10 Sales Metrics to Measure to Stay Ahead
You may think your sales team is doing well and you’re on track for a good year, but do you have the sales metrics to back it up? To make sure, let’s talk about the sales metrics you should be using to determine the efficiency of your company and sales team.
Below are some of the common sales metrics you’ll need to know—and track—in order to measure your sales team’s progress and project ahead. Some of these will be familiar to you and some won’t. We suggest you try tracking all of them.
The quantity of leads needed in your sales funnel
You should know what percentage of your leads you can expect to convert into prospects. (If you don’t, start tracking this first, or go back and look at historical data to determine the average percentage.) Use this number to determine how many leads your sales team should be working through the sales funnel at any given time.
Conversion rate of leads to qualified prospects
This is the number of leads that make it through the sales pipeline to become qualified prospects. If you have a low conversion rate, that means you need a large prospect universe to start with. This isn’t necessarily a bad thing, and it could be an indicator that your team should be focusing more on higher quality leads, or it could indicate an ineffective sales process or even sales materials that fail to engage. It’s worth looking into…
Close rate of qualified leads, a.k.a. opportunity win rate
This number is the total wins divided by opportunities bid. Any “no-decision” leads should be removed from the calculation, because they’re often poorly qualified. This metric helps you avoid bidding poorly qualified or completely unqualified opportunities that waste time and resources, and it’s another reason why it’s important to have a solid qualification process. This metric also shows where there might room for improvement in the sales process, training or materials.
Average deal size
Knowing your average deal size helps you prioritize deals based on a comparison to average historical deal size and the work required to close a deal. Smaller deals can be easier to close, but they’re also not worth as much revenue-wise. You need to make sure your sales reps understand the big picture and the company’s revenue goals so they can prioritize their time and efforts accordingly.
Revenue conversion rate on closed deals
This metric is based on the average deal size and how many leads your other metrics indicate you will win. Compare this to your sales quota. You will see if you have a buffer (meaning you’re more than on track) or a bit of a deficit (meaning you’re falling short on the sales goals). Then you can decide how to proceed in the months ahead.
Cost of sales to revenue ratio
This metric includes salaries, commissions and expenses involved in the sale. This metric helps you determine what kind of investment is needed to win a client and whether or not it’s worth the investment.
Average sales cycle time
Keep track of the average time it takes a deal to pass through the various stages of the sales pipeline. Use this metric to make sure you have enough leads to hit your quota, but also use it to determine if you have any old, less qualified leads that should be removed from the pipeline. Knowing this metric will also help you to re-examine a deal when it seems to get “stuck.”
Time spent selling (as opposed to other activities)
Knowing how long your sales reps spend actually selling can help you identify issues in the sales process—or even with some of your sales people. For example, you might discover that it takes your reps a long time to find information on a prospect. Address this either by showing them a better way or looking into a different system. It might be time to invest in some sales software to improve efficiencies at your organization!
Lead response time
This metric matters because you want your sales reps promptly responding to an interested party. In addition, in our age of instant access to information—and therefore expectations for instant replies—online leads can have shorter life spans. You need to have a quick response. A lead response time of less than an hour is seven times more likely to qualify the lead than those that waited an hour. On the other hand, a lead response time of more than 24 hours makes it 60 times less likely that the lead will convert to a qualified lead compared to those who were responded to in less than an hour. What is your lead response time, and what can you do to speed it up?
Marketing collateral usage
Although investments in marketing content are on the rise, 90% of this content goes unused by the sales team according to the American Marketing Association. Is your team taking advantage of the marketing collateral that your organization offers? If not, why not? It could they’re unaware of the resources, or it could be the resources aren’t helpful (common in organizations with a big marketing/sales disconnect). Determine how much is used and how to increase that usage if necessary, even if it means asking the marketing department to create new materials.
Start making these sales metrics a regular part of your process, so you can easily spot trends either upwards or downwards—and then act. These metrics will help you develop a deeper insight into how well your reps are performing and how efficient—or not—or sales processes are. Because you can’t improve if you don’t measure!