Good sales discipline requires organizations to measure and monitor their sales metrics regularly. Doing so will provide valuable insight into the effectiveness across an entire sales strategy.
So, keeping a watchful eye on your metrics removes the guesswork, lowers risk and will help guide better sales process and tactical decisions. In addition, it will help improve sales pipeline efficiency and performance that will directly increase company growth.
What are Sales Metrics?
Sales metrics are data points that represent sales activity and performance. Sales managers use sales metrics to track sales growth, goal achievement, business planning, sales rep compensation and pipeline efficiency.
What are the Most Important Sales Metrics?
Knowing which sales KPIs (key performance indicators) to track will help you monitor the sales team's growth, health, and identify issues along the way.
1. Qualified Leads
A qualified lead can have many definitions depending on the organization, industry and sales metric criteria. The broad definition is a person who's interested in your brand.
However, without being further defined, such as their level of interest or stage of the buyer's journey, can diminish the salesperson's win rate. So, it’s important that the sales and marketing teams agree on what it means and the key sales performance metrics associated.
Define the sales pipeline metrics that matter most to sales and marketing. In the best-case scenario, qualified leads are those who already have an intent to buy, not those who randomly came across your website.
Types of Leads
Typically, it's a good idea to separate your leads into Marketing Qualified Leads (MQL) and Sales Qualified Lead (SQL).
An MQL is a lead created by the marketing team and is a person who's showed interest by taking a first action on your site like downloading an offer.
An SQL is a lead that's taken additional actions such as, book a consultation, that further indicates their interest and makes them more sales ready.
Managing and Automating Leads
Managing sales leads can be challenging the more you have. It can be even more challenging to nurture them over time. It's a good idea to invest in a good CRM system and marketing automation platform. These types of marketing tools can help you assess sales metrics, determine lead status and manage the entire sales pipeline.
Reaching out to new leads within the first five minutes of their expressing interest can make them nine times more likely to convert. Automating your processes allows you to communicate with these customers as soon as they appear on your radar.
2. Win Rates
Simply put, the win rate is the percentage of sales pitches that were successful. You can calculate this rate by dividing the closed-won interactions by total interactions that were "closed won" plus "closed lost". When you track this number, then you’ll be able to see how effective your sales team and pipeline are, thus allowing you to make adjustments and analyze performance.
3. Average Size of Deals
All your closed-won deals can calculate the average deal size. This can help you estimate how much revenue you should bring in and how much work you should do to meet that goal. Calculating the average deal size allows you to determine whether a sales team needs more resources to close a larger-than-usual deal. If your deal sizes are trending upward, it may be time to reexamine your sales strategy.
4. Sales Pipeline Leakage
If you’ve ever found a leak somewhere in your home, you know the structural damage it can cause. The same applies to your business. Even the smallest leak can have consequences for your sales processes. Map out the key points of the customer’s journey and identify places where people back away from the process. Why aren’t these leads converting? When you plug the leaks in your pipeline, you’ll be able to improve its efficiency.
If it's taking longer for customers to make purchase decisions, you might need to check for leaks, flaws or inefficiencies in your sales processes.
5. The Average Sales Cycle
Another important sales performance metric is the average time from the customer’s initial contact into your sales pipeline to the winning of the deal or purchase. If you have a quick sales cycle, then you can be confident that your processes are working properly.
If the cycle is slow, then it may be time to check for leaks or flaws in your pipeline. You can also check your sales numbers against industry standards, or even analyze your own historical data to make a note of any trends.
Over the past five years, the average sales cycle for a B2B organization has increased by approximately 22 percent, thus making it imperative to streamline sales processes. It may in your best interest to acquire a pipeline sales tool to help you measure your cycle.
6. New Leads
Once your pipeline processes are air tight and running smoothly, you should see a consistent flow of new leads that are gradually filtered down to the closing stage. Tracking the number of new qualified leads allows you to determine the success of your inbound marketing. It’s also a good idea to examine industry averages of new leads per month and then create objectives accordingly.
Most of all, don’t forget to celebrate your successes with your team. Remember, high employee morale often correlates with great performance and an increase in loyalty. With employee-centric practices and an efficient, leak-free pipeline, you’ll create an environment where your company can truly succeed.