The 7 Most Important KPIs for Measuring Sales & Marketing Alignment

The 7 Most Important KPIs for Measuring Sales & Marketing Alignment

The 7 Most Important KPIs for Measuring Sales & Marketing Alignment Image by 401kcalculator.org via Flickr

Achieving ideal alignment between the marketing and sales teams often seems like a pie-in-the-sky dream for B2B business leaders. At its heart it requires a deep and detailed understanding among each team of the other’s unique situation. Once you get there, however, you can unlock the true potential of your sales and marketing departments. Organizations claiming positive alignment between the functions reportedly grow revenue at rate of 32% per year, compared with a 7% decline among companies stating poor alignment. Thankfully, there are several important metrics that can tell you whether or not your marketing and sales strategies are working in harmony, or inhibiting each other’s progress.

1. End-to-end conversion ratio

End-to-end conversion ratio is a high-level KPI that can’t tell you everything about your sales performance on its own, but it can still be a powerful metric when analyzed in concert with others. This metric measures the number of sales made as a ratio of initial market attraction. It might seem counterintuitive to track conversions as a percentage of market attraction, since sales reps never even have the opportunity to contact some of these leads that prove to be unqualified. However, an erratic end-to-end conversion ratio is often a telling sign that there’s a disconnect between the two functions. You can then analyze other, more specific metrics to identify the gaps.

2. Sales cycle timeline

The total length of the sales cycle has important consequences that ripple throughout the entire organization, and shortening the buying cycle is usually particularly important to the sales and marketing teams in order to minimize bottlenecks in the process. The shorter the length of the total sales cycle, the more certain you can be that marketing is delivering the best possible leads to the sales department, and that the sales reps are effectively using the data provided by marketing to convert deals.

However, you shouldn’t just stop at analyzing the length of the total cycle. Tracking the length of time it takes customers to travel through each stage is crucial for identifying where certain processes may have gone out of alignment.

3. Marketing qualified leads (MQLs) to opportunity ratio

As we’ve established, ideal alignment is a function of each team understanding the other’s value and constraints. The following two KPIs readily speak to this principle, as desirable results generally indicate that marketing and sales are on the same page. The first, MQL to opportunity ratio, provides an indication of whether or not the marketing team understands what constitutes a good lead for the sales reps, as well as if they are targeting the right prospects.

4. Opportunity to customer ratio

Then, it’s necessary to examine the other end of the buying funnel by looking at the opportunity to customer ratio. This metric demonstrates whether your salespeople are, or are not taking advantage of the effort of the marketing team by engaging these qualified leads in an effective manner. These two metrics taken together are an important reminder of the necessity of sales and marketing alignment for success: if either is languishing, it won’t matter at all that the other is thriving.

5. Revenue diversity

Modern B2B-focused organizations target leads through a diverse swath of channels, and honing the performance of your marketing and sales efforts is dependent upon tracking these various channels as ultimate sources of revenue. By analyzing which channels are consistently performing well in generating revenue and which underachieve, you can determine if marketing is not effectively reaching leads in a particular segment, or if the sales department is unwisely prioritizing some channels over others.

6. Percentage of content used by sales

Content isn’t just for the top of the funnel any longer, as studies have indicated for several years that as much as 70% of the buying process is often completed now before a traditional sales conversation even begins. Measuring how content is deployed throughout the entire buying journey, but especially once a sales rep makes contact with a prospect, can lead you to important insights about the marketing team’s ability to create value-added content, as well as your sales reps’ understanding of how best to employ it.

7. Revenue per account

When alignment is at its peak, your marketing experts should be inbounding high-value leads that commit to larger-than-usual contracts. It’s not enough to just look at the number of new customers signed; monitoring the average revenue per account provides a clearer picture of how the marketing and sales teams are working together to identify and sign customers that generate increasing amounts of revenue for your business.

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Danny Wong

Danny Wong is a marketing consultant, sales strategist, and writer. He is a member of the marketing team at Tenfold, which provides a seamless click-to-dial solution for high-performance sales teams. Connect with him on Twitter @dannywong1190.