The number of sales-related metrics and KPIs are limitless. There are countless things that are worth monitoring and measuring, some more valuable than others, depending on your goals, what you sell, and how you sell. There are a few, however, that I find to be critical to increasing sales, whether you are coaching an individual or leading a large team.
The following list of metrics is something I believe should be monitored, measured, and managed in what I would call a Pipeline Meeting (something that, for me, is different than an opportunity review meeting, where people spend much of their time discussing individual opportunities).
- New Opportunities Created: Salespeople do many things, but they roll up into two primary buckets. The first bucket is opportunity creation, the second is opportunity capture. One mistake that sales managers often make is to undervalue opportunity creation and focus exclusively on opportunity capture. By looking at the number of opportunities created, you capture a metric that measures how well you are doing in building your pipeline.
- Deal Size: It’s easy for a salesperson to perceive every prospect as being a good prospect, believing every prospect they pursue brings them that much closer to their goals. The reality suggests something different for most sales organizations, namely that the too small deals take as much time as larger deals while not contributing enough towards your goals. The size of a deal is important, and the average of these deals is a good indicator as to whether your salespeople are pursuing the right clients. This metric allows you to coach your team to focus on the right deals, not only those who appear to be more receptive.
- The Value of the Opportunities: Rarely do I ever see this metric being captured. Because the salesperson captures the value of an individual opportunity when they enter the information to the CRM, the individual value is looked at while the collective value is ignored. The value in the collective value of the opportunities created in a week is that it allows you to verify that you are generating enough new opportunities to meet your goals. If you have a goal of $20,000,000 in revenue, you need to win $384,000 in new business a week. Which brings us to win rates.
- Win Rates: This is a critical metric for determining how well you are doing at building your pipeline. We’re going to weave this metric together with the value of the opportunities created. If you have a 40 percent win rate, yielding $384,000 in new revenue a week means creating $961,000 in new opportunities each week. You need $50,000,000 in new opportunities annually to yield $20,000,000. When you underestimate what needs to happen in a week, you put your goal at risk.
- Segment: For some sales organizations, their teams cover different segments of markets. They may have one team that calls on more transactional business, another that calls on Small and Medium Businesses, and one that focuses exclusively on Enterprise clients. In cases where this is true, the segmentation can tell an important story. Looking at the metrics above as filtered by the segment allows you to ensure that you are growing the segments appropriately, or in some cases changing the focus of the sales force.
- Solution: When you sell products, services, and solutions, it can make sense to look at the pipeline through the filter of a solution. Maybe you are doing well in products but lagging when it comes to services. Or you could be succeeding in services, but not selling the larger, compelling differentiated services that allow you to displace your competitors.
- Deals That Moved Forward: There are two metrics rolled up into this one view: number of deals, and value of deals. In B2B sales, deals progress over time, some moving faster, and some necessarily moving slower. What you want to ensure is that deals are progressing from week to week, that action is being taken to progress your opportunities. The number of deals moving forward is a good metric, and so is the value of those deals. But a word of caution here, as you also must look at the deals that moved backward in stages or that fell out of the pipeline for one reason or another.
- Commitment: This is a personal favorite for me because I believe that is an indicator that the opportunity is real and that the salesperson knows how to move the deal forward. The prompt that can be recorded is the commitment that the prospective client has made that indicates they have agreed to the next step. The 10 commitments I wrote about in The Lost Art of Closing are good guideposts, but you can capture these as customer-verifiable outcomes, or whatever makes sense for you and your organization.
If you want to see how I look at these metrics and how I use data visualization to assess pipeline performance, please join me for this webinar on Coaching Pipeline and Data Visualization with Microsoft’s suite of business analytics tools within PowerBI.
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Filed under: Sales Knowledge