5 Sales Metrics Every VP Should Measure
On growing revenue efficiently, Dave Elkington, the CEO and Founder of InsideSales.com, said:
“…you must create a data-driven sales culture. Data trumps intuition.”
We concur. Without data, sales teams flounder and VPs lose sight of sales funnel complexities. So, what sales performance metrics should you track? To realise opportunities in your sales pipeline and build a team of sales ninjas, here are five key sales metrics to measure.
1. Average length of sales cycle
This is the average time it takes for a deal to pass through your funnel. This sales performance metric highlights any snags within a sales pipeline. Break it down even further by measuring the duration in stage. That’s the average time it takes a deal to pass through a particular funnel phase.
By measuring each opportunity stage, you will identify inefficiencies in particular phases. You can then get to work on cutting down the length of your sales cycle by clearing bottlenecks, coaching sales reps, and flagging any at risk or slow moving deals.
2. Time spent selling
(Or frankly, time spent not selling.)
How much time do your sales representatives actually spend selling? This sales metric might surprise you. Did you guess only 36 per cent of the day? In Salesforce’s 2016 research report, “Second Annual State of Sales”, sales reps reported spending 64 per cent of their time on tasks which didn’t involve selling. Here’s what sales reps reported doing during the day when they weren’t selling:25% admin tasks
- 17% company meetings, training and downtime
Tracking where your reps are spending time will help pinpoint any sales performance issues or process inefficiencies.
For many sales reps, paperwork is the ultimate time waster. Taking advantage of sales tools with workflow automation, electronic document management, and e-signatures can help reduce dull paperwork. Thanks to digital signatures, Aragon Research saw one sales department reduce their average deal close time from two days, to 71 per cent of deals closing in less than an hour.
3. Lead response time
This is the average time it takes a sales rep to chase a lead. Not taking advantage of a lead quickly can result in a loss. If your customer doesn’t get a fast response, they will continue their search and, chances are, a competitor will snap up the deal.
While the benchmark for lead response time varies by industry, the rule of thumb every manager should adopt is the faster the response, the better. According to Harvard Business Review, sales teams who got back to prospects within an hour of contact were nearly seven times as likely to qualify the lead as those who contacted customers over an hour later.
Taking advantage of lead notification systems, CRMs, and automated responses can help reduce lead response times. Although an automated response is not exactly human, it’s better than no response.
4. Win rate
The sales opportunity win rate is the number of closed won opportunities, divided by total closed opportunities (both won and lost). Calculating the win rate will give you a yardstick of your sales team’s success and help determine if your sales pipeline experiences steady growth. You will need to calculate each sales rep’s win rate separately. Keeping tabs on a reps’ win rates helps you to understand their closing skills. It can be tricky identifying exactly why a sale dropped off — the possibilities are endless. But, by keeping a close eye on the win rate over time, patterns will emerge.
Observing reps as they work their magic can also help pinpoint any issues they’re having, which you can solve through coaching and optimising your sales process.
5. Deal size
The average deal size is the median sales price of closed won deals. The smaller the deal, the easier to close — and reps know this. A sales rep may have an outstanding track record, but if you look a bit closer, he might just be landing a whole bunch of small deals. By calculating average deal size, you understand where reps are placing their efforts — small wins or big opportunities. If your reps spend most of their time on small deals, they might be scared to land a big one for fear of failure. However, reps aren’t always to blame for having a small average deal size. Maybe it’s time to take a look at your lead generation process. Is it finding suitable leads? If not, tweaking marketing campaigns or your pricing strategy can help.
By digging a little deeper into your sales data, you will lead growth and set your sales team up for success. The key is to measure these sales performance metrics overtime, set sales targets and review your improvement strategies along the way.
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What sales performance metrics do you measure? Comment below.
Originally published at blog.accordium.com.