How high-growth companies leverage sales and marketing KPIs to accelerate growth

Cybernetics is the field of study concerned with causality and feedback, whereby each action begets an outcome, and then each outcome becomes an input that causes further action—and on and on into infinity. The French mathematician and cybernetics pioneer Louis Couffignal described it as “the art of ensuring efficacy in action,” and we think this perfectly encapsulates the what and why of sales and marketing key performance indicators (KPIs).

To understand what a well-designed, high-performing measurement program looks like, ZS surveyed the executives responsible for designing sales and marketing KPIs for more than 250 B2B firms with revenues of between $50 million and $1 billion to learn what they measure, how they measure it and how they share metrics across the organization. Respondents represent a cross-section of industries (hightech and software, professional and business services, healthcare and manufacturing) and ownership structures (public, founder-owned, private equity and venture capital-owned).

While industries exhibit minor differences in the measures they choose to emphasize, the most salient insights can be found by comparing our survey’s fastest-growing companies (20% growth or higher) with their slower-growing peers. If you aspire to accelerate your company (or division) to $1 billion in annual revenue and beyond, then we recommend emulating this high-growth cohort by establishing a purposeful KPI process and governance, focusing on thoughtfully chosen KPIs and sharing “the right few” metrics with the right people at the appropriate level. Sounds simple; the devil, of course, is in the details.

If the goal of measurement is to “ensure efficacy in action,” then the quality of your inputs is paramount. We recommend setting a defined cadence for selecting and—just as importantly—deselecting your KPIs. By adopting good measurement hygiene, you can keep KPIs appropriately aligned to both short- and long-term business objectives. Despite (or maybe because of) all the market uncertainty over the past few years, most organizations we polled stayed the course when considering which KPIs to track and how often to revisit their choices.

How often? While 79% of companies in our survey design and implement KPIs on an annual basis, just 22% do so at the beginning of each quarter. High-growth companies are just as likely as low-growth ones to have an annual cadence, but they’re more likely (22% to 14%) to also consider KPIs on an ad hoc basis. This suggests that companies may be best served by keeping to a steady rhythm for choosing (and discarding) KPIs while maintaining the flexibility to adjust as conditions evolve.

How many? Overall, 54% of companies said they expect to track the same number of KPIs as they did a year ago, while 39% expect to track more and just 7% expect to track fewer. While fast growers are about as likely as their peers to say they’ll track the same number of KPIs as they did a year ago (56% vs. 53%), they are more likely to say they plan to track more (44% vs. 38%). And while almost one in 10 underperforming companies said they’ll track fewer KPIs, not a single one of our outperforming companies said the same. Our takeaway: Companies that pare back too far risk missing out on potentially valuable feedback. Choose the “right few” KPIs and then actively manage, communicate and, most importantly, act on them.

It’s the old cliché: What gets measured gets managed. By focusing on the right metrics, companies ensure that marketing and sales activities cohesively support long-term growth ambitions while maintaining flexibility to evolve as internal, customer and market dynamics shift. Our survey reveals subtle yet significant differences between high- and low-growth companies in the weight they give to the KPIs they track.

Building the funnel. Middle-market companies place by far the heaviest emphasis on two marketing KPIs: total leads generated (54% “important” or “very important”) and marketing ROI (51%). But high-growth companies place stronger emphasis on three interrelated KPIs:

• Rate of converting marketing qualified leads (MQLs) into sales qualified leads (SQLs) (42% of fast growers vs. 22% of slow growers)
• Customer acquisition cost (40% vs. 28%)
•  Prospect scoring and lead quality (30% vs. 21%)

Top performers dig below the surface to scrutinize their pipeline for insights that tie leads to actual ROI and identify sources of leakage. They recognize the importance of a healthy top of funnel and do a better job of connecting it with successful outcomes at the bottom by measuring, publicizing and celebrating marketing qualification measures—rather than leaving it to sales (or, worse, nobody!).

Selling. For sales team activities, the top three tracked KPIs shouldn’t surprise anyone: total opportunities (58% “important” or “very important”), number of bids or proposals submitted (44%) and total leads qualified by source (36%). The difference, again, is in the details. High-growth companies place more weight on three key leading-indicator KPIs:

• Total sales-qualified leads (48% vs. 33%)
• Number of customer business reviews (24% vs. 17%)
• Total opportunities created (76% vs. 55%)

As we see, activity leads to results—but only if it’s the right activity. Quality must balance quantity, and this is where frontline sales managers are critical to ensuring that activities measured are both anchored to the strategy and tied to quality outcomes. 

New business. KPIs like revenue won (82%) and number of new customers (71%) are worth tracking, but they only tell us what’s already happened—not what is likely to happen. We recommend emulating our survey’s high-growth cohort who, again, give more attention to how successfully opportunities progress through the funnel. Fast growers are significantly more likely to heed:

• Customer lifetime value (44% vs. 19%)
• Advance rate through each pipeline stage (24% vs. 11%)
• Value and volume of business at each pipeline stage (42% vs. 21%)
• Win rate (64% vs. 54%)

It’s called a funnel and not a tunnel for a reason. To drive growth, your organization needs to see where there are kinks or leaks and then attend to them.

Retention and expansion. In sales, we all know that keeping a customer is easier (and therefore more profitable) than acquiring a new one. High-growth companies embrace this foundational wisdom more readily than their low-growth peers, with growers much more closely monitoring customer retention rate (76% vs. 50%), customer spend (68% vs. 47%) and number of referrals (22% vs. 13%). Retention rate is the only KPI related to customer expansion that more than half the low-growth cohort identifies as “important” or “very important.”

Financial outcomes. When measuring overall financial outcomes, the widest disparity between high- and low-growth companies is between new customer revenue and/or margin (76% vs. 55%) and existing customer revenue and/or margin (68% vs. 52%). High-growth companies are more adept at differentiating the composition of their business.

Tracking the right metrics is key, but to “ensure efficacy in action,” they must be shared with the right stakeholders at the right levels—who then need to act on them. And when it comes to sharing KPIs, the pattern is impossible to miss: High-growth company share more KPIs, more widely, than their slower growing peers. In particular, they are significantly more likely to share metrics organization wide or at the board level. Whether we’re talking about KPIs connected to marketing, prospecting, new business, customer expansion or financial outcomes, it’s hard to find a metric that isn’t more widely shared by the faster-growing cohort than the slow. But here is a sampling of metrics where the differences are especially dramatic (and why we think they matter):

Marketing activities. The fastest growing companies in our sample pay especially close attention to their health at the top of the funnel and the ease of handoff from marketing to sales.

Traditional sales activities. From prospecting calls and demos scheduled to customer calls and business reviews, high-growth companies are dramatically more likely to report sales activity metrics across the organization and at the board (or investor) level.

Pipeline efficiency. Whether it’s net-new customers, business value and volume by pipeline stage or funnel velocity, fast growers are significantly more likely to share KPIs that illuminate the health and efficiency of the sales funnel.

Customer expansion. Fast-growers share these more widely across every dimension, but one metric is so starkly underreported by slow-growers that it deserves a special callout: number of customer referrals. Fast-growers are more than three times as likely as slow-growers to report this KPI at the board level and nearly seven times as likely to spread it across the organization.

Financial outcomes. Companies with accelerated growth share with their board and investors “revenue stability measures”: monthly recurring revenue (84% vs. 67%) and new (76% vs. 55%) and existing customer revenue/margin (68% vs. 52%). In an inflationary, “cash is king” environment, it will be critical to measure and publicize stable and recurring sources of revenue from your current customers. 

The real value lies in how KPIs and insights are efficiently converted into action. To do this, we recommend companies concentrate their efforts along three tracks:

1. Invest in your sales operations engine. Delivering the right metrics to the right people frees up salespeople to spend time selling—not moonlighting as analysts. According to our survey, roughly 75% of organizations have a purpose-built sales operations team. Of those, 58% have multiple roles in the function, 39% employ a single person and 3% outsource the function. High-growth companies are significantly more likely (52%) than low-growth ones (41%) to employ multiple people in sales operations, suggesting an area ripe for competitive advantage
2. Invest in the workflow usage of a customer relationship management (CRM) system. While 63% use CRM to track KPIs, only 37% use application dashboards within a CRM to share those KPIs. By continuing to disseminate metrics via spreadsheets, companies remove insight distribution and digestion from contributors’ daily workflow, making it challenging for sales managers to direct quality behavior in ways that resonate. A CRM often fails to deliver on its substantial promise because sales team members have to work too hard to fit it into their daily workflows.
3. Invest in CRM training and messaging. Almost 45% of executives we polled cite behavior change as their number one barrier to successful CRM adoption and use. (No wonder only one in five say their sales reps extract strategic insights from CRM.) Without demonstrating the benefits of CRM adoption to the reps themselves, contributors will input shoddy data (or none at all), they will draw scant benefit from the system and the cycle will continue. Too few executives (20%) say they plan to invest in CRM training and behavior change in the year ahead.

Whether it’s a global pandemic, inflation, supply chain dynamics, political instability or the next disruptor around the corner, companies need to adopt a more agile, test-and-learn approach to business. They should create a governance structure and cadence for considering sales KPIs but maintain flexibility so they can adjust as circumstances shift. When selecting KPIs, less is more. Settle on the right few, then evolve. Focusing on the wrong metrics, or sharing the right metrics with the wrong (or too few) stakeholders, defeats the purpose. And finally, companies that aspire to $1 billion in revenue should invest in areas including sales ops, CRM, upskilling and change management that will amplify their existing measurement efforts and convert inputs into efficient action.