Sales Metrics to Watch

Your goal is to hit your revenue number – whether it is just you or a team. While you do that, there are a few key metrics that will identify trends related to your sales that provide insights into efforts.

“While you do that, there are a few key metrics that will identify trends related to your sales that provide insights into efforts.” 

Questions You Should Be Asking

There are certain key metrics that are indicators that your sales process is on or off track. Keep an eye on these metrics and ask yourself the following questions as you look to improve your sales process.

• Opportunities. Do you have enough open opportunities to close new business and did this number increase in line with your projections that you used to set quota? This guides you to make sure you are spending enough effort on prospecting – bringing in new opportunities that may become customers.
• Sales Cycle. You sales cycle is how long it takes form the time you connect with a prospect until you close a sale. What is you average sales cycle and is it longer or shorter than expected? Is your deal size affecting the sales cycle (i.e., larger deals take longer than smaller deals). You should also look to measure the average time it takes a deal to pass through each stage of the sales pipeline. Minimize your sales cycle by identifying at which stage in your sales funnel you are seeing bottlenecks and know that for each sales rep. This will inform you which skills you should coach and improve. By arming yourself with this important sales cycle information, you can quickly eliminate sales bottlenecks and give direction to your team on how they should invest their time.
• Time Spent Selling. Am I (or my sales team) spending enough time selling? Take the time to measure how much time your reps actually spend selling. Time, after all, is the most precious commodity of the sales rep. Look to eliminate sales roadblocks and administrative tasks.
• Win Rate. Did your win rate stay within the acceptable range that you expected or was it higher or lower than expected? And why? Did it drop because deals were larger? Did it drop because you were selling to a new market? Keeping track of opportunity win rate gives you some insight into the ability of your reps to close a deal. Some tips:
  • Look at Stages. To increase your reps’ win rate, you need to find where they have the most difficulty converting opportunities from stage to stage. Analyze your sales funnel by stage – are your reps losing a lot of opportunities in the early stages or the late stages? If conversion rates are low in the early stages, your team will need help with such skills as rapport building, better qualification, or maybe product knowledge and demo skills. And if conversion rates are low in the later stages of the sales funnel, you may want to start coaching skills such as managing objections, gaining commitment, negotiation skills or perhaps even closing skills.
  • Look at Deal Size. Your win rate can decrease when your sales reps work on opportunities that are considerably larger than your average deal size which you win.
  • Look at Lead Source. Your win rates can be higher when the original source of the opportunity is from referrals or from inbound marketing (i.e. when the prospect was searching for a solution like yours and found you) rather than from outbound sales (i.e. when your sales development reps cold call them).
• Average Deal Size.Is your average deal size larger or smaller than expected and why? The average size of closed won deals is a metric which can quickly flag deals that may not be worth pursuing or larger deals that need attention. A change in average deal size isn’t good or bad – it just means you need to dig into your historical data and pipeline generation efforts to figure out how (and whether) to react.
  • Smaller Than Expected. You might learn that reps are veering towards smaller deals because they are easier to close instead of pursuing the most important opportunities. If your average deal size is smaller than you would like, take some time to assess your company’s lead generation efforts and why they are producing leads that end up in smaller deals.
  • Larger Than Expected. Opportunities in your pipeline that are significantly larger (3x or greater) than your average deal size should be flagged because, typically, larger-than-average deals tend have smaller win rates and longer sales cycles. Do you spot an opportunity worth $100k in your pipeline when your average deal size is $20k? Flag it. Talk to the rep who owns the at-risk opportunity about how likely it is to close-win and whether it belongs in the sales forecast. If your average deal size increases significantly from your historical average, your pipeline may be changing.

These sales metrics are worth keeping an eye on as they will alert you to trends and also allow you to forecast better in the future.