Sales VPs need to track whether sales reps are meeting quota. But if that’s all they monitor, they will have an incomplete picture of sales reps’ performance. In addition to tracking quota attainment, sales VPs should also track how many of each rep’s clients/deals stay on after the initial onboarding—in other words, retention.
We cited this retention statistic in a previous post, but the numbers are so impressive that we need to share them again. Studies by Bain & Company and Earl Sasser of the Harvard Business School indicate that a five percent increase in customer retention can increase profits by 25-95%. We are going to teach you how to track this metric to help you increase profits by retaining more new customers.
The Retained MRR metric is essential to better understand the performance of your sales reps. Like we mentioned earlier, simply tracking quota isn’t enough. You could have sales reps meeting quota whose clients won’t be successful customers later on. Getting new MRR is important, but it won’t matter how many new clients or deals sales reps close if they don’t stick around very long after they’ve been onboarded.
Viewing the data for the Retained MRR metric as a stacked bar chart makes it easy to compare retained customer MRR and canceled customer MRR. Displaying a rolling three-month retention also more accurately shows how much revenue each rep is bringing into the company compared to how much of that revenue stuck around after the initial onboarding.
Knowing which sales reps close the most deals with clients that stay with the company is valuable. You can explore what these reps do that makes their clients stay so much longer. Do they have a good explanation of the product? Do they not overpromise on what the product will deliver? Are they getting higher qualified leads from a specific source that is known to convert and retain better? Answering these questions not only allows sales VPs to teach the techniques successful sales reps use to the other reps, thereby improving team performance, but it can also help you improve your marketing efforts.
Suppose the metric above represented your sales team, and sales reps have a quota of $9000. If you are not tracking the Retained MRR per sales rep, you could have a sales rep like James who closed a lot of deals and exceeded quota, but had at least 50% of his deals churn out. You could also have a sales rep like Mike who closed around $3000 less in deals and didn’t meet quota but who had more sales stick around. With the Retained MRR metric, you’ll see that although Mike didn’t meet quota, he is actually more profitable for the company than James who exceeded quota.
There is also another factor to consider: If a sales rep continues to close several deals for a few months, but a high amount of them churn out shortly after being onboarded, you are creating a negative reputation for your company. If that continues, at some point you could have to make a serious effort to repair your damaged reputation.
As you can see, simply tracking quota attainment could give you the wrong picture about how much value each sales rep adds to the company. That is why sales VPs need to track Retained MRR for each of their sales reps.
The metric shown above was created in Grow with data pulled from Salesforce. Grow can also create this metric with data pulled from other CRMs like HubSpot, Zoho, Base, Nutshell, Pipedrive, and others which you can view here.