On the last episode of The Funnel, we discussed why you should be tracking sales metrics. Today, we discuss which sales metrics you should be tracking. These specific sales metrics will help you to grow revenue, understand your team, and help you achieve overall success. As always if you have any questions please schedule a free 30 minute consultation and I’ll do my best to help in any way I can.
What we’re going to cover:
- Get to the point
- Activity based metrics
- Metrics to consider
Get to the point
What matters most
“How much each one of your reps’ sell is the most important number. In other words, the revenue, and profit that each person brings to the table.”
“There are other areas of focus that help drive those numbers but the objective is for you to figure out what metrics you should track and what metrics drive one another.”
Making the number
“Some people fall into this trap of ‘just hit the number at any cost.’ If you’ve got managers and sales reps complicit in this, they could be driving poor deals into the pipeline because they’re trying to hit some target or bonus, and that’s dangerous. Because that’s where you need to look at not only the people involved but your compensation plan. So, don’t get too focused on the number, the numbers are the outcome.”
The goal is improved performance
“You want folks that are going to improve in every phase of the sales process and skill set to the point, where they are driving higher numbers. When you focus strictly on the number you push people into taking shortcuts and that’s the last thing you want to do.”
The bad outcome.
“I have witnessed the shortcuts, the bad deals, the manager obsession with just getting to the number and pushing the rep to do that. Sometimes even pulling the wool over the eyes of the people above them. Then at some point they go and they start peeling back the layers of the deals and they realize how bad the deals are.
And it happened because there was a focus on the number and not a companywide focus on metrics and KPI’s. If you’re good at managing the metrics you’ll know what’s going on within your company from a management perspective and from an ownership perspective.”
Time actually selling
“How much time do your reps spend out in front of prospects and customers, selling or upselling, getting referrals, etc.? I would say that’s a low number by any standard in most companies.
I break this down into A, B, and C time. A time is when you’re actually signing an order. B is everything that’s leading up to that order in the sales process. And C is everything else. So your admin work, your sales meetings, your one on one meetings, anything you do that’s not in selling in the sales process.
If you think this is a problem start tracking it. Give your sales reps an outline, you can do this easily, and have them track what they actually do every day. Remind them this isn’t about catching them cheating, this is about how much time they actually sell and how we can if you suspect there is a problem, improve that.”
“The average length of time it takes you to close a deal. How long does it take? And if you’re sitting there thinking to yourself ‘that’s hard to say sometimes it takes 6 months, sometimes it takes 30 days.’ Then you have a problem on your hands. If you have come to the conclusion that the average sell cycle should be 30 days and you’ve got a lot of deals hanging out there for an extended period of time, you’re doing something wrong. Because it’s not just how long it takes to close a deal, it’s how long it sits in each stage of the deal.”
“This is what drives me crazy, sales reps will get leads and it will take 5-6 days to follow up, forget about it, it’s dead. 1 hour is the time frame. There’s some statistical stuff out there that says if you contact the lead within the first hour your likelihood of closing is much higher. If you wait an entire day? Forget about it. Quick response time is key.”
Look at your reps
“How quickly are your reps responding and have you put a program in place that says this is the time frame you need to respond within? You can also put an escalation process in place so if at 50 minutes they haven’t taken that lead, somebody else can pick it up. That way there is always a follow-up.”
“What kind of impact is marketing having on your sales efforts? Marketing doesn’t understand sales, sales doesn’t understand marketing, that’s the big argument.”
“First of all, are you using the collateral that marketing is putting in front of you? And if not, why? So, if the reason why is it’s not good and it’s dated then we have a problem. If it’s because you can’t find it then you have another problem. You’re aligning marketing and sales when you have those conversations.”
“How often are they using marketing material? What are they using it for? Is it working, is it not working? Marketing is expensive you have to get it right. There is nobody who is in the wrong here, if they are putting out really good collateral and you’re not using it, figure out why. Stop pointing the finger at one another, start working together.”
Average deal size
“What is your average deal size? Are they spending their time wisely? Should a deal size go up? There are companies I work with that the deal size is in the hundreds of thousands plus, depends on the company. Whereas SAS companies it’s really based on a contract, a monthly revenue amount. That’s the MRR they look at.”
“Maybe you have a rep that’s pushing higher and driving the average revenue up. How can we get more of those deals? Maybe there’s a rep that’s driving down to the lower, smaller, deal size, why are they veering to that? Because it’s easy? You want to put yourself in a position where you’re not spending tons of time on deals you’re never going to win. It’s all about understanding where your business is coming from and adjusting to that.”
“How often are you winning? What’s your win rate? What’s the percentage of deals that you win? Now, there’s a lot of factors that go into that: Are they putting the right opportunities in the pipeline? Are they having problems closing? Or the reps that have low rates who put stuff up against the wall, put a bunch of stuff into the pipeline, and very little of it comes out, what’s going on? So, you can hone in on specific issues that you’re having with the team or the rep based on the win rate.”
Sales to revenue
“How efficient are we as a sales department? Look at all the costs, commissions, salaries, bonuses, expenses, what does it cost to run the sales organization? What does it cost to run the team? That’s going to help you decide what you need next.”
“How many more salespeople do we need to get to this next level? What is it going to cost us to move up? How much investment do we need to make it in the sales department? Are we managing the industry average?”
Activity based metrics
“How many emails are you sending? Emails are important in the warm sales environment, you’re not just buying a list and sending emails to people you don’t know.”
“Now, this is not marketing emails, this is where people get confused, ‘well if somebody downloads something they get these series of emails’ I get all of that. I’m talking about you as a sales rep, what does your outreach look like? What kind of open rate are you getting? Are they opening emails?
I use the HubSpot tool, $50 a month per rep, it’s worth every dollar. It tells me is somebody opening my email? Are they opening the link I sent them? How many times have they opened it? Because that will tell you a lot.”
First meeting & Second meeting
“What’s the first meeting look like? How many first meetings am I getting? Are they parlaying into second meetings? So, I’ve got 10 first meetings, how many second meetings did I get off of that?”
“What did I schedule, demos, proposals? If you’re just throwing out proposals and nothing is happening you have a problem.”
“How many schedules appointments are there, demos, how many proposals am I putting out? Does this make sense against what we’re doing here? Are we closing on this or are you doing what’s called premature jubilation? Are you just putting our proposals to put out proposals? Don’t waste your time.”
Metrics to consider
“How do you measure culture? Do surveys of your sales team and get a feel for exactly what it is that’s going on in your company. Are they satisfied? Do they feel like they have an opportunity to do well with you? Do they like the company? Do they like their bosses? Do they like the customers?
It’s easy to do employee satisfaction and throw a bone. But I don’t mean free ice cream days, no you need to get to the core of it. If you have cultural issues then make some real changes.”
“How many lost deals do you have and what happens in those lost deals? Those are metrics you need to look at.”
Sales process breakdown
“Where are you breaking down in the process? Is it consistent across the board or is it different by rep? If it’s consistent across the board you have a problem with our process. If it’s by rep and it’s different per rep then you have areas of coaching that you can help with.”
Keep Filling The Funnel
We would love to hear from you. Let us know what you think about this episode. Please feel free to reach out to us if there is a specific sales topic you would like me to cover. You can find me on Twitter at @Sheajohnr or email me at email@example.com. And if you get a chance, please feel free to review us on iTunes.