What KPIs can you use to align sales operations and finance?

Revenue is not what sales brings in a recurring revenue business. Functional KPIs are great but they are all in a different language and it is not revenue. Effective translation from sales into revenue, customer success into revenue etc…

Anyone in the digital marketing world: TACOS. The only consistent function from the output of the TACOS equation is the cost it represents. TACOS should be provided by clients and understood as, this is the maximum budget we are allowing. Because TACOS can be manipulated so easily is why it's not a leading indicator of a marketing or advertising teams efforts.

Learned this one first hand! Cash flow and budgeting are very different. Budgeting is easy. Add up your planned expenses and balance against planned income. Cash Flow is more real world. It's the day in day out realities of how much money is actually in your account. Sure your budget says you have enough money to pay your bills this month. But, it's Monday, the bill is due now, and your client's deposit doesn't hit until Friday. That's cash flow!

Sales cycle is how fast you can get the money and cash flow is how quickly you can have it available. These are extremely important but by far not the only ones. You have to also look at the route to get such money (pipeline) and also how you are planning on keeping it coming (retention). If you wish to go further (which I would suggest), expenses also need to be taken into consideration. And by expenses I mean ALL expenses, not just Revenue teams salaries. I would consider ALL expenses for CAC to give you a clear understanding of your operational (in)efficiencies.

As mentioned above, CAC is a vital piece to understand your business efficiency and focus. CAC should take into consideration ALL expenses so you don't fall into the trap of having a myopic view of efforts and LTV is only really useful if you have significant retention. What is the point in spending so much money to acquire customers if you are simply going to loose them in 1 year's time? This will significantly affect your LTV

Forecast accuracy & variance is so critical to business as a whole. If your variance is small & accuracy is on-point, there is so much more the organization can do around planning, resourcing & fundamentally understanding how the business will evolve or time. This is why I've love platforms like Clari so much. I saw first hand how their contribution to the forecasting process leads to proper cadences. Those cadences lead to more predictable revenue. That revenue fundamentally transforms the business.

One of the additional primary metrics to look at, are unit level economics. While the sales team could group various units into a package, the finance team would have a better perspective into the various other linked costs, both fixed and variable. These two teams aligning and coming together would now enable reaching a sweet break-even, thus ensuring that majority, if not all, sales could be effective from a finance/profitability standpoint.

Understanding the overall cost to service a customer is critical and finance departments are often well placed to pull together and report on these numbers and this can inform sales strategy.