies focus on priorities to grow their businesses to the next level. We meet with many CEOs and business owners and we ask them critical questions about planning and managing their business such as:
Does your company have a Strategic Plan?Does your company have a defined Sales Strategy to maximize sales?A Marketing Plan, Schedule and Budget to optimize leads and fuel sales?A monthly Forecast as financial goals to drive your business forward?What are your (the CEO's) strengths and weaknesses?Does your company and business owner have a written Exit Strategy?
Every business needs to plan - and execute on the plan. Unfortunately, many people associate planning with start-ups. As a CEO or owner of a small or mid-size business, can you afford not to plan? Do you prioritize, focus and manage your growth proactively? Are you wasting time and money due to lack of planning or are you achieving your goals on time and optimizing your sales, profits and the value of your business for an optimal exit.
Benefits of Planning
Guide Your Growth
Your business will grow or not depending on many factors, including overall economic trends, size of your industry, growth of your industry, your management team, your products and services and the value to customers, specific market needs, sales strategy, marketing, hard work and other factors. Businesses that plan do it to guide and accelerate their growth so they consistently move towards defined objectives rather than just reacting to business issues daily.
Strategy
Strategy involves taking a hard look at your products and services, your core competencies, your target markets, geographic sales coverage, your customers, pricing, your management team, operations, sales and marketing. Consider bringing in a business advisor with the needed expertise to ensure your strategy yields success.
Manage Priorities
Managing people involves focus and constantly managing priorities. Allocate resources where they will generate the most sales and profit. Work towards your strengths and fill in the gaps for your weaknesses. Grow the company by doing the most important things according to your current needs and long-term objectives.
Assign Responsibilities
A plan gives you a place to develop organizational responsibilities. Accountability drives businesses forward. Assign tasks and projects that achieve your goals and hold your people accountable.
Track Progress
With a written plan and Management Dashboard of key performance indicators (KPIs) and metrics, you can track your progress towards goals, measure results, and better manage the business. Without a plan and reporting, how can you tell whether or not you are moving in the right direction or measure success? A Management Dashboard of monthly reporting to track key metrics in your business will generate a tremendous return on your investment.
Specific Responsibilities, Goals, Tasks, Deadlines and Budgets
We call these milestones. These key aspects of business planning are critical to business success. Effective management of your people coupled with time management and planning will yield higher profits and company value.
Financial Forecast
One of the most important aspects of strategic planning is the financial forecast. A business needs to set financial goals and targets to truly measure its success and drive the business forward. Without a monthly forecast you will never optimize your business and you will settle each month on results of the past.
Exit Strategy
To achieve a successful Exit Strategy, you must execute on the above business issues. If you do not have a well thought out Exit Strategy, it may be the most valuable issue of all. CEO Advisor, Inc. has the expertise, coupled with hands-on advice to help you plan, strategize, grow, increase profits and succeed.
Contact Mark Hartsell, MBA, President of CEO Advisor, Inc. for a no cost initial consultation at (949) 629-2520, by mobile phone at (714) 697-3370, by email at MHartsell@CEOAdvisor.com or visit us at www.CEOAdvisor.com for more information.
Does your company have a Strategic Plan?Does your company have a defined Sales Strategy to maximize sales?A Marketing Plan, Schedule and Budget to optimize leads and fuel sales?A monthly Forecast as financial goals to drive your business forward?What are your (the CEO's) strengths and weaknesses?Does your company and business owner have a written Exit Strategy?
Every business needs to plan - and execute on the plan. Unfortunately, many people associate planning with start-ups. As a CEO or owner of a small or mid-size business, can you afford not to plan? Do you prioritize, focus and manage your growth proactively? Are you wasting time and money due to lack of planning or are you achieving your goals on time and optimizing your sales, profits and the value of your business for an optimal exit.
Benefits of Planning
Guide Your Growth
Your business will grow or not depending on many factors, including overall economic trends, size of your industry, growth of your industry, your management team, your products and services and the value to customers, specific market needs, sales strategy, marketing, hard work and other factors. Businesses that plan do it to guide and accelerate their growth so they consistently move towards defined objectives rather than just reacting to business issues daily.
Strategy
Strategy involves taking a hard look at your products and services, your core competencies, your target markets, geographic sales coverage, your customers, pricing, your management team, operations, sales and marketing. Consider bringing in a business advisor with the needed expertise to ensure your strategy yields success.
Manage Priorities
Managing people involves focus and constantly managing priorities. Allocate resources where they will generate the most sales and profit. Work towards your strengths and fill in the gaps for your weaknesses. Grow the company by doing the most important things according to your current needs and long-term objectives.
Assign Responsibilities
A plan gives you a place to develop organizational responsibilities. Accountability drives businesses forward. Assign tasks and projects that achieve your goals and hold your people accountable.
Track Progress
With a written plan and Management Dashboard of key performance indicators (KPIs) and metrics, you can track your progress towards goals, measure results, and better manage the business. Without a plan and reporting, how can you tell whether or not you are moving in the right direction or measure success? A Management Dashboard of monthly reporting to track key metrics in your business will generate a tremendous return on your investment.
Specific Responsibilities, Goals, Tasks, Deadlines and Budgets
We call these milestones. These key aspects of business planning are critical to business success. Effective management of your people coupled with time management and planning will yield higher profits and company value.
Financial Forecast
One of the most important aspects of strategic planning is the financial forecast. A business needs to set financial goals and targets to truly measure its success and drive the business forward. Without a monthly forecast you will never optimize your business and you will settle each month on results of the past.
Exit Strategy
To achieve a successful Exit Strategy, you must execute on the above business issues. If you do not have a well thought out Exit Strategy, it may be the most valuable issue of all. CEO Advisor, Inc. has the expertise, coupled with hands-on advice to help you plan, strategize, grow, increase profits and succeed.
Contact Mark Hartsell, MBA, President of CEO Advisor, Inc. for a no cost initial consultation at (949) 629-2520, by mobile phone at (714) 697-3370, by email at MHartsell@CEOAdvisor.com or visit us at www.CEOAdvisor.com for more information.
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