Numbers Talk: The Sales Metrics That Matter
August 7, 2019 Comment off
Numbers are a constant focus for every sales organisation: more leads, more sales and more metrics being tracked are the common themes with the vast majority of sales teams. However, having too broad a perspective and tracking too many metrics can be detrimental to your salespeople’s’ effectiveness.
Instead, taking a stripped-back approach can help you create a more targeted and, ultimately, more successful sales machine. These three core metrics will help you understand your salespeople’s biggest challenges, opportunities and identify areas for improvement.
Metric 1: New opportunities created
This metric ranks far and away above all others in terms of its value to your business. Put simply, you can’t capture, nurture or close an opportunity that you haven’t first created.
Creating new opportunities is a good gauge of how effective your business is at acquiring and arranging meetings with prospective customers. It provides insight into not only how successful your salespeople are at prospecting, but also their work ethic – which is a vital tool in meeting your ultimate sales goals.
Tracking the number of opportunities being created is a critical metric of your sales team’s ability to engage in sales conversations with prospects. It will track how effective they are at entering exploration conversations on how businesses need to change. These can often be tricky discussions, but they are useful in shaping your understanding of a prospect’s specific needs and requirements and encouraging them to choose your product or service.
Metric 2: Average Size of Deal
All deals are good deals, no matter the size. But tracking deal size is an important metric in understanding if your sales teams are spending their time prospecting the right targets in the right places. For example, whether they are spending too much time targeting major, hard-to-win deals with large organisations that are unlikely to ever agree to a deal without an RFP.
Alternatively, if your metrics tell you that you’re overloading on tiny deals, it may be a sign that you’re not targeting the businesses that stand to best benefit from your product or service. It may also be an indication that your salespeople aren’t as effective at negotiating or closing large, complex deals. This, therefore, may point to your sales team needing the training to build up their experience and confidence in winning large deals.
It’s important to remember that small deals can turn out to be vital, and can easily develop into huge deals. But the same also works in reverse – contracts can sometimes diminish in size through no fault of your own.
Metric 3: Win Percentage
Every sales organisation wins and loses deals, and has to accept that they will lose some. Even the very best salespeople in your company won’t win every deal, and it’s how they react to and learn from the defeat that makes them stronger.
Your win rate metric provides insight into how well your sales team are selling. In some ways, it’s the ultimate sales metric as the business can only hit its goals or quota by winning opportunities. Win rate is also an indication of how well your sales team controls the sales conversation process – namely, whether they are creating enough value in meetings, can secure follow-up meetings or are too willing to accept non-committal clients.
A low win rate is an indication that your sales team is underperforming or lacks effectiveness. The challenges tend to show up early on in the sales conversation, with the sales team not communicating the benefits of your product or service to their prospects.
On the other hand, a high win rate indicates that your sales team is offering good value to prospective customers, that they provide a positive working experience and they have a good understanding of their prospects’ needs, pain points and requirements. The likelihood is that your sales organisation is creating positive working relationships that encourage deals to grow.
The value of metrics
There are many metrics that can be used to measure the effectiveness of your sales teams, from the number of phone calls made and the number of meetings secured through to deal cycle times, profitability of deals and the growth of existing clients. But the three core metrics outlined above will help you understand if your salespeople are doing enough to secure meetings in the first place.
When used over time these metrics will indicate whether your sales operation is improving, which is portrayed by deals growing in value and win rates improving in percentage. This alone is fundamental to tracking the areas in which you are succeeding, where there’s room for improvement, and how you may need to help your salespeople progress.