12 Critical Sales Metrics for CFOs

1024 678 Pete Furseth

CFO Responsibility

As a CFO you are responsible for tracking the financial health of your business. More importantly, you are a strategic leader who is responsible for shaping your company’s future. To succeed as a CFO you need to accurately forecast revenue, identify risk, and mitigate that risk where you can. One of the biggest sources of risk is inaccurate sales forecasts. How can you be expected to hit your revenue targets if you don’t have an accurate prediction of sales?

To increase your confidence and mitigate risk from your sales forecast, you need an automated way to track key sales metrics. A one-time analysis in Excel is not sufficient to measure and understand how your business is changing through time. By automating key metrics you can measure month-over-month, quarter-over-quarter, and year-over-year growth. In addition, you have the ability to quickly identify and plan for the seasonality in your business.

Here are 12 critical sales metrics that every CFO should track:

Historic Sales – This is the first place to look when trying to understand the trends and seasonality in your business. It is important to break this metric down into (1) Net-New, (2) Add-On (upsell or cross-sell), and (3) Renewals.

Pipeline Forecast – Your sales pipeline is a good place to start to understand your forward-looking sales projection. It is important to have an automated way to track these forecasts, so you can go back and measure your accuracy through time. Your pipeline forecast is made up of a few key elements: (4) Number of Deals, (5) Win Rate, and the (6) Length of Sales Cycle.

Sale Capacity Forecast – This forecast is based on your sales resources and how much quota is assigned to them. As your business grows, so will your sales team. It is important to have a clear expectation of what your sales team will produce. The three key drivers are (7) Number of Sales People, (8) Assigned Quota, and (9) Sales Ramp Rates.

Customer Retention – If you live in the SaaS world, or in any business that relies on renewals, you need to track metrics about your customers. It is usually easier to up-sell an existing customer than it is to win a new logo. To understand the value of your customers you need to understand: (10) Renewal Rate, (11) Customer Acquisition Cost (CAC), and (12) Lifetime Customer Value (LTV).

Transparency into sales is one of the easiest ways to mitigate risk in your business. By tracking each of these key sales metrics through time you will build confidence in your sales forecast. At ORM we specialize in sales and marketing analytics. Specifically, we help our customers align their sales and marketing teams to revenue goals. If you have any questions or would like to know how we can help you automate these metrics, please let us know at info@orm-tech.com.