5 Sales Metrics that Drive Strong Performance
If you don’t measure it, it doesn’t exist.
These are the words that ring in my ears when I take on a new sales team. We have a wealth of data in this day an age, no matter your CRM, chances are you have more data at your fingertips than you realise. There’s an obvious advantage to measure and report on all the metrics you have but which ones improve performance? Which ones will help you coach your reps?
You know who your top performers are as well as your lowest performers but if your goal is to improve performance overall then you need to be able to drill down into the data that will help you diagnose the root cause of the problem. It could be one rep is great and setting appointments but can’t close, whilst another rep is a great closer but can’t get people on the phone to talk to. So what is the problem?
Without modelling the entire buyer’s journey and identifying the deal stages your customer will go through, you’re in the dark a bit.
Sales metrics are key bits of data that show a reps or teams overall performance. They can be used as leading indicators for a set period, predict future performance, plan sales compensation, and highlight problem areas.
5 Sales Metrics That Matter
1. Conversion Rate
This should be your cornerstone metric, if you measure nothing else then measure this. In sales teams, the conversion rate is the number of qualified leads that turn into a closed sale.
Conversion rate = # of sales / # of qualified leads
What is a qualified lead? – in this case, it’s any lead that you have given to the sales team that is able to be converted. This means having the intelligence to filter out spam leads trying to sell you something, leads that you don’t have a product or service for and no duplicated leads. Hopefully, your lifecycle stages already filter out what is and isn’t sales-ready, your marketing team already work in alignment with the sale team to ensure you have product fit and your CRM is smart enough to de-duplicate leads for you. If not, work on getting accurate data in before you try to get meaningful data out.
What is a sale? – This can vary from business to business, it might be a simple product purchase and you can measure it as being when the order was placed or it might be a more complicated service offering that has recurring revenue over time. Either way, this should align with your compensation plan, sales reps can’t be expected to work to a conversion rate that doesn’t go hand in hand with their targets.
Measuring conversion rates will give you the overall health of your sales rep or team. You can measure this on a monthly, quarterly or annual basis and provides insight into not only how well your reps are doing but also how well marketing are doing. For example, if you have a sales target of 100 sales per month and your marketing team are delivering 1,000 leads a month, but the historical conversion rate is 1%, you know ahead of time that either the sales team need to lift their game or the marketing team need to diversify their lead gen. It’s rarely as black and white as that and assumes you already have good sales and marketing alignment but it is what sets high performing teams apart.
Once you’ve got this started, you can drill down into micro data sets that will give you even better insight. Try looking at:
- Conversion rates by lead source
- Conversion rates by product
- Conversion rates by first lead form submission
- Conversion rates by state or geographic location
- Conversion rates by ad group
2. Win Rate
Win rate is the number of deals that are closed versus the number of opportunities in a specific timeframe.
Win rate can be calculated as:
Win rate = # of won deals / #of opportunities
What is an opportunity? – an opportunity is a qualified lead who has a high chance of converting to become a customer. This can vary a bit but most businesses will define an opportunity as someone who sales have engaged with and are qualified enough to know that you have a product or service to meet their need.
What is a deal? – Much like defining a sale, this should align with the compensation plan for your reps. Usually, this will be where sales hand over to ops or service. A good tip is to include any post-sale activity that the rep is responsible for, like a soft handover to the customer service rep or getting the contract signed. This way you can align the required behaviour with the desired outcome.
3. Pipeline Progression
Pipeline progression looks at the time spent in each deal stage.
If you have well-defined sale stages then you can measure how long a lead or opportunity is taking to progress. This will give you insight into where reps need to improve and where leads are dropping out of the funnel and becoming disengaged. Ensure that your sales stages are outcome focused, for example, you might have a stage for ‘Meeting Booked’ but what’s the next stage after that? Do you jump straight to ‘Deal Closed’ or do you have a stage that shows how and when the lead re-engages with you. Most sales have several back and forth steps with lots of questions and follow up emails. It’s good practice to codify these as not all reps have the same closing ability.
You might have a pipeline progression like this:
40% book a discovery call > 50% go on to a demo > 30% book a follow up call > 20% close
You can drill down per rep or per team to identify where reps might not be qualifying leads properly before booking a discovery call or where reps are giving cookie cutter demos that aren’t tailored enough or where reps aren’t following up opportunities consistently. These are invaluable insights to the sales coaching process.
4. Sales Activity
Sales activity looks at any activity that your sales team does to engage with a lead or opportunity.
It can include calls, emails, live chat, meetings, demos or presentations. Tracking these data sets is especially problematic unless you have a decent CRM but if you do then it is the perfect real-time indicator of how your people are doing.
Start off with the basics here, measure the average number of sales activities per closed deal and the number of sales activities per lost sale. More often than not you’ll see a large disparity here. This can mean your reps aren’t following the same sales process for all leads but it can also show where you have poorly qualified leads that are hard to contact or have poor product fit.
5. Average Deal Size
The average deal size looks at the average value of a deal per rep or team over a given period.
Average Deal Size = total revenue of won deals in a specific period / # of deals
This is a strong indicator of a reps overall performance and selling style, some reps might opt for fewer deals at a higher deal size or more deals at a lower deal size.
You might find newer reps have a lower average deal size and need help negotiation or upselling. Similarly, you might find average deal size fluctuates in line with marketing activity. If there’s a promotion running then of course you’d expect to see the average deal size drop but you can also drill into brand messaging to see how your reps are aligning their process and content with what marketing are putting out there.