This post was written by Sales Ops Strategist Kris Parise. It was last updated on 12/20/21.
A version of this post was sent out in the May '21 Kicksaw email newsletter. To make sure you get access to content like this in advance, sign up to get our monthly newsletter in your inbox!
Tracking revenue is crucial for any company — after all, you can’t know if you’re making money if you’re not paying attention to what’s coming in. There are a few different ways to view revenue data, and the preferred method is usually based on the company's sales cycle, the size of the market the company is trying to capture, and the different channels of revenue coming in. These factors ultimately shape which metrics are important for the company.
Companies selling into the SMB space usually focus on acquiring customers at a high volume while trying to keep the cost per acquisition at a minimum. Due to the lower barrier to entry for a sale (typically determined by the product’s price or competition within the company’s segment), the customer is likely to have options available to them.
The focus on acquiring customers and customer retention, along with the ability to convince a customer to stay a customer, are crucial metrics for a company to consider. Depending on the business, Marketing likely plays an important role in the success of the SMB segment, so metrics by revenue channel and marketing attribution become increasingly important when trying to understand which channels are more profitable and successful than other channels.
As companies go up-market and start to sell to mid-market and enterprise customers, the revenue metrics start to shift from volume-focused towards a model supporting land-and-expand metrics. There is also increased difficulty going up-market, due to larger barriers to entry for a sale predicated by the market and customers.
For example, when selling to enterprise accounts, you need to overcome the customer’s procurement processes, security reviews, internal budgetary constraints, legal review, and numerous other obstacles that prolong the sales cycle and ultimately shape the different revenue channels that can come from this segment. These barriers shape which metrics are typically relied on — initial revenue and revenue growth of the account are usually the most heavily emphasized here. Different channels of revenue begin to develop when selling into the enterprise segment as the customer’s needs develop.
Enterprise customers typically lean on existing relationships or vendors in the marketplace to fulfill their needs — this pushes a company to fulfill the enterprise customer’s needs by developing new products or features to capture this new revenue, or to look elsewhere for capturing the revenue through partnerships, reselling, or other means. As different revenue channels come in, revenue metrics are adjusted accordingly.
When considering what metrics to track, you might want to use a decision tree method to help you determine which metrics are the most important for your business. It can be hard to see the forest through the trees, though — if you're overwhelmed and worried that you aren't tracking the right metrics for your business, give us a shout. We'd love to point you in the right direction.