Sales metrics are a collection of personal and business efficiency indicators as well as ratios. They are calculated from gathered information that explain the business’s historical and continuous sales processes. Sales metrics are used to comprehend the performance of marketing, sales tasks and also the performance of the sales process. Creating sales metrics is needed for managing sales teams; these metrics are also necessary for those individuals who take care of a sales funnel.
All companies, small to enterprise, need to monitor sales metrics. Here are a few key ones to consider:
Average Sale Size: Identify the average dollar amount generated by each sales deal. Refine the measurement by doing away with really high and also really low values that skew the average. If your sales include a mix of service (consulting) income as well as product sales, split the numbers in to two streams, unless they are inseparably linked (i.e., no product sale takes place without service). This metric will definitely help you to make sales projections and also will help you look for reasons why deal size might be increasing or decreasing.
Length of Sales Cycle: What is the average amount of days that sales opportunities sit in the sales funnel (i.e., what is the length of sales process?). Sales Cycle Length can easily be averaged and you may categorize cycle time by deal size. Numerous sales processes can be incredibly long, so finding ways to reduce them is extremely useful. Great salespeople spend time early in qualifying their prospects to either dismiss them or acquire their buy-in to move the sales process forward. This allows salespeople to concentrate their efforts on deals that have a high probability of closing, as well as move away from deals where there is no buy-in or no reason to move forward.
Conversion Ratio: Figure out the proportion of closed deals compared to the number of opportunities at different phases of the sales funnel. The conversion ratio will definitely assist you understanding how well you are doing in qualification and sales procedures. For example, you might need 30 dials to have 10 good conversations, to get 5 booked meetings, to have 3 qualified opportunities and proposals, to close 1 deal.
Win Rate: Determine the number of proposals per sale. It is a part of your Conversion Ratio, however it concentrates on the final stage. By that stage, your sales staff will definitely have put in a great deal of time and effort, so this ratio should be as high as possible. A poor ratio could be a major sign of your low competitiveness in the market, an ineffective company value proposition or could mean that team is in need of some further sales training. Win rates can very slightly depending on many factors however a good rule of thumb is for every 3 proposals delivered you are winning 1 or more deals.
Sales Funnel Leakage: Identify the amount of opportunities that are removed from the funnel at different stages. This is inversely related to your conversion rations. You should discover that funnel leakage is relatively predictable. The reason for tracking this percentage is to better comprehend why deals are eliminated from the sales funnel. This will enable you to make adjustments where required. If you handle a group of salespeople, this ratio could help you compare as well as review personal strengths and challenges. If your business has longer sales cycle times, you will generally see a higher leakage in the beginning part of the sales cycle as the need for a strong focus on qualifying is critical and not all prospects will continue down the funnel. Monitoring funnel leakage allows you to take measures to support an overall healthy sales funnel.
Overall Sales Funnel Value: This is the financial value of all opportunities in the sales funnel. It makes sense to weigh possibilities based upon how far along they are in the sales process. Understanding conversion ratios and also funnel leakage could assist you in giving weight to opportunities based on their stage and the funnel. For instance, if you have $ 300,000 in proposals and your closing ratio is 3 to 1, then you can expect $ 100,000 in sales.
Summary: There are numerous metrics you could make use of. Over time, you will discover that some metrics prove more vital for your company than others. To many this might seem very basic, however the amount of companies that know they need to do this verses the amount of companies that ARE doing this is staggering. Key metrics can also be different for each sales person, so it’s important that each individual sales person knows what metrics are important to them and which ones bring them the great return on their time.
At Dynamic Strategy Group we work with companies who are looking to maximize their Return On Sales in order to grow revenue. We work with sales teams in all verticals focused in both the B2B and B2C markets. Our proven methodology with the combination of collaboration and sales fundamentals will provide your company with a sustainable sales process with measurable results.
President & CEO
Dynamic Strategy Group