All businesses are looking to increase sales, right? We’ve certainly never encountered a business who’s told us that they would like to decrease sales. Whether your busienss is suffering from a decrease in sales or just looking to kick it into higher gear, sales analytics metrics are the first step towards increasing your sales.
Sales analytics metrics exist to help you understand the effectiveness of your current sales process. Understanding your current process and the health of your sales pipeline will help you identify areas of opportunity or pieces that aren’t as effective as they could be and improve the overall success of your pipeline. Tracking these metrics historically will help you to analyze trends in your results with more clarity and you will even begin to start forecasting future trends and opportunities.
Let’s take a look at the seven sales analytics metrics every company should be monitoring and how they can help you understand the strength of your overall sales process and pipeline.
Number of Open Opportunities
One of the most important numbers to look at is the number of open opportunities each representative is working at a given time. By determining how many opportunities are created and available to your sales reps, you can get an idea of whether you are generating enough new opportunities.
Is this number low? That means you aren’t providing your sales representatives with enough opportunities for them to pursue. Given that 79% of marketing leads never convert into sales, a low number of open opportunities will lead to a low number of overall sales and lower revenue.
In this case you want to take a look at your MQL-to-SQL (link to content offer when live) ratio. If this percentage is decreasing over time that means you’re having a problem converting marketing qualified leads into sales qualified leads. This might mean that your definition of a sales qualified lead is too strict or that your ideal customer is changing and the sales process needs to change in concert with that change. Take a look at the criteria you’ve put in place for converting a MQL to a SQL and determine whether it’s time to make a change in that criteria.
Another thing you can use this metric for is to evaluate the spread of opportunities amongst your different sales reps. Reps working too many open opportunities aren’t able to spend much time on each opportunity to qualify and close those people and will thus become ineffective salespeople. Making sure opportunities are divided adequately amongst your sales team (after taking experience level, time needed to service an opportunity and deal size under consideration) will help ensure that your salespeople have enough time to work with each prospect until they are ready to make a purchase.
Total Closed Opportunities
Just because you have a lot of open opportunities does not mean that you’re sales process is working correctly. That’s why you want to also consider the total number of closed opportunities (both closed – won and closed – lost opportunities).
Imagine, for example, that you have a sales rep that’s being provided with 10 open opportunities per day but only closing 10 of those per month. In that scenario you need to determine why your rep is closing so few of their open opportunities. It’s possible that they don’t understand how to properly close a deal or they’re just letting potential business fall through the cracks. No matter the reason, this is cause for concern and is something that you should address with that sales rep so that future opportunities aren’t left by the wayside.
Win rate will help you understand the success rate of your sales team and can be calculated using a simple equation:
(Closed Won Opportunities)/(Total Closed Opportunities)
This metric will help you identify which, if any reps, are struggling to close deals. By identifying the sales reps that are struggling to win deals, you can work with those reps to determine where they are struggling and how you can help them win more deals. If conversion rates are low in the early stages, your team might be struggling with rapport building, qualification or even product knowledge and demos. By contrast, if conversions are low in the latter stages of the funnel, they might be struggling with managing objections, gaining commitment, or their negotiation or closing skills.
In the short term, knowing the average sales price of all closed – won deals will make it easier for you to identify opportunities that fall outside the normal deal size. Larger (3x or greater) opportunities tend to have smaller win rates and longer sales cycles and should be called out as such in the your system so it can be monitored adequately.
In the long-term, this metric will help you track when and by what margin you start beginning to win bigger deals. If you average deal size increases significantly, that might mean you’re attracting larger deals and your pipeline is changing. Larger deals also might cause your pipeline to change as deals of a larger cost tend to take longer on average to convert than those of a smaller cost.
If you notice an increase in smaller deals, it might be something you want to look into. It’s possible that your sales team is foregoing larger deals because smaller deals are easier to win. Or they might be giving too many discounts that are affecting your pipeline.
Sales Cycle Length
Your sales cycle is the average time it takes your team to win a deal. This metric should be measured starting from when the lead comes in and ending when the deal is closed. Sales cycle lengths depend on a lot of different factors including your industry, sales price, etc. As such, no one sales cycle length works for all industries or even all businesses in the same industry. Therefore, it’s most important here to measure this from a historical perspective so you can identify whether your sales cycle is increasing or decreasing in length.
This will also help you identify any place in the sales cycle where prospects get hung up or spend an unusual amount of time. This will inform you which skills you should coach your sales team on to decrease the amount of time a prospect lives in that stage of the sales cycle.
You can also use this metric to identify the likelihood that new prospects will become buyers. After all, there is a high correlation between the amount of time an opportunity spends in a stage and the likelihood of it becoming a won deal. Use historical data to identify deals that are less likely to close based on the amount of time they have remained in a particular stage of the pipeline.
Cost of Sales to Revenue Ratio
This metric reflects the overall efficiency of the sales division without having to look at numbers for individual sales reps. Total costs should include salaries, commissions and expenses for your sales team. Over time, evaluating the cost of sales to revenue ratio will help you understand the level of investment needed to reach a certain performance level. This will, in turn, help you estimate how much money you need to put into sales in order to reach certain revenue goals.
While analyzing big picture metrics is incredibly important to understanding the overall performance of your team, it’s also crucial to evaluate performance based on measurable actions taken by the sales team. Identifying the most influential actions and setting KPIs based on those actions will keep your sales team on track and will help them understand what actions they should be spending their time doing.
Here are a few examples of action-based metrics you can measure for your sales team as a whole or even for individual reps:
- Number of outreach emails sent
- Number of first contact calls made
- Number of follow-up calls made
- Number of follow-up emails sent
- Number of meetings scheduled
- Number of demos given
- Number of proposals sent
There are tons of additional sales analytics metrics that a business can measure but starting with some of these high-level metrics will help you get a feel for your overall pipeline and determine whether your overall process is effective or needs to be revised in order to be more successful. Businesses are always looking to hit revenue numbers and manage their teams successfully. In order to do both of these, it’s important to start focusing on some of the most critical sales metrics. The seven metrics above should be a good starting point for understanding your overall pipeline and identifying any areas of opportunity within your overall sales cycle.
Tired of looking at data in 100 different places? Wish you could access all of your analytics in one business dashboard? We can help! Check out our FREE trial today and get ready to more easily view and analyze all of your business data.