Sales managers need to be savvy and strategic to get ahead. Fortunately, there are many advanced data measurement and analytics options available to help you motivate your team and drive performance. Through sales analytics software, sales managers can gain insight into the pipeline and manage an effective and efficient team. But are you measuring the right things? Here are 7 effective sales team metrics to get you started or compare against what you're currently doing.
Data analytics solutions have revolutionized sales measurement. They enable sales managers to pinpoint where their teams can generate more leads as well as cross-sell and upsell to existing customers and define customer profitability. The potential exists for sales managers to enjoy great benefits. Whether they get to enjoy such benefits depends on how you use the solutions available.
So, are you measuring the necessary metrics to ensure your sales team is working at an optimum level? We outline the seven sales team metrics every sales manager should measure.
1. The sales pipeline
This is a great way to gauge a company’s health. Sometimes presented in a graphical format, it shows the sales opportunities the company currently has and an estimation of the amount of revenue the sales team is going to generate in the coming months. If the opportunities within the pipeline are managed well, the sales team will stay organized and feel more in control of their sales figures, giving the sales manager more confidence in the targets that can be achieved.
What metrics should be measured in a sales team’s pipeline?
- Number of potential deals in your pipeline
- Average size of a deal (in $) in your pipeline
- Average percentage of deals that are converted from leads to customers
- Average time deals are in the pipeline (measured in days)
2. Sales revenue
Measuring the revenue a sales team brings in, instead of only their profit margin, gives a sales manager more insight into the business' performance. If a company experiences steady “top-line growth”, it could be viewed that the performance in that period was positive even if the earnings growth or “bottom-line growth” didn’t change.
Measuring revenue allows you to identify the profitability of the business. By calculating the profit ratio (divide net income by sales revenue) businesses can reveal how much of every dollar brought in by sales actually makes it to the bottom line.
3. Forecast accuracy
Forecasts will never be exact, but there are tools available that will assist a business in creating the most accurate forecast possible. The accuracy of a sales team’s forecasts needs to be measured on an ongoing basis to ensure that they are continually reaching their predicted targets or at least getting closer to them as time goes on. Producing accurate forecasts enables a company to reveal issues threatening the business as well as opportunities available.
4. Sales funnel leakage
No sales team wants a leaky funnel but sometimes with limited technology and manpower, this can happen. It’s imperative to know where the holes in your funnel are, how they occurred, and how you can essentially ‘plug’ them. Things to review include:
- Lead response time: a business that responds quickly to a sales qualified lead is more likely to win the sale
- Rate of follow up contact: persistence is key, a sales team should be continually following up with a lead via phone calls and emails until they are deemed no longer qualified
By constantly monitoring this data and putting means in place to avoid opportunity leakage, the overall sales numbers will improve.
5. Win vs loss rate
It’s important to understand the reasons why leads buy or don’t buy a company’s product/service. This information is crucial as it can assist in improving a sales team’s close rate thus gaining more market share for the business.
6. Cross-sell and upsell opportunities
Cross-selling and upselling can be complex and risky. However, with the challenges around new customer acquisition, businesses must find ways to improve sales from existing customers. With the right analytics tool, businesses can identify cross-selling and upselling opportunities in the organisation and ultimately, generate more sales for the business.
7. Closure rate aka “win rate”
It’s important to be aware of how many leads or opportunities are being converted into customers. This metric focuses on the final stage of a sales team’s pipeline. By this point, a sales team would have invested a lot of time and resources into the lead so this rate should be as high as possible.
A low or constantly changing closure rate signifies a lack of competitiveness in the market, which means the value proposition being offered to the leads is not good enough. It may also mean that the sales team requires additional training.
Measuring a sales team’s performance has evolved from the simple spreadsheets used back in the 20th century. There are now advanced business intelligence software options that provide dynamic reporting capabilities with dashboards to help automatically track business KPIs and key metrics. This gives a sales manager the ability to become more proactive as well as make more insightful and strategic decisions that will benefit the company.