What are sales metrics? Discover why they're the key to understanding what's working and what's not within your sales campaigns and how you can track them.
What are sales metrics? In a world that relies heavily on data for, well, just about everything, they are the backbone of your sales campaigns. They tell you what you're doing right, what you're doing wrong, and how your sales reps and team as a whole are performing. They can even tell you how your entire business is performing.
Without them, every adjustment you make to your sales strategies is a shot in the dark. It's like closing your eyes and throwing a dart at a dart board and hoping it lands on the bullseyes. With them, you can revolutionize everything about your sales strategies and reach the best possible outcomes.
Every member of your sales team should understand what sales metrics are and how they impact your business. It's also important to understand the truth behind some common misconceptions about sales metrics.
Sales metrics are data points that represent your sales performance. They can help you determine if you're meeting your quotas and whether your sales strategies and campaigns require changes. They can also help you make forecasts and evaluate your team.
Sales metrics can help you understand how your sales reps are performing. Some team members may be falling behind, while others are surging ahead, and the numbers usually explain why. But they also tell you how the business is doing overall. When business leaders have access to these numbers, they can use them to make decisions about everything from which products and services to sell to how to compensate their employees. Making data-driven business decisions ensures accuracy, consistency, and efficiency, and it shows your employees and other stakeholders that you are transparent and objective.
Myth #1: You should only focus on quantitative metrics. While it's tempting to focus on the numbers, the best way to get a comprehensive understanding of your sales performance is to combine your quantitative metrics with qualitative metrics like customer satisfaction and brand perception.
Myth #2: The more metrics you have, the better. There is no magic number of sales metrics your team should consider, but more is not always better. Focus on the KPIs that align with your team's specific goals.
Myth #3: Sales metrics are only relevant to your sales team. As mentioned above, sales metrics can indicate how well your entire organization is doing. Business leaders use them to make big decisions. A production team might use them to determine how a product's new features impact sales. A marketing team might use them to measure the effectiveness of their own campaigns.
Myth #4: Positive metrics mean you shouldn't make adjustments to your strategies. It's easy for a sales team to find a false sense of security in positive metrics. But it doesn't mean you should just kick back and keep doing what you're doing. At any given time, external factors, like changes in the market or new products offered by competitors, can have an impact on your sales, so it's important to remain agile. It's also important to continue exploring and testing new strategies so you're prepared when you do hit an internal snag. And of course, no matter how well you're doing, you can always strive to do better and focus on growth.
Sales metrics can measure your sales team's activities. They can provide insight into the health of your pipeline. They can also help you measure your progress towards your sales goals and the effectiveness of your campaigns through conversion and outcome metrics.
Activity metrics are fairly basic indicators of what your sales team or individual sales reps are doing each day. How many calls are they making? How many emails are they sending? How many meetings are they scheduling? How many LinkedIn messages are they writing? How many demos did they conduct?
These metrics can also help you gain insight in other areas. For example, if your sales reps make 500 calls every week, and they book 20 meetings, you have a general idea of how many calls your team needs to make to book 50 or 100 meetings. If your sales reps are sending out 200 emails every week, and they're not booking any meetings at all, there could be a problem with your email messaging.
Pipeline metrics help you understand the health of your pipeline. For example, a number of opportunities metric can help you determine how many prospects in your pipeline are likely to convert to customers. If this number is low, you may be going after the wrong leads.
Your pipeline value metric tells you how much revenue you would generate if all of those opportunities turned into confirmed sales. It can help with forecasting and give you a better understanding as to whether you're going to meet your targets, as well as identifying which opportunities might need more attention and resources.
Another key pipeline metric is sales velocity, or the speed at which your team makes sales. It involves comparing the number of deals in your pipeline, the average size of each deal, win rates, and sales cycle length. It can help with forecasting, as well as understanding where in the sales cycle your team is running into problems. It can also give you a better understanding of your overall operations.
Conversion metrics are often a favorite among sales managers. They tell you how many leads you're turning into customers and help you evaluate the effectiveness of your campaigns. A lead-to-opportunity conversion rate tells you what percentage of your leads become opportunities. It measures the number of leads who turn into opportunities against your number of leads generated during a specific period of time. This can help you understand if you are targeting high-quality leads.
An opportunity-to-win conversion rate is similar, but it compares the number of opportunities in your pipeline to the number of deals you close with in a certain period of time. This can help you evaluate the effectiveness of your campaign and your sales team's performance.
Outcome metrics give you an idea as to whether you met your goals or fell short. They can help you make forecasts, evaluate your campaigns, and better understand how your sales team performed.
For example total revenue — the number of sales you make multiplied by the average sales price —can help verify the effectiveness of your campaign, your sales team, or even your products and services. Average deal size can help you set future revenue goals. Customer lifetime value tells you how much profit you'll earn from a single customer during their relationship with your company. It can help you understand how much effort to put into your retention strategies and gauge qualitative metrics like customer satisfaction.
Once upon a time, sales teams had to rely on spreadsheets and manual entry to measure their metrics. Today, you have advanced and powerful tools that can keep up with all of them for you.
CRMs and other sales tracking software are plentiful and can help you measure sales metrics, but we highly recommend investing in a reputable sales engagement platform like Salesloft or Outreach. Every time you interact with a customer or vice versa, the platform tracks it automatically. It also integrates with other applications, like your CRM, so that you can access all of your information in one centralized dashboard. These platforms generate reports in real time, so you always have access to your data when you need it. And you can count on it being accurate 100% of the time.
Whatever tool you use, it's important to understand how to set up your dashboard so that you're keeping up with metrics that are important to your unique goals. Remember, it's better to track a few relevant metrics than to try to track every single one. Once you've determined which metrics you want to track, you'll need to set up targets. Relying on historical data can help you make these decisions. Some platforms come with templates that can also inspire you if you're not sure where to start, and you can always customize them over time. Just make sure all of your sales reps have access to the same dashboard so they can collaborate and work together to reach the same goals.
1. Make sure your metrics align with your goals. Don't waste time measuring something that doesn't give you insight into what your team is doing or how your campaigns are performing.
2. Use accurate sources. You can integrate your CRM with your sales engagement platform to ensure your metrics are complete and accurate.
3. Don't make assumptions. Check your reports regularly and only make data-driven decisions.
4. Keep your team on board. Training and communication are everything when it comes to ensuring your entire team is working together toward the same goals. Communicate your goals regularly. When implementing new technology, every sales rep should receive training. Ensure they understand the importance of metrics and how they measure their performance.
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