Maintaining effective performance of your B2B sales team means understanding how your sales activities will affect future performance, not just how you’re doing this month or year to date. This is why the sales metrics you use to track performance are so important. No matter how comprehensive your sales reporting, it can be easy to fall into the trap of using lagging indicators exclusively and not using leading indicators. Leading or forward-looking indicators help sales managers by pointing to trends that can predict future performance.
Salespeople tend to be optimistic, overestimating the pipeline and revenue impact of the deals within that pipeline. But there is a way to overcome both issues by enhancing the sales metrics you put in place. By choosing carefully, you can ensure a clear, up-to-date picture that allows accurate and informed decision making and give you a better picture of future sales performance. Here are6 metrics that we recommend clients include in their sales reporting package:
Pipeline: Plan Ratio
This is the ratio between the total values of the deals in your pipeline, including opportunities, bids and wins, compared to your total annual sales plan target. Depending on your business, this ratio should be anywhere from 3:1 to 5:1. Keeping your pipeline within this range makes sure that you will hit your sales target this year, but builds the momentum for next year as well.
Win: Loss %
The ratio of deals won versus deals lost is a great indicator of whether you are winning your fair share of the business. Too low of a ratio would indicate that you’re not. Too high of a ratio might indicate that you’re leaving money on the table.
This identifies the total number of days it takes from qualifying an opportunity to closing the deal. Cycle times vary depending on industry and product or service, but in most B2B businesses the sales cycle can range from several weeks to over a year. Sales is all about efficiency and effectiveness and long sales cycles may indicate problems with either (or both). You always want to look for ways to reduce cycle times by looking at your processes, sales competencies and organization structure. Keep in mind, faster cycle times shorten the time it takes for revenue to hit your books!
Average Deal Size
Calculating your average deal size over time can provide key insights into sales performance. It’s calculated by taking the total value of closed deals divided by the number of deals over a specific time period (YTD is typical). A simple sales metric that should be added to any sales reporting, allows you to compare value over time and see if deal size is changing. If your average deal size is shrinking, it could be an indication that there has been a shift in the market or that you are targeting the wrong customer base.
Lead Conversion Rate
The lead conversion rate tracks the percentage of leads that are converted into closed deals. This is used to determine how effective your lead gen process is – are you targeting the right prospects? is your sales team bringing the prospect through the sales funnel effectively? This information can help you reshape your sales strategy and lead targeting to generate improved performance.
% of Priority Calls
Everyone knows that the more sales call your team makes, the more deals you will close. However, calling on firms that are less inclined to buy from you is a tremendous waste of resources. Segmenting your prospects by priority and limiting your team’s efforts to high priority names can increase your sales by 30-100% annually. Tracking calls by priority ensures that your team stays focused on the clients most likely to buy your product/service and increases both the efficiency and effectiveness of your sales force.
All these sales metrics offer valuable insight; together they deliver a broad, clear picture of your sales performance today. If you want to make the most of these metrics or are looking for ways to refine your sales process and improve performance, get in touch today for a free sales assessment from our highly experienced experts. See more of our blogs and articles here!