Welcome to Metric Monday, our weekly series detailing the critical metrics you need to track and understand to become a metric driven sales leader.
Flow. Like MC Hammer?
Well, not quite. We are talking about opportunity flow. But don’t be discouraged, your flow can be as smooth as MC Hammer with a little measuring.
TODAY’S METRIC: Opportunity Flow
Opportunity flow is a moving metric that measures how your pipeline is expanding or shrinking by total number of opportunities over a given month.
To calculate the flow of opportunities (turquoise line) in your sales funnel, take the number of new opportunities (blue) for this month and subtract the sum of won (purple) and lost opportunities (red). This is opportunity inflow minus outflow. The equation should look something like this -
Opportunity Flow = New – (Won + Lost)
This metric gives you a snapshot into how the size of your opportunity funnel changes month over month.
What does your opportunity flow tell you about your sales team?
A positive opportunity flow means you had more opportunities open during the month than close. There are two possible explanations for a positive flow, one good and one not so good. First, your team may have worked efficiently to move leads to opportunities. This is a good thing. On the other hand, a positive flow could also mean that your team is working on moving leads to opportunities, but failing to move the opportunities through the pipeline to get a final decision.
On the flip side, a negative flow also requires an overarching perspective to truly understand what is happening. Again, the flow is caused by one of two reasons. Either you lost a lot of deals, which indicates an issue with converting between stages in your sales pipeline, or you won a significant number of deals, which is clearly the end goal. In both situations, your team ended opportunities without replenishing the pipeline with new opportunities.
Looking at your opportunity flow in isolation may create misleading indicators of how your sales team is performing, so always analyze your opportunity flow within the proper context.
How can you improve your opportunity flow?
The exact recipe to improve your flow is a difficult question to answer because there is no correct flow number that will result in reaching your sales quota.
But a great place to start is with a supplemental opportunity funnel report using your Salesforce.com data, like the one on the right. In both situations where you are either failing to move opportunities through the pipeline or you are not converting people between stages and eventually losing the opportunities. Analyzing your sales funnel helps your team identify its weaknesses.
The most valuable metric to look at in this dashboard is the conversion ratios between the stages in your sales funnel. Your lowest percentage is where you are most vulnerable in the sales process. In the opportunity funnel pictured above, this would be between opening an opportunity and completing a demo, where your team only converts 64.6% of all open opportunities.
Opportunity flow is an important metric to understand how your funnel is changing over time. Over the long run, your flow should be close to zero as you balance your new open opportunities with your closed wons and the losses that you clean out of the funnel.
Want an easy way to monitor your opportunity flow and sales pipeline? Check out InsightSquared for Salesforce.
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