Choosing Metrics That Matter

Colleen Francis, Owner, Engage Selling Solutions

You won’t get outstanding results in sales without data. But data is meaningless unless you understand what you’re measuring and how it supports the goals of your organization. The top sales leaders of today have mastered the skill of choosing and managing the right metrics. There are three kinds of sales metrics that need to matter to you: leading indicators, lagging indicators, and unique indicators. Here’s how each of these works:

Leading indicators

This describes everything that leads up to you making the sale. It’s the top of your sales pipeline and defines how capable you are at opening an opportunity — not closing a sale.

Your organization should have several metrics in this category, and the most important one is called overall gap to growth. This is simply the distance between where you are now and where you need to be to hit your next sales goal.

Leading indicators include all the activities and sales stages that happen before a proposal is sent out. With that in mind, some other metrics in this area include:

• The number of qualified opportunities created in each period compared to what’s required to hit your target
• The length of time it takes to convert a lead to an opportunity, grouped by marketing source (for example, referral, cold call, inbound)
• The number of attempts (calls, meetings, emails) it takes to convert a lead into an opportunity, grouped by marketing source (for example, referral, cold call, or inbound)

Lagging indicators

Lagging indicators are metrics focused on getting an opportunity signed. It’s also where sales managers often mess up their analysis. They forget that the actual sale is not a leading but a lagging indicator. Making a sale only tells you what you did right in the past to get you to where you’re at now.

To measure how effective you are at closing, you must look at metrics such as:

• Your closing rate (conversations to sale).
• The average number of days an opportunity takes to close.
• Churn rate. Measure how many customers leave you every year.
• Cross-sell rate. Look at how much more each customer buys from you every year.

Unique indicators

Last but not least, unique indicators describes management metrics that are not opportunity-related but are specific to your operation. For example, as a sales manager, you look at what percentage of your team hits their target every quarter. These unique indicators are designed to diagnose challenges that are specific to your business.

Think of sales data and sales metrics the same way that an athlete looks at nutrition. Be selective with what you’re consuming. Be meticulous in measuring meaningful outputs. What you’ll gain is valuable insight for your sales organization to help you learn, plan, and execute so that you grow better, faster, and stronger.

To read the complete article, “Choosing Metrics That Matter,” visit Quotable.com.