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The Two Critical Revenue Numbers Every Business Should Track

Uncategorized Dec 14, 2020

When it comes to tracking revenue, we all want to know the total amount of top-line revenue. However, underneath the total revenue number are two critical revenue numbers that every business, marketing team, and sales rep should track:

  1. Number of Clients
    This is the measure of your net-new business effectiveness. This number will tell you how well you are doing at growing net-new business.

  2. Revenue per Client
    This is the measure of your cross-selling effectiveness. This number tells you how well you are doing at building client relationships.

In working with companies across multiple industries, I’ve discovered that that most businesses are good at one or the other. They are either good at net-new businesses or cross-selling by deepening relationships. A business that is only good at one may be growing year over year, but they are leaving a lot of revenue on the table by not shoring up the area where they are weak. 

What should you do?

1. Know Your Two Numbers

Make sure you know these two numbers. Go to your finance department and ask how many active clients you have. Then take your revenue and divide it by the number of clients to calculate your revenue per client. This is your baseline.

2. Track Your Two Numbers

Each month you can add new customers and subtract those that drop off. Find a method that works for your specific business. Take these numbers, and put them on your dashboard. Share them in every company, marketing, and sales meeting. Use them in sales rep reviews.

3. Set Revenue Goals Based on Two Numbers

Most companies set goals based on the trend of the past few years. In doing this, they perpetuate mediocrity, leaving a lot of money on the table. Instead of setting goals based on the overall revenue number, set them based on the number of clients and revenue per client. How many new clients can we add? What could we do to cross-sell more to our current clients? Add these numbers up and you have your revenue goal.

If you’d like more help on this, watch my recent web class on How To Set Revenue Growth Goals in an Uncertain Market.

 

 

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