3 Metrics Frameworks For Tracking Your Sales and Financial Metrics

David BaerUncategorized

In this excerpt from our book, Systematic Advisor Marketing: How Financial Advisors Can Strategically Attract, Convert, & Retain More Clients, Ken Cook discusses a topic most advisors – most businesses, in fact – overlook. That’s their numbers. 


Having been in the marketing industry for about a decade at the time, but on my own for only about 4 years, I had a client for whom we had built a pretty predictable system – we knew that for every $63.37 we spent on marketing, we were signing a new client! That was a heck of a deal, as the minimum this person was signing for was a yearlong contract, for no less than $600. 

This client, when he first came to me, bragged that he changed marketing companies every 3-4 months. It was like a badge of honor, or maybe a warning — who knows… But as I dug into the marketing that this growing company was engaging in, I found that no one was measuring anything! And I mean NOTHING… So, I sat down with the owner and asked him how much money he would be happy spending on a new customer. 

He said $5. 

I smiled and laughed — in awkward anticipation of a more realistic number… but none came.

I then asked how much he’d be able to profitably spend on a new customer. 

He said he would typically, on his base sale, spend about $450 all in on operations and service. He then revealed that at “no point” had any marketing group been able to allow him to make money on his first year with a client – something that I took as a challenge… 

So how did I get him to be profitable in the first six months of a new client relationship rather than in the first eighteen? 

It was Peter Drucker, the father of modern business leadership, who taught “what gets measured gets improved.” There is real truth to this idea, especially when it comes to marketing, and the rise of data-driven marketing has led to a near frenzy over measurement and analytics to understand how to improve marketing. 

I believe that if we’re to be successful in growing businesses we must have a firm grasp on the numbers. However, metrics are in and of themselves, not the salvation we are looking for in the marketing world. They are simply a tool.

“In the end, there is no silver bullet, no substitute for actually knowing one’s subject and one’s organization, which is partly a matter of experience and partly a matter of unquantifiable skill. Many matters of importance are too subject to judgement and interpretation to be solved by standardized metrics. Ultimately, the issue is not one of metrics versus judgment, but metrics informing judgment, which includes knowing how much weight to give to metrics, recognizing their characteristic distortions, and appreciating what can’t be measured. In recent decades too many politicians, business leaders, policymakers, and academic officials have lost sight of that.”Jerry Z. Muller, The Tyranny of Metrics

John Wanamaker famously commented that half of his marketing was wasted, though he didn’t know which half. Many have tried to remedy this commonly healed belief that marketing is simply trial and error. Some have attempted to create predictive technology, others have invested in supposedly better targeting, and still others have advocated for changing or adding new marketing channels. 

The truth, however, is there is no silver bullet to predicting marketing outcomes without the essential ingredient of data from previous results. All other efforts are simply a waste of time and money. And yet, most advisors are in the dark when it comes to how much they are wasting when it comes to marketing. Are you currently calculating your ROI? What about your acquisition cost?

Data is the key. Because when you use data to inform the metrics you’ll use as the basis for your marketing decisions, you’re going to drive more effective growth in your practice.


The single focus of metrics is the elimination of waste. Measuring what you put in and what you take back out of your marketing allows you to effectively eliminate the things that don’t drive the bottom line: 

getting new, retainable, clients. Everything we do in measurement is in service to this goal. 

So, with this end in mind I’m going to layout three different marketing measurement frameworks for your consideration. I’ll do my best to avoid getting too deep in the weeds here, but this is a subject that deserves some deeper understanding among business owners like you.

The first framework is basic funnel measurement. It is a step-by-step accounting of where people are in your sales process, and it will allow you to see exactly what kind of prospecting / marketing actions lead to specific results. 

The second framework that I am going to explain in this chapter is a more advanced variation of the first that will allow us to better understand what kind of prospecting / marketing activities lead to specific revenue outcomes and will give us some level of future predictive power, in that regard. 

Finally, the third framework is going to dig deep into your practice. It’s going to answer questions like, 

how profitable is my practice? — what is my time worth? — how can I scale my practice? 

The “secret” to your success here is knowing your numbers and using them to make smart choices. 

Framework 1: Sales Activity & Client Retention At-A-Glance

Let’s assume you follow a sales process in which you have two appointments to close a new client. Sometimes it’s more, sometimes it’s less. But you average two appointments. Typically, a first appointment might include a general exploration of the prospect’s needs and your services. A second appointment, sometimes known as a discovery appointment (but we’ve heard lots of other names used), provides an opportunity to present a specific plan and seal the deal with your new client. 

In an effort to track your sales activity toward conversions, we recommend compiling data on each of the following items on a weekly, monthly, quarterly, and annual basis:

New Cold Prospects. People with whom you have little to no relationship, but you have at least one of the three critical pieces of contact information and permission to contact them (ie. Phone number, email, and/or mailing address). Ideally, there would be some 

qualifications in place to filter these new prospects so that you don’t simply have a large “list” of prospects who can never be qualified into warm prospects.

Warm Prospects. People with whom you have some relationship, and have met some qualifying criteria.

First Time Appointments. People who have actually had a first meeting with you. 

First Time Appointments Cancelled. Why keep track of this? Simple. It provides a predictive matrix showing you a ratio of “scheduled” to “kept” appointments. This is critical so you can base your actual performance in these meetings, and isolate cancellations from unqualified prospects (such as lack of personal fit, disconnect with your investing method, or lack of personal means).

Discovery Appointments. The second meeting held with prospects that are on track toward becoming a client. 

Signed Clients. Like Alec Baldwin said in Glengarry Glen Ross, these are the folks once you “get them to sign on the line which is dotted!”

Retained Clients. This is a little bit of a less intuitive metric that I often see is missed, because it’s nothing more than your current client count. However, this can tell you about the size of your front door versus the size of your backdoor. (According to a 

Financial Advisor Magazine article from May of 2019, as many as 45% of clients leave their advisor in the first two years of the relationship. 20% of those leave in the first year!)

Referrals. I know that you live by referrals but let’s not be a ship tossed about in the sea about them. Let’s get a real grip on what’s happening on this front. Ideally, these are the referrals that are 1) meaningful, and 2) meet enough criteria to get the person into warm prospect status!

The reason to track all this data is not to sit back and bask in the knowledge of your numbers but rather, it is so that you can employ a methodology for improvement of each of these metrics. This is where Excel becomes your best friend. Simply keep track of each of these items from week to week. This doesn’t need to be complicated, but it does need to be accurate.

Framework 2:  Financial and Channel Driven Metrics

Framework 1 should give you a good overview of what’s happening in your business, which is useful for at-a-glance updates. But it’s only useful if you’re only using one marketing channel or means of attracting prospects.

Therefore, the focus of this second framework is to apply financial metrics to the process and separate your prospects by channel. We know very few established practices that use only one means of attracting prospects, so if you’re only using the data of the framework 1, you’re missing out on insights

 into how each marketing channel is performing. The following metrics will remedy that: 

New Cold Prospects by Channel (Metric: Action Cost). For these we are looking at the channel, the number, AND the cost to acquire what typically amounts to an opt-in request of some kind (i.e. a white paper download, information about a seminar, signing up to watch a webinar, etc…). For example, if you spent $500 on Facebook ads and you received opt-ins to a web presentation on retirement, you have a cost-per-action of $50. 

Or if you spent $1500 sponsoring a chamber of commerce club for a year and you got one new lead each month, we could say that you have a cost-per-action of $125 ($1500/12 = $125).

Warm Prospects (Metric: Unqualified to Qualified Ratio). For this framework we’re looking at a ratio of cold to warm prospects, again by channel. So, if on Facebook you take 50% of your cold prospects and they become warm prospects, you could say that you’ve moved from ten cold prospects to five warm prospects.

First Time Appointments (Metric: Lead to Appointment Ratio). For this you’re creating a financial metric using your cold prospect numbers and your ratio of cold to warm prospects. This is going to tell you what it actually costs for a booked appointment. So, if it requires 5 warm prospects to

book an appointment (and we know that based upon our Facebook example above) we can book one appointment. 

Signed Clients (Metric: Acquisition Cost). This is where perhaps the most valuable marketing metric comes in. We now have all of the data in place for us to be able to drive to a final acquisition cost (measured by channel, that is). If we know that for every 3 first time appointments we sign one client, we know that our acquisition cost is $1500. 

Retained Clients (Metric: Average Customer Value). This is where you get to measure the average value of your clients gained by specific channels. We’re going to look at customer value generated by each channel. Now, I know that this is likely NOT a weekly metric, but it is ideally something that you can look at on a quarterly basis. 

The best way that I’ve found to calculate this is to make it an aggregate average, meaning if you have $30 million of AUM for 25 clients produced from Facebook, you can get a pretty clear picture of what an expected average new client from that specific 

channel is worth. You can also take multiple channels and bring those averages together to get what your average client is worth.  

Referrals. This may feel a bit like beating a dead horse, but simply asking for referrals is insufficient for measuring the actual outcome of these referrals. We can’t tell you the number of practices we’ve seen that “work primarily off referrals” who have no idea of the numbers behind those referrals!  That’s why we recommend tracking referrals just like you would any other channel and getting each of the above metrics for this channel and comparing it to each of your others. 

This framework, which primarily deals with the financial metrics of client acquisition, is useful for two main purposes. First, it allows you to see what activities are profitable and in what timeframes they will become profitable. Second, it gives you financial predictive power, that when applied to Framework 1 gives you a clear guide for what kind of money your efforts will bring you. 

A word of caution about this framework. The biggest pitfall for this is poor tracking. If you can’t tell which channel generated the lead, the entire system breaks down. We dislike relying on client surveys for this information and would strongly recommend that you put in place a systematic process for identifying and cataloging who came from a specific channel. 

There are a number of great Client Relationship Management (CRM) tools that can help you accomplish the outcomes metrics described above. 

Framework 3: Scaling Your Practice

This third and final framework of the Advisor Inbound Method really focuses in on longer term values. What this means is that we’re going to have a few metrics that we look at on a quarterly and annual basis that tell us about the overall direction that the business is going. 

Net Income Per Hour of Operation. This might sound like quite the mouthful, but the concept behind it is very simple. How much profit do you make per hour of operation? The best way to really get to this number is to start with your net (after tax) revenue for the quarter and divide it by 520 (this is assuming a forty-hour work week for thirteen weeks). So, if your net after tax was $10k in Q1, your net income per hour would be $19.23. This is often a shocking metric, because it’s often hard to have business profitability in mind during the day-to-day activities. The goal for this metric is to drive operational thinking. 

Churn Rate. There’s nothing fun about calculating the rate at which clients will leave you, but that is what your churn rate is going to tell you – and it’s an 

important metric to track. We know a number of advisors who take and start building “wow” into the practice (which we’ll be covering in detail later) and have seen their churn rate dramatically reduced. 

How to calculate churn: Take the number of clients that you lost in a given timeframe (quarter or annual is typically what David and I use) and divide that by the number of clients that you started with in that same timeframe This will give you a percentage or a churn rate. Let’s say, for example, you started the quarter with 125 clients and lost 8 of them in that quarter. You’re going to have a quarterly churn of 6.4%. 

Growth Rate. You’re probably very familiar with this metric. You likely use it to evaluate stocks regularly, but have you taken this inverse of churn rate and applied it to your business? If you have, would you invest in your organization based upon it? I’m not saying that you need to apply compound annual growth rate (CAGR) to your business, but having a simplified picture is going to tell you how your organization is performing. 

How to calculate growth rate: This is going to be a calculation similar to that of churn rate. Take the number of total clients at the end of a timeframe and divide it by the number of total clients at the beginning of that timeframe. 

So, if you begin the quarter with 125 clients and you ended with 145, you would have a growth rate of 16%. Where this starts to become a powerful tool is when used in conjunction with churn rate. 

Lead Velocity. This metric is about how many leads are generated within a given channel. Why does it matter? Lead velocity is something that you look at to tell you about the overall production potential of a given marketing channel. If you knew that the Chamber of Commerce’s annual sponsorship gave you great results in terms of acquisition cost, but it only generated ten leads a year, this tells you about the scaling potential that this channel brings.  It also speaks to the opportunity cost. If you have to spend money in January and wait until October to see a return, that may or may not be a great fit for what you’re trying to accomplish. 

Are there other metrics that we could consider? 


The field of analytics and the selection of key performance indicators (KPIs) is vast, and we have not even begun to scratch the surface of this critically important topic. 

My aim here, however, is not to give a masterclass in metrics, but rather to give you the metrics that are the most effective in global measuring of the effectiveness of your marketing. 

These are the numbers that we use on a regular basis to understand how well our clients’ practices are performing and growing. We know that 

for many advisors the implementation of these may seem overwhelming, but our hope is that you’ll start simple, and realize that consistency in measurement is the key. 

Remember, there is NO silver bullet.