8 Sales Analytics Metrics You Need To Focus On
A common theme shared by all businesses is the desire to increase sales. Whether your business is suffering from a decrease in sales or you’re looking to expand, an analysis of your sales analytics metrics can open this door for you.
You’ll need to examine which areas have been successful and where you have bottlenecks clogging your pipeline. More importantly, you need to know which are the sales analytics metrics that matter. To help you analyze and improve the success of your sales pipeline, take a look at these key metrics.
1. Tracking Open Opportunities
If you are looking to gauge the success of your pipeline, finding the Total Number of Open Opportunities is a great place to start. By determining how many open opportunities that your sales team was working on at any given time, you can get a general idea as to whether you are generating enough new opportunities into your sales pipeline.
If you find that your opportunity creation is low – leaving sales reps with too few opportunities to run and therefore fewer opportunities to generate revenue – then you will need to examine why that is. One item to check, in particular, is your MQL-to-Opportunity percentage. If you see that the percentage of MQLs that become opportunities is decreasing, then it is time to reassess your criteria for a lead to be considered an MQL.
2. Closed-Won to Closed-Lost Opportunities
Assessing the ratio of Closed-Won to Closed-Lost Opportunities for both the sales team and each individual rep can give you an idea of whether your sales team and sales reps worked enough of the pipeline to meet your goals. Keep a historical record of this and compare it to the number of open opportunities. You can use this sales analytics metric to assess whether your reps are opening and closing enough deals and whether your pipeline is steadily growing over time.
3. Tracking Sales Rep Activities
If you need to dive a little deeper in your assessment of opportunity creation, then you’ll need to evaluate the activities of your individual sales reps. First things first, take a look at the number of Open Opportunities Per Rep. This can tell you if any of your reps have too much or too little to work on. Reps with too little open opportunities won’t close enough business and thus produce less revenue. Conversely, reps with too many open opportunities won’t have enough time to effectively qualify and close them all without risking the prospect feeling neglected.
If you are still trying to determine why opportunity creation is low, or perhaps why there is a significant difference in the closed-won to closed-lost ration amongst reps, find the number of New Account Calls Per Rep. This number will indicate whether your reps are prospecting for new business. When considering this number, however, don’t forget to take into consideration the size of the account. Typically, smaller accounts won’t require as much time, nor as many phone calls, as compared to larger accounts.
Similarly, you should assess the percentage of Leads Presented-to-Leads Worked. This sales analytics metric is an indicator as to the initial quality of the leads that are being presented to your sales team. If sales reps aren’t contacting these leads, then something could be wrong with the quality of the lead or even the handoff from marketing to sales.
Aside from prospecting activities, you can also take a look at channel referrals, trial downloads, and anything else that may be creating leads for your sales reps.
4. Capacity Per Sales Person
When considering sales rep activities on an individual basis, it’s important to keep in mind that the Capacity Per Sales Person may be slightly different for each rep. The capacity per sales person is the number of open opportunities a particular sales rep can handle at a given time. This number will vary depending on the size of the deal, the rep’s experience, and the time he or she needs to effectively service an opportunity. Because this number will vary from rep to rep you will need to consider how much time each rep typically invests in activities such as prospecting, qualifying, presenting a solution, nurturing, negotiating, closing, etc.
5. Win Rate
Win rate is another key sales analytics metric. Knowing the number of open and closed opportunities can also help you calculate the Win Rate of both your sales team and individual sales reps. The win rate is simply the number of closed-won opportunities divided by the total number of closed opportunities for a given sales period. This calculation is the success rate of your sales team. As such, this number should be steadily growing over time as you begin to grow your pipeline.
With this metric you can identify which, if any reps, are struggling to close deals. Find which reps have a consistently low win rate and determine that why is. From there you can help coach them in any areas that may need improvement.
6. Number of Sales to New vs. Existing Customers
From your closed opportunities, you should recalculate your closed opportunities based on whether the opportunity was for a new or existing customer. A good sign of a healthy business is an ongoing supply of new customers as well as customers who have returned to buy more of your company’s products or services. Use this sales analytics metric to see where salespeople may be spending their time – developing existing accounts or prospecting for new customers.
7. Average Deal Size (or Sales Price)
At the end of the day, the amount of revenue generated is a greater concern to you than the number of customers you closed-won. Your Average Deal Size is the average revenue, or sales price, per customer account that was closed-won.
One customer account may have generated $15,000 while another was only worth $8,000. As such, it is important to pinpoint early on which opportunities are worth your sales reps’ time. Calculate the average sales price of your closed-won deals and flag any opportunities that fall above or below the normal deal size.
The greater the deal size does not necessarily mean it is worth the rep’s time. Normally, greater than average deals have smaller win rates and take longer to close. It is best to flag any opportunities you find with significantly larger deal sizes. Speak to the rep managing the account about the likelihood of close-winning the account and whether it belongs in the sales forecast.
Tracking your average deal size over time can also help you determine when you begin to consistently win larger deals and by what margin you move up the market. A significant increase in deal size could indicate a change in your pipeline. On the other hand, if the trend shows an increase in smaller won deals, it could mean that your reps have learned that smaller deals are easier close and thus have chosen to pursue the smaller fish. Or perhaps you reps are giving away too many discounts and it’s affecting the pipeline.
Nevertheless, a change in your pipeline means it’s time for you to evaluate your historical data and pipeline generation efforts to determine why the change has occurred, whether you should react, and how to respond to this change.
8. Sales Cycle
Calculating the average length of time it takes for your sales team, as well as your individual reps, to move an opportunity through the pipeline and close-win the deal can help you identify the likelihood that a prospect will become a buyer. The Sales Cycle is the sum of all the durations of time spent for each opportunity stage in your pipeline.
You’ll need to use the sales cycles from previously won deals as a baseline to compare the sales cycles of your current opportunities. To do this, calculate the average time it takes a deal to pass through each stage of the pipeline. There is a high correlation between the amount of time an opportunity spends in a stage and the likelihood of it becoming a won deal. Conversely, the longer an opportunity stays in the pipeline over the average won cycle, the less likely it is to be won.
Use this sales analytics metric to flag deals that are less likely to close based on the amount of time they have remained in a particular stage of the pipeline. Identify which stage you are seeing bottlenecks for both the sales team and individual reps. Aim to minimize your sales cycle at these respective stages. Knowing which particular stage(s) that your bottleneck lies can help you identify which skills you may need to provide some training and seek to improve. All in all, your sales cycle metrics are a quick and efficient way to quickly eliminate sales bottlenecks and direct your team on how and where to invest their time.
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