If you were to ask sales leaders how important they think it is to measure sales, you’d get answers like “a lot”, “extremely”, etc., as it’s very suggestive and logical. However, we noticed that, in reality, there’s a lack of balance between doing nothing and taking measuring to extremes.
In our experience, B2B companies either don’t measure sales at all; therefore, they get lost in reaching the planned revenue, or they measure too many activities and forget what metrics should be the priorities and the overall importance.
You can’t control, plan, and manage what you don’t measure. The same applies to your team members; however, if you’re in a leading position, you’re the one driving this behavior in your company/team.
We can all agree that having sales metrics is vital for your business (and success). What you need to realize, too, is that measuring takes both your and your team’s time, so you need to focus on the right metrics and waste no time on the wrong ones.
Take a look at our set of 8 basic metrics below and note that if you don’t measure these, don’t even bother measuring any other. Don’t expect everything to be perfect immediately, be patient when introducing them to your team.
You should set several basic sales metrics as a core, first. For example, these could be the amount of revenue delivered, the number of new meetings and opportunities, won rate, etc.
State your priorities, and familiarize your team with them. When your email open rates drop by 10%, yeah, it’s not ideal. But don’t give it the same importance as when your won rate drops by 10%.
It’s essential to set up the target revenue we want to achieve this year. Divide it between cross/upselling, renewals, and new sales, and plan it into individual months. The following metrics will serve as the next steps and checkpoints on your way to hitting it.
This metric is the core of every sales discussion: are we on the plan right now? You need to be evaluating it regularly on a daily/weekly basis. The whole organization has to understand that plan is crucial and not just a random number.
To ensure your team knows what to deliver each month, divide the yearly revenue between months specifically. This will make the number more concrete. Your sales representatives should be able to recite their target by heart and always know how they’re doing in delivering it. Keep evaluating the pipeline as the year passes.
Just looking at how much your team delivers doesn’t necessarily give you an overview of their current sales performance. They might have just closed a huge deal that hits 150% of their year-to-date quote. And at the same time, they have nothing else in the pipeline to work on.
Vice versa, they might be on 70% of their quota, but their pipeline is full of opportunities with next month’s close-by date and are on the last stage of the pipeline.
Apart from seeing your current sales team performance, another reason for checking the pipeline values is to see more into the future.
Total Value - in the CRM, there are 10 opportunities, each of 5 000 €, their total is 50 000 €
Expected Value - the real value of the potential deals, depending on the stage of the sales process theyˇ're in. If the sales representative is at the beginning otf the opportunity, let's say in the first 10%, the expected value is 500 € (5000/10)
How to work with the pipeline value? At the end of each month, you should look at the expected value for the next month (unless you have a sales process shorter than a month - in that case, you should do that weekly).
Once the month ends, compare your estimate from the beginning of the month with the reality.
Did you deliver +/- 20% of what you expected? Well done. If you didn't, start evaluating why it happend.
This one is basically about how long it takes you or your team to get from an opportunity to winning the deal.
Obviously once you start measuring it, you can also start thinking about how to make it shorter,
Helps you forecast the future
Validates the trustworthiness of your pipeline. If the opportunities are in the first stage of the pipeline, and their close-by date is set for the next month (while knowing that the length of the sales cycle is 3-4 months), you know there’s something wrong. Either the opportunity should be further in the process, or the close date is unrealistic.
In general, the first thing you want to see is movement in your pipeline. You must have new qualified leads, new opportunities, and your opportunities moving forward. If you’re getting stuck on stages, later, you’ll discover that your pipeline is a mess.
Although there’s no ideal weekly/monthly number, they all have something in common as each company functions differently. It’s unacceptable not to have any incoming deals in the CRM.
It needs to keep moving; sales representatives should open, qualify, and disqualify constantly. Do not settle for having all deals stagnating in the “ongoing discussion” phase. Once again, the flow in your pipeline is crucial.
Healthy pipelines have conversions higher than 50%. It is not about having the highest number of opportunities in your pipeline. The best sales people are the ones who are the most focused and have the highest conversion rates while overachieving their quotas.
If you see that your revenue is low or that the pipeline is insufficient, you should dig into why there are not enough good opportunities.
There might be enough of them, but of a small value - find out whether you’re targeting the right customers.
Also, consider whether the sales representative can talk about complex matters and convert a big opportunity into a deal. Or there’s a low number of opportunities…
If you find out that you’re missing opportunities to hit the target, measure how many meetings your sales representatives do. Are there enough meetings? How many new meetings are logged every month/week in the CRM?
There might be just enough, but they’re not getting turned into opportunities - figure out whether your sales representatives are contacting the right type of customers and whether they’re able to discover how they can help the potential customer in the first place. And if you don’t have enough meetings…
Not having enough meetings gets us back to measuring basics - prospecting activities (calling, emailing, LI outreach,... ).
Do we prospect actively?
How many activities do we do?
How many companies did we contact?
Are we doing the right activities towards the right companies?
Sometimes the core problem is not doing enough prospecting activities while having a great conversion rate to a meeting, which is a shame.
In Saas, where customers continue being your customers by signing up for new licenses every year, it’s vital to watch out for how many drop out.
It’s quite common that Saas businesses lose about 10% of their customers in a subscription period, most commonly a year.
Strive for a healthy customer base - meaning that your current customer portfolio is being constantly upsold and therefore spends more every year. The upsells will cover the loss of 10%.
If you’re losing a more significant chunk of your customers, you are probably targeting customers that can’t have their pains solved by your solution. You need the opposite - current customers buying more and recommending you to others.
Status updates with your sales representatives. Whether you have your sales status meeting weekly or monthly, these are the questions to ask your sales representatives to get a better understanding of how they're doing on their reaching the goals.
Are you on the target right now?
What are you going to deliver next month/week?
Did you deliver what we expected?
How many new meetings, opportunities, and deals do you have?
Is the opportunity - deal conversion higher than 50%?
What is the qualified - opp conversion?
What is the lead - qualified conversion?
Bare in mind that you have to have a sales process defined (set up stages, determined what “qualified” means, what is an “opportunity”, and how to know that a deal is closed “won”?) to be able to manage your department.
The higher your deals are on individual “stages” of the sales process (aka closer to a successful closing), the higher is the expected value of each of them.
If the total monthly value equals the monthly target, you’re on thin ice. Most probably, the sales representative won’t be able to deliver the amount in 100% and in a time you expect - and honestly, that happens rarely.
Be reasonable when evaluating your sales representatives’ results. Focus on what is important. There’s no need to drill someone because they didn’t make enough calls while still delivering their targets.
Weekly updates with an experienced sales representative should revolve around strategy and how much was delivered. If the team didn’t deliver, look at the opportunities and meetings and try to determine why.
Conversation with a junior should be the opposite as leaders shouldn’t really expect any revenue at the beginning.
The weekly update is usually about activities, starting with emails and calls, via meetings, to opportunities. Find out how to lead weekly meetings with your team here.
What you can’t measure, you can’t control. Set up and evaluate several basic metrics to truly understand what is happening in your business and where is the space for improvements.
Once you know the basics of how to measure sales performance, add additional or more profound ones. Be careful, if you introduce too many, you’ll get lost, and no one will ever know which of the metrics are truly worth following.
Don’t forget to consider and predict external events, like Christmas or the summer period of vacations when evaluating, when all the numbers mentioned above can be lower than usual.
Periodic meetings with your salespeople are crucial for any successful business. In this chapter, we’ll recommend the best intervals and agenda for these meetings.READ NOW
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