Data is a driving force in sales, and sales effectiveness metrics are the data that drive successful sales teams to high-revenue results. Key to understanding what your sales force is achieving, however, is a deeper dive into measurements than simply tracking how much revenue each of your reps brings in every quarter.
The following metrics represent the kind of granular approach that the sales leaders who bring in big numbers tend to take. Incorporating the sales effectiveness measurements below will energize and help you to revise your team-wide strategy, sale by sale.
Quantify how many leads actually lead to conversions.
Start with the basics: divide your team’s number of conversions by the number of leads with which they started in a given cycle. Once you have that percentage, you can start to analyze the qualitative differences between sales wins and deals that didn’t close. And that, according to experts, can come down to identifying leads that don’t represent decision makers in the lifecycle of a deal — the difference between prospects and suspects. “Most salespeople that don’t reach the level of success desired, even if they’re well qualified, spend too much time with suspects who cannot make the buying decision,” said Mike Smith, a sales coaching specialist, in an interview. “Tracking the number of contacts, that lead to the number of presentations, that lead to the number of quotes — and then convert to sales — is the process for success. But only if you are dealing with prospects, not suspects.”
Track response times for every lead.
When it comes to conversions, response time makes a critical difference. According to the Harvard Business Review, in a report on sales performance metrics, a sales rep is seven times more likely to make meaningful contact with key decision makers when they reached out to them within one hour of the initial query. Sales leaders should query their own data, finding instances of quick turnaround times that align with sales wins. Identifying where the team has lagged and not closed the deal is also a crucial insight. These are the kind of measurements that incentivize change when it come to day-to-day performance.
Evaluate every sales win (not all deals are weighted equally).
When it comes to the type of deals we close, pressure to meet the quota can cause reps to reach for the low-hanging fruit. Sales effective metrics that identify your team’s average deal size over time allow you to dig into what each sale actually means to your bottom line. As Cóbhan Phillipson points out, at Docurated, “If your average deal size is smaller than you would like, take some time to assess your company’s lead-generation efforts and why they are producing leads that end up in smaller deals. Liaise with marketing about ways lead generation can be tweaked to boost sales performance.”
Apply sales effectiveness metrics not just to revenue, but cost of revenue.
Efficient sales teams typically spend less over time to acquire customers and close deals. Tracking customer acquisition costs over time means opening a window onto your spend-to-impact performance.
Measure your customer retention rates.
As David Ehrenberg points out at Forbes, “How sticky is your customer base?” Retaining clients rewards your team’s investment of time and resources necessary to acquire them. While a sales team might see a spike in customer churn at the beginning of a new product cycle, this revolving-door effect is supposed to diminish as reps refine their strategies in the weeks and months that follow. “It should descend over time,” Ehrenberg writes. “If it suddenly spikes or plateaus at a high level, you need to figure out why. The numbers will be your guide.”
Finally, as you explore the sales performance data that your team gathers, don’t neglect sources outside your department.
“Sales never exists in isolation,” said Marc Prosser, of Fit Small Business, in an interview. “In most cases, marketing plays a huge role in lead acquisition. To get the full picture, you need to look at the metrics on both sides and consider how they relate to each other.”
In other words, evaluate your company’s marketing spend in relation to your sales spend; measure your sales in relation to marketing wins.
Along the lines we’ve just considered, quantitative measurement becomes a tool not only for better understanding your team’s performance, but also for building bridges and sharing best practices across all the avenues of outreach. When it comes to customer acquisition and closing deals, sales effectiveness metrics are the kind of data you can’t afford to overlook.