What does revenue tracking mean?
Keeping track of income means figuring out which sales and marketing activities bring in the most money and then following that money as it moves through the business. Tracking helps businesses determine which contacts work best since most sales happen after more than one (ads, emails, outbound sales, etc.).
Keeping track of income has two parts: attribution and performance monitoring.
Revenue attribution means giving some or all of the money from a sale to specific activities or sources.
Performance monitoring means monitoring how much money you make for each channel or action.
Because most groups’ ways of making money are complicated, tracking revenue needs special tools. Tracking by hand means writing down every sale and its information, like where it came from and what percentage of the income that source brought in. This can’t be done with digital channels. This information is automatically gathered by software so that it can be analyzed.
Like words
- Revenue tracking
- Tracking of sales revenue
- Tracking of revenue analytics
- Tracking of revenue success
Tracking revenue is important
It is essential to know where each source of income comes from and how much revenue comes from each source. Businesses have to spend money to make money, so keeping track of revenue gives a better picture of how much they make from marketing and sales efforts.
Find sources of profitable income.
Leads (and, by extension, sales) come from successful income streams at a cost much lower than their value. If you keep track of the income metrics for each channel, it’s easy to see if the money coming in is enough to cover the money going out.
Compare the cost per click (CPC) and conversion rate to the money made from new sales for a small e-commerce brand running a paid social promotion. After that, they must determine the ROI in dollars over a specific time frame.
For a business with a longer sales cycle and more than one channel, the method includes a few extra steps:
So, a SaaS company wants to get leads and runs an ad campaign on LinkedIn. When one of the leads gets to the site, they only read a blog post. Later, they return to the site to read a story comparing products. They save it and send it to other people on the team. After a week, they set up a call with a salesperson, and after a few meetings, the deal is done.
In this case, how much is that paid social effort worth? This is a very different case of profitability math because each touchpoint leads to a sale. Tracking revenue lets you look at every step of the sale and figure out which ones gave the most and how much.
Recognize Poor Performance Ways to Make Money
Businesses keep track of their income to find weak spots in their sales funnel. This will help them get more sales and work more efficiently in the long run.
It could be:
- Figuring out why some web pages aren’t converting well
- Try to figure out why calls to action aren’t resulting in any sales.
- -Seeing which platforms qualified buyers to use the most – Finding content that doesn’t work with the ICP
Many of these problems could mean that changes need to be made in how you deal with customers, but tracking income can also let teams know when they need to rethink their whole marketing strategy.
Learn how your customers usually buy things.
When some types of sales and marketing materials do better than others, it shows how the customer feels and what they need before they buy. Businesses change how they sell based on these findings.
For example, income tracking could show that customers of a business read more than one blog post before calling sales. Inferring from that, they can guess that more information might help them decide to book a call more quickly. They will finally figure out which content gives them more information they need by testing it.
Tracking revenue lets you see the customer’s lifetime value (CLV). Businesses can make their campaigns more successful by knowing where the most significant returns come from and emphasizing specific marketing activities (and customer groups) more than others.
Find chances to make more money.
Companies that learn more about how their customers interact with their brand and material before buying can make more innovative campaigns and bring in more money. Usually, this means A/B testing various ad designs and writing, tailoring emails to each group of customers, and making content better based on where customers are in the buying process.
Businesses can quickly tell which tactics are working and which ones aren’t with the help of tools that track revenue. So, they can focus on the channels and places of contact with customers that bring in the most money.
Estimate Future Income
Companies can get a good idea of how much money they’ll make in a certain amount of time by looking at trends in their past sales data. Teams can better plan their budgets and cash flow when they know what their top-line success will be like in the coming months or even years.
Forecasts are more accurate when software is used to keep track of income. Since the marketing and sales channels work separately, putting all the data on one site gives the algorithms that use predictive analytics more data to work with.
Things that can’t be predicted always change how things turn out in real life. However, keeping track of income gives leaders the confidence to approach growth projects methodically.
Key Performance Indicators for Tracking Sales
The second step is to evaluate performance using key measures. Businesses look at measures for each source of income to keep track of their income. So, they can find out how profitable a particular group of people is when they are specifically targeted in a certain way.
These are the most critical measures that companies use to figure out how well their sales are doing:
Information on Gross and Net Sales
To do an income performance review, you must first know how much the business makes. There are two types of total income that businesses report: gross and net.
When a business sells things or services, its gross revenue is the money it makes before any discounts, taxes, commissions, or other costs are taken out. The amount that’s left over after all of those deductions is called “net revenue.”
Businesses figure out their gross and net income in three main ways:
Revenue by product or service: How much money does each product or service bring in?
Income from each channel: How much money does a company make from all its sales and marketing channels?
Revenue by geographic/demographic: How much money a company makes from every type of customer or market group.
Net income is a better way to determine how much a company made in profits.
Growth in sales
Businesses keep track of income growth year-over-year (YoY) and quarter-over-quarter (QoQ) to see how their work is paying off over time.
QoQ growth keeps track of short-term activities that bring in money, like releasing a new product, adding a new feature, or having a sale.
Year-over-year growth helps companies figure out big-picture trends and see how well more significant, longer-term investments, like entering a new market or reorganizing the sales department, are working.
Both are important for businesses because they tell different stories. QoQ growth gives you a better picture, which helps you choose products, run marketing campaigns, and oversee a flexible sales team. However, it does not take seasonality into mind.
Year-over-year growth helps businesses predict demand and plan when they won’t make as much money. But the more extended period has many variables, making it hard to tell how any of them will affect things.
The average amount of money made per user
Businesses that depend on subscriptions keep track of average revenue per user (ARPU) to get a sense of how much each customer is worth in money.
This is how it’s worked out:
Total Revenue / Total Number of Users = ARPU
Since ARPU is a way to determine how much money a customer is likely to bring in over their lifetime, it tells subscription companies how much they should spend to get each new customer.
Rates of Conversion
The first thing that brings in money for a customer is a conversion. If a business has a high conversion rate, it can turn more of its target group into paying customers.
Getting more sales is what every business is all about. Priority is given to platforms and customer groups that convert well. Those that don’t are changed or taken away over time.
Tracking the Sales Funnel
When you look at income data, you must know how to make a sale. Companies use funnel data to track how customers move from when they first learn about a product or service to when they buy it.
Depending on how a business makes money, some standard measures are:
- Time it takes to buy – Cost per click (CPC)
- Return on ad spend (ROAS)
- Length of the sales cycle – Speed of sales
Businesses can see where possible customers are leaving by looking at these metrics. On the other hand, they can focus on the platforms that move the sales process and cause people to buy things.
Upsell and cross-sell to make money
Cross-selling and upselling are the best ways to keep and make more money. It doesn’t cost them anything extra to get new customers, but there is generally some marketing and sales involved.
It’s essential for companies that sell subscriptions to have accounts that spend more money over time. Businesses keep track of the new money they get from these sources and compare it to the total net money they keep.
New Customers vs. Customers Who Stick Around
Always try to find new customers for your business. Keep them, though, because that’s the key to long-term security and sound finances. It means the product is good for the market and the price is right.
Companies need to know who their customers are before they can make personalized sales and marketing and offer messages to keep those customers. Since they track revenue, it’s easy for them to tell if a buyer has been in the system before or if this is their first time. This information is immediately gathered and shown on a dashboard when you use the software.
How to Set Up a Way to Keep Track of Revenue
Tracking revenue is only as valuable as the plan that goes with it. Businesses that do well set up a step-by-step process that spells out each job and who is in charge. That way, losing or missing out on something is less likely.
Here’s how to make a good plan for keeping track of your income:
- Make clear goals. Figure out what you want to do. This could mean launching a new subscription service, lowering prices, or entering a new market to make more money from certain sales outlets.
- Use tools to keep track of customers as they make purchases and figure out who they are. Different tools, like Google Analytics, CRM, CPQ, billing, and subscription management systems, can help you find different ways to measure income.
- Make a sales dashboard with data for tracking sales. In that case, you can send updates on income to anyone who needs them. You can use Google Analytics, CRM, or a third-party visualizer like Databox.
- Figure out who your possible customers and target groups are. Who do you want to buy from you? What do they want, need, and value?
- Make a plan for your sales process. Making sure customers reach buy events is essential. How will you move customers through each stage of the sales cycle?
- Start ads. You’re ready to get, convert, and upsell leads now that you have tools to track and analyze your revenue.
- Look at the facts. Use it to find groups of customers that have the most growth potential. As a starting point, you could look at things like age, gender, location, job title, or yearly pay. Then, change your advertising based on what people buy and how they use your website.
Why using revenue tracking software is a good idea
Tracking sales can’t be done by hand, at least not on a large scale. Tracking and reporting on sales are built into most tools. The best systems also can make predictions and use AI to make analytics that help people make better decisions.
Here are some reasons why using tools to keep track of sales is a good idea:
Automation—Software for tracking revenue collects data automatically, saving time, eliminating mistakes, and opening up new levels of understanding.
Scalability—A lot of information is too much for any team. Software that tracks revenue easily handles extra data like sales and conversions.
Alignment between sales and marketing: software that tracks revenue centralizes data, so no one works in separate groups, and everyone sees the same numbers.
Accuracy of the data: Entering data by hand is prone to mistakes. Automated software for tracking income cuts down on wrong data and makes reporting revenue easier.
Time savings: Doing the same things repeatedly and writing reports by hand wastes time that could be used to work on long-term goals or develop new plans.
Personalization: If you know which customers are the most important, you can change your sales, marketing, and customer success plans to give those customers more tailored experiences.
Lead scoring: Software tracking sales helps find leads most likely to become customers. You don’t waste time or money on low-value leads because everything is in one place.
Firms can see their income information in one place with the right tracking tools. When they know this, they can decide where to put their efforts and how to scale more efficiently.
Where to Get Data on Tracking Sales
Technically, revenue-tracking data can come from any place where a customer views content, buys something, or connects with a business in another way. It’s necessary.
Revenue operations software is a common place to get revenue tracking info.
CRM (customer relationship management) and PLM (product and license management) systems
Systems for taking payments
- Configure, price, and quote (CPQ) software
- Billing
- and accounting tools – Websites
- Social networking sites
Help with payment gateways
Online shopping sites
Networks for advertising
Dashboard builders such as Databox and Klipfolio
