Everybody’s company is a little bit different. However, the ideas presented here should be universal in terms of sales metrics that each company should track in order to have the most success.
Get to the point
When tracking sales metrics it is important to get to the point right away and determine what is important, and what is not. This means, knowing how much each sales rep sells so that you know how much revenue and profit each rep brings to the table. But remember, numbers are not the only thing that matter.
In the beginning, determine what metrics should be tracked and then make sure you do so. This will help you to see what metrics drive one another. Some companies fall into the trap of focusing only on the numbers but this can cause issues.
For example, if poor deals are being driven into the pipeline just to try and drive numbers, the team will not be as successful. The reps will be spending time on deals that will not amount to anything when they should be concentrating on accounts that will boost revenue and deals that they can close.
It is more important for a company to improve the performance of each rep and that in turn will yield higher numbers. If you’re a company that is only concerned about the bottom line, sales reps may be pushed into taking short cuts. This leads to chasing dead leads which will draw time from the good deals.
Things you should actually be looking at in terms of metrics are things that are going to improve sales:
How much time are you selling?
Start by looking at the time your reps have to spend selling. It is important that reps are able to spend the majority of time in the field so that they are able to sell as opposed to attending meetings or doing training that does not serve a greater purpose. Of course, training is essential especially if there is a new product they need to learn about. However, it is important not to take the reps out of the field when they could be closing deals. Remember that the Reps need more B time in order to get to A time (B time is things leading up to getting the order and A time is signing the deal). C time is everything else that a rep has to do and it should be minimized as much as possible.
If you are not sure where the reps are having to spend most of their time, track their days so that the time they get to spend selling can be increased. Find out how the day is spent and where adjustments can be made so the reps are able to make the most of their time out in the field.
It is important to know what the sales cycle is so that you can track the average length of time it takes to close a deal. If you have an average sales cycle of 30 days then your reps should not have deals that are taking three months to close. If several reps seem to have sales that are extending past the 30 days, you may need to make some adjustments to the process. If you only have one or two reps with this problem, those reps may need some coaching in specific areas.
It is also a good idea to track leads and response time. If it takes a sales rep too long to follow up on a lead, he will lose the sale. The ultimate time frame for following up on a lead is within one hour. This may seem like a stretch but if you wait longer than that, it could be too late. If you can get to the lead right away you are far more likely to qualify and close the deal. If the rep is not able to get to the lead quickly, it is a good idea to get somebody else on it.
Make sure you are also aware of the marketing impact. The sales team should be using the collateral that marketing is putting out and if they are not, find out why. Is it an issue with the sales team or with marketing? Make sure there is communication so that the leads are useful and that they are being followed up on.
When tracking sales metrics, know what the average deal size is and then work to drive the average up. It is vital to know where the business is coming from and then adjust.
This includes measuring the win rate on the deals. How many opportunities in the pipeline are actually being closed? This information will help you to determine whether or not you have the right opportunities in the pipeline or if it is being filled with deals that have no potential. Then, you will be able to see which reps are closing deals and which are not and know if there are procedures that need to be changed or coaching that needs to be done.
Last, determine how efficient the sales department is. Metrics will help you analyze the costs, commissions, and salaries. Then, you will be able to see how much it costs to run the team and whether or not more investment will help the team to improve and move up.
Activity based metrics
Be aware of how many emails the reps are sending out and other methods that they are using to connect with potential clients.
You can also track the open rate of emails. Use a program that will tell you how many times emails are being opened and find out if the customers are clicking on the links that you send them.
Use metrics to determine how many first meetings are had and how many of those lead to a second meeting. See how many scheduled appointments are made and how many of them are demos or proposals. Use metrics to determine if sales reps are closing these opportunities or if they are doing demos that are not a good use of time.
Metrics to consider
Lastly, when tracking sales metrics, know the culture of your sales team. One way to achieve this is to do a survey to get a feel for what is going on in the company. Find out if the sales reps are satisfied with pay, commission, bosses, interaction with customers, etc. It is important that the sales reps are satisfied as people who are happy at work will provide better service.
Find out how many deals are lost and why. If deals are all being lost with one or two reps, the problem may lie therein. However, if the whole team seems to be losing deals, there may be a problem within that needs to be addressed to solve the issue.
Use the information to find out where the sales process breakdown is and find a solution. Is the breakdown consistent across the board or does it differ for every rep?
Analyzing metrics is good for the company. It will drive revenue higher when you are able to find issues and deal with them in an efficient manner rather than just wondering “what went wrong?” Metrics will tell you what is wrong and then it can be addressed.
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 firstname.lastname@example.org. And if you get a chance, please feel free to review us on iTunes.