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When it comes to B2B sales, it can be hard to figure out how to measure sales performance. Is it good enough to just keep an eye on revenue, or could that be hiding trouble down the road that more nuanced sales productivity metrics could sniff out?
In this day and age when data is all around us, you simply must use CRM software and sales tracking software to track key sales metrics. if you don’t, your chances of having a successful sales team are slim.
Tracking the right sales performance metrics will help you spot inefficiencies and identify room for improvement in your team’s ability to close a sale.
If you aren't monitoring the following metrics, you need to start in order to see a boost in revenues throughout the sales cycle over the next quarter.
Sales metrics refers to the specific numbers and key performance indicators (KPIs) that businesses try to hit in order to meet revenue goals for a period.
Sales team leaders will track these metrics, typically with the help of software, and use them to determine how well their sales team is doing, and whether adjustments should be made to improve performance.
Without tracking sales team metrics such as conversion rate or new prospects, a sales team would have no idea how well it is doing beyond broad numbers such as total revenue, making it difficult to make improvements or do sales forecasting.
Sales metrics are important for one very big reason: money. It is impossible, and I do mean impossible, to grow your business without tracking sales metrics.
If you don't know how much time your sales team is spending on a client before closing a sale, what percentage of your leads turn into customers, or what your churn rate is, to name just a few examples, you will have no idea what your team is doing right, or wrong, and therefore no idea how to improve.
Any change you make to grow your business will be a shot in the dark. If you are tracking sales metrics, however, you have a wealth of data to examine that will tell you exactly where you're wasting money and where there are huge opportunities for revenue growth.
There are countless sales metrics that you could be tracking, and indeed, which ones you should track really depends on what your goals are. However, every business should be tracking these eight core metrics, so it’s time to start setting up your sales dashboard to do just that.
No matter how good your conversion rate is (more on that shortly), if you aren’t getting lots of new leads into the pipeline, your revenues are going to suffer. It’s up to you what time frame you want to track, monthly probably works perfectly fine, but you should be measuring how many leads are coming in on a regular basis.
If you’re struggling to make your revenue goals, explore increasing the amount of leads that are coming into your business by doing more prospect qualifying.
When you start crunching the numbers on new leads, you should pay attention to a couple of things in particular.
You have minutes to contact a lead before your chance of landing a sale drops precipitously. Once that prospect fills out a form or sends you an email in response to an ad, the clock is ticking. By measuring lead response time, you can determine how quickly you are typically getting back to leads.
This metric will give you insight into whether you have room to shorten the lead response time as a way to deal with revenues that are lagging.
When you start crunching the numbers on lead response time, you should pay attention to a couple of things in particular.
A salesperson's conversion or close rate is often the metric he or she is most measured against. Basically, it's all the opportunities that were won over a certain period of time.
If a sales team is struggling to achieve revenue goals, one of the first places a manager will look is at the conversion rate. If it's low, that means leads are slipping through their fingers, and it's time to figure out why.
It could be because salespeople just aren't doing a good job closing, or perhaps the prospects weren't properly qualified. Either way, it's a critical sign that something is amiss.
When you start crunching the numbers on conversion rates, you should pay attention to a couple of things in particular.
A lot of people confuse conversion rate with this metric, but there is a critical difference. If a salesperson has 100 opportunities, closes 20 of them (win or lose), and scores four sales, that's a conversion rate of 4% (four sales out of 100 opportunities).
The opportunity win rate, however, is more specific: it measures what your success rate was when you went for the kill, and doesn't include opportunities that are still open. So in the above case, the opportunity win rate would be 20% (four sales out of 20 closed opportunities).
When you start crunching the numbers on opportunity win rates, you should pay attention to a couple of things in particular.
Your team could be closing deals left and right, but if your average deal size is low, you may not hit revenue quotas. It's a simple calculation: you just need to divide the total revenue from deals over a certain period by the total number of deals.
If you're watching this metric, you can see if the deal size is fluctuating which will give you greater insight into your sales operation. You can then make adjustments based on your goals. Perhaps you want a smaller deal size but more customers, or maybe you're gunning for big enterprise contracts that are fewer in number.
When you start crunching the numbers on average deal size, you should pay attention to a couple of things in particular.
CAC helps you understand just how much money you spent trying to get that customer, from salesperson time to marketing dollars to anything else that goes into your operation.
Tracking CAC can be very eye opening, particularly if you find that, say, it costs almost as much to acquire a certain type of customer as they bring in with a sale, which might suggest that you should abandon that type of client and spend more time on other more profitable customers.
When you start crunching the numbers on CAC, you should pay attention to a couple of things in particular.
While CAC is important, it should be understood in the context of customer lifetime value, or CLV. For example, even if the CAC is high, if that customer buys multiple times over the course of their relationship with the company, that's OK because the customer is extremely valuable as measured by CLV.
You can arrive at CLV by adding up all revenue earned from a customer and subtracting the CAC.
When you start crunching the numbers on CLV, you should pay attention to a couple of things in particular.
Your CLV stats can get hammered if you have a high churn rate, which refers to the annual percentage rate at which customers abandon your company for whatever reason.
You need to track churn rate to spot any changes in either direction, which can tell you if you need to make adjustments such as more successful client management, offering customer loyalty programs, or simply making the product itself better.
When you start crunching the numbers on churn rate, you should pay attention to a couple of things in particular.
The reality is you simply can't miss out on the tremendous opportunities out there to improve your team by closely examining data.
There are so many aspects to sales that are hidden in broad stats like revenues, but if you're tracking the metrics above, you can be sure you won't be caught off guard by a sudden drop in sales, or a sudden, temporary increase that you have no idea how to replicate.
But you need good tools to do this effectively. Try out a few CRM examples to see if they are a fit for your business. By improving your sales management through software, you're more likely to see revenue growth than if you're just winging it based on instinct.
You’ll be able to create a sales metric dashboard that will tell you exactly how your team is performing at any given moment, and that’s vital to future growth.
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