Metrics that Matter Chapter 5. Business Development
February 20, 2020
February 20, 2020
Chapter 5: Business Development
Fuel Your Grow With Know
As a janitorial business owner, you probably hear people toss around terms like “growth”, “ROI”, and “business development” a lot. In this chapter of Metrics That Matter, we’re going to put the term “business development” into a perspective as it relates to the commercial cleaning industry. Feel free to catch up if you missed out on chapters
In the literal sense of the term, “Business Development” refers to what you’re doing to develop your business (and by “develop”, we mean “grow”). There are lots of tools out there that can be used to grow your business. For the sake of context, we’re going to look at business development specifically in the sense of getting new business (but, as we know from Chapter Four, retaining clients should also be a part of your overall business plan).
Let’s start by looking at some of the first touchpoints for new potential clients:
Common Business Development Tools:
Newsletter Subscribers / E-blasts
Sales Calls/Cold Calls/Meetings
Networking – In Person, or on LinkedIn
Whether you have a designated sales and/or marketing person at your company, or, in most cases, that’s you (we know you wear many hats), checking in on these basic business development tools is a great place to start. Without these tools, you’re missing out on the opportunity to spread brand awareness about your cleaning company and draw the attention of potential new clients. Word of mouth is great, but it’s not enough in a competitive environment like the professional janitorial industry.
Understanding Business Development KPIs
Another word for “metric” is Key Performance Indicator (KPI). In this chapter we’re going to dive into business development KPIs and talk about why you should be measuring them on a regular basis.
As usual, to get anywhere, you need to benchmark. As we look through these five major business development KPIs, you should first calculate where you were in the last measurement period (whether that be a month, a quarter, or a year) so that you can compare over the next measurement period, and assess your progress and growth.
Looking at KPIs
1. Sales Targets
You probably have a good sense of where your sales are at currently, and where you want them to be. Setting sales targets is exactly how it sounds, you just need to decide on your measurement period, and what you’d like the company to reach for sales over that period of time. It’s important here to be realistic, but still look for growth. Decide if you’d like the target to be a dollar value, or the number of new contracts won.
2. Sales Pipeline
Your sales pipeline shows what your cleaning company has in “active opportunities” at each stage of the sales process. This is much easier to track if you’re using a Customer Relationship Management (CRM) Dashboard or similar technology to support your business development efforts. Creating a sales pipeline really gives great visuals on how active you or your sales team are at any given time.
According to the Hubspot Blog, these are the Five Steps to Building a Sales Pipeline:
Define the stages of your sales cycle.
Identify how many opportunities typically continue to the next stage.
Work backward to calculate the number of opportunities you need at every stage to hit your revenue goals.
Pinpoint the common characteristics of opportunities that convert for every stage — both actions the rep takes (like sending a follow-up email) and prospect responses (agreeing to a demo).
Create a sales process or adapt your existing one around these actions and numbers.
3. Number of Leads per Month
This is an easy one to set up, but super important to track. As you know, it’s easy to get bogged down in day-to-day activities, and putting out fires. You may forget to look at the number of new business leads you’re actively getting each month. If you lose track of your new leads, you’ll lose track of your overall growth and lose sight of your goals.
Take it to the next level: categorize your leads by how they came in! Then you can put values on your respective business development tools.
4. Leads Presented to Leads Worked
Getting new sales leads presented is fantastic — it’s what every business owner wants. But if no one is “working” those leads, what happens? Nothing. That potential client ends up contacting your competitor instead, because no one worked the lead. Once you start tracking the number of leads per month coming in, you can in turn track the percentage of those leads that were properly followed up, or, “worked”.
First, pick a measurement period, let’s say last quarter, then use this simple equation to find out the percentage of leads that were worked.
(New Leads Worked / All New Leads) x 100 = Percentage of Leads Worked
5. Lead Close Rate
We touched on this already in Chapter Two, where we talked about contracts won and lost, and how to calculate those metrics. Here, we’re looking at it slightly differently. We’re tracking the overall amount of leads coming in (whether you initiated the lead or it came in through one of your business development tools, like your website), how many leads of those were worked by you or your sales team, and now, how many leads you closed. The percentage of leads closed is a great KPI to look at, as it helps to show the effectiveness of your sales strategy.
TIP: If sales are low but your lead close rate is high, you may need to ramp up your marketing efforts to bring in more qualified leads.
To calculate your Lead Close Rate, use this equation. Again, first pick your measurement period.
(New Customers / New Leads) x 100 = Percentage of Leads Closed
All Good Things
And with that, we bring our series on Metrics that Matter to an end. Of course, that doesn’t mean you should stop finding new and interesting ways to grow your business through a better understanding of how paying attention to the small things, can make a big difference.