Kindergarten was great – who doesn’t love naps and crayons? – but eventually, we all had to move on to more challenging endeavors. The things we learned in kindergarten were not applicable to solve the issues that the real, adult world presented. We had to learn more lessons in middle school, high school, college, and graduate school.
So if you’re not in kindergarten anymore, why are you still using kindergarten sales metrics?
We’re kidding, of course. The sales metrics that you use today are (probably) more advanced than the 2+2 arithmetic we learned in kindergarten, but the point remains: as challenges become more difficult, we have to advance our learning and adopt new sales metrics at a graduate or even doctorate level.
It’s time to graduate from kindergarten sales metrics, and onto real metrics that can actually move the needle on your bottom line!
Sales Activity Management
Kindergarten sales metric: Activities –
The number of activities (e.g. dials, emails) that your reps perform in a given time period. This tells you if your reps are performing enough sales activities to help you hit your number. Sales is largely a function of the number of activities your reps perform, so you want to see which of your reps are most active. Reps with low levels of activity need sales coaching to help with time management and to boost their activity counts.
Graduate-level sales metric: Activity efficiency –
But what the raw number of activities doesn’t tell you is how effective those activities actually were. All the calls made and emails sent in the world won’t mean a thing if none of those are converting into meetings, demos and deals.
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That’s why a truly effective Graduate-level sales metric to use is activity efficiency, which measures your reps’ ratio of Calls : Connects, Connects: Meetings, and Meetings Scheduled : Opportunities Sourced. This opens up real avenues for sales coaching that can actually move the needle. If your reps are making lots of calls but getting few connects, they might be leaving ineffective voicemails or having trouble reaching real decision makers. With this metric, you can actually identify who your strongest reps are, not just your busiest or most active ones.
Sales Pipeline Management
Kindergarten sales metric: Historical pipeline growth –
You can’t close deals if you don’t have enough pipeline. That’s why every sales manager has to keep an eye on how their historical sales pipeline is trending over time. As your sales – and your team – grow, you’ll need an ever-expanding pipeline; up-and-to-the-right growth is very much a desired outcome when looking at your historical pipeline.
Graduate-level sales metric: Pipeline Inflow/Outflow –
By looking at your historical sales pipeline trend, you know if your pipeline is growing or shrinking over team…but you don’t know why this is happening. That’s where the Pipeline Inflow / Outflow sales metric comes in. This tracks the number of newly created opportunities in your pipeline, compared to the number of deals that have left (both as Won and Lost deals). In other words, what’s the net flow of opportunities in your pipeline?
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If you’re losing a lot of opportunities due to losses, that’s a very costly situation, and you might need to plug a leaky section of your funnel. If you are closing opportunities more quickly than you are generating them, you need to keep an eye on the future and start pulling lead generation levers. Effective sales management requires a forward-looking mentality, and the Pipeline Inflow / Outflow is a great leading indicator to help when planning for the future.
Sales Cycle Management
Kindergarten sales metric: Sales Cycle over Time –
As your team becomes more comfortable with the sales process and more adept at selling, and as your marketing team refines its process for finding the best Marketing Qualified Leads (MQLs), it stands to reason that your sales cycle – the amount of time it takes you to close an opportunity – should decrease. A shorter sales cycle is a good thing – it means your reps are spending less time on one specific opportunity, and can move on to working and closing others.
Graduate-level sales metric: Sales Cycle by Won / Lost –
The problem with sales cycle over time is that it is largely a lagging indicator, not really providing actionable insights to improve your sales process. On the other hand, the Sales Cycle by Won / Lost metric is a terrific leading indicator, and an extremely useful tool when it comes to sales forecasting.
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What this metric does is identify the sales cycle by stage, and how this differs between winning deals and losing deals. If you know that the sales cycle for opportunities that ultimately Close-Lost spend a significantly longer time in the Present Solution Stage, you can extrapolate that information to your current opportunities. Is one specific opportunity spending more than double the amount of time in that stage that winning opportunities typically spend? Chances are, that opp is not going to end up as a win.
It’s not easy, but leaving kindergarten behind and moving on to more challenging and demanding sales metrics can take your organization from nursery school to PhD-level intelligence and success.
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