Trying to be successful in sales without tracking numbers is like playing golf while blindfolded. Sure, you might strike a ball just right and land it near the hole, but you’re probably just going to be frustrated all the time and have no clue what you need to do to be successful.
But it can be daunting for a salesperson who might not be great with numbers to even know where to start. There are a gazillion different statistics out there — after all, this job is about numbers. So which ones should you track?
The reality is that there are only a handful of metrics out there that you should be carefully tracking as a salesperson, and it’s not as complicated as you might think.
Why you should be tracking your sales analytics
Salespeople should track key sales metrics for four key reasons:
- It boosts revenue: Salespeople who properly track sales analytics make more money because they are armed with knowledge on how to do things better.
- It saves time: Tracking sales analytics saves time because you can identify where you’re wasting effort.
- It increases efficiency: Salespeople are more efficient when they use analytics to find better ways of doing things, because they can be confident that the numbers back them up and they can forge away with a new approach.
- It helps identify new opportunities: Salespeople can use market analytics and sales forecasting to spot new opportunities to grow as a professional, such as by getting better at prospecting because analytics shows very clearly that it pays to invest more time there.
The best sales analytics your small business should track
There are an infinite number of analytics you can track in the numbers-heavy world of sales, but we’ve identified eight key analytics that every salesperson must track in order to be set up for maximum success.
1. Conversion rate
This is a metric that most salespeople use to measure their success. It represents the number of prospects who actually pulled the trigger and purchased your product or service.
A conversion rate is important to know because it tells you how many prospects you need in order to achieve your sales revenue goals. It also indicates that something is wrong with your sales process. An extremely low conversion rate should cause a salesperson to reevaluate the pitch or other aspects of the sales cycle and make changes.
2. Gross revenue
At the end of the day, sales is about how much money you can pull in. You need to be tracking your overall gross revenue, which will provide the ultimate metric on whether you’re successful as a salesperson.
You can have a great conversion rate, but if you have bad revenue totals, it could mean you don’t have enough prospects in your sales pipeline or you aren’t charging a high enough price. If you are talking to tons of prospects but your revenue is low, it could be a sign you need to improve your closing pitch or, again, take a look at the price point.
3. Qualified prospects
If your sales revenues are struggling, maybe it’s not your conversion rate or your sales pitch — maybe you just aren’t spending enough time on business development and reaching out to enough prospects each month.
Sometimes, the key to squeezing more sales out of your funnel is to stuff more prospects into the top of that funnel. You should be tracking the number of qualified prospects you are putting into your sales funnel each month so you can determine whether that figure needs to grow, or possibly even shrink.
4. Sales growth
It's important to monitor how your sales figures change over time. If you are seeing regular, healthy growth each month, that's a good sign you're doing things right.
But if things suddenly take a downturn, it's time to dive into all the other analytics to figure out why. Has your conversion rate crashed? Are you struggling to find prospects? Are your direct marketing success rates flagging? A sales dip can be the canary in the coal mine for a larger problem.
5. Sales target
A good salesman has a sales target, which is a key performance indicator of what a salesperson should achieve in terms of sales over a specified period of time.
The salesperson should be keeping an eye on progress toward that sales target and make necessary adjustments if he or she is falling behind the pace. A sales target may be in terms of revenue, but it can also be for units sold or any other metric that is of importance to a company.
6. Cannibalization rate
A new product is absolutely flying off the shelves at your business — great, right? Well, you might find out a few weeks later that sales for a much higher-priced item have fallen off a cliff, because customers are opting for your lower-cost item instead.
You should be tracking cannibalization rates for the things you sell so you can make the necessary adjustments.
7. Average sale revenue
A salesperson who has a great conversion rate and talks to a lot of prospects may still not be cutting it if their average sale is of a low value.
By tracking average sale revenue, you'll be able to see how much each sale tends to be worth. Then, you can potentially make important adjustments in terms of what products you market to the customer and even who you market to.
For example, if you are only getting low-dollar sales, it may be time to start qualifying prospects with deeper pockets.
8. Length of sales cycle
Time is money, as they say, so it's important for a salesperson to track how long it takes to close a sale.
There's no hard and fast number for how long it should take to close a sale, as that will vary depending on the industry, whether you’re doing B2B sales, the type of the product, the price of the product, and other variables.
However, you should be tracking this analytic, as it may help you spot ways to speed up the sales cycle and therefore close more sales in a shorter period of time.
Should you use a CRM to track your sales analytics?
Not only should you use CRM software to track sales analytics, it’s pretty much the only way to do so. It’s practically impossible to track these often complicated analytics by hand or with a simple spreadsheet, and you’re a busy individual who doesn’t have time for that anyway.
Most CRM software will offer ways to track your sales so you can take a moment each month to take a deep dive into your figures and make critical adjustments to improve your efficiency as a salesperson. Look for software that offers custom reporting.
Here are some examples of analytics you can track with some CRM platforms:
- The number of closed deals on each day over the past month
- The ratio of sales coming from direct traffic versus other sources, such as email marketing and social media
- How many times a salesperson has to contact someone on average to get a close
If you’re not tracking sales analytics, it’s time to start
A salesperson who isn’t tracking sales analytics is missing out on huge opportunities to improve.
Maybe a simple adjustment to the time you spend developing qualified prospects would boost your sales volume by 20%, or perhaps you could make a couple tweaks to your B2B marketing strategies and boost your conversion rate by 5%.
You wouldn’t know because you don’t know that your conversion rate is bad or the number of qualified prospects you talk to each month is much lower than you thought — and that’s because you’re not tracking those analytics.
Set aside some time this week to try out some CRM software and start tracking religiously.
The Motley Fool owns shares of and recommends HubSpot and Salesforce.com. The Motley Fool has a disclosure policy.