How much data is too much data?
Organizations today are swimming (drowning?) in data, and that includes your sales team. Few departments are as data-driven as a good sales team, but there comes a point when this tips into analysis paralysis, and takes away more than it brings.
Sometimes, you don’t need more sales metrics and data to wade through. You need the right ones.
Sales metrics: Intelligent beasts and where to find them
For the uninitiated, let’s take a step back.
What are these metrics anyway?
Sales metrics are the data points that track certain key performance indicators (KPIs) in your sales cycle - about your sales reps and teams, existing and new customers, go-to-market model and sales strategy.
Leaders use these metrics to evaluate the wins and losses, and identify what needs to be fixed. This information is further used by them to:
- Land more qualified leads and improve customer experience
- Measure progress towards goals and correct any deviation, if needed
- Forecast future sales that further influences many other critical decisions
- Tweak sales reps’ behaviour and reward or train the high, medium and low-performing salespeople
But as we said earlier, there are millions of rows of data; every unique match between cell A, B, …, Z delivers a metric that could either fuel a business decision or waste time, efforts, or dashboard-building limits on your sales analytics platform.
So let’s identify the ones that really matter.
9 sales metrics that every sales leader should track:
1. Total Sales Revenue: The one metric to rule them all.
This is the total revenue you've earned from selling your products/services over the last week, month, quarter, or year. Total sales revenue is the north star of your sales team, and the metric to end all metrics. For subscription businesses, this might mean looking at your MRR (monthly recurring revenue) or ARR (annual recurring revenue).
Keep comparing this to benchmarks and goals, and course-correcting accordingly.
Obviously, this metric alone can’t reflect the financial health of the company. For example, total revenue could be growing, but expenses might be growing even more. In that case you are in trouble, even with the graph moving upwards. So keep the larger context in mind while looking at these metrics and drawing any conclusions.
2. Quarterly Revenue Growth: Did we do better than the last quarter?
“A great sales metric you must have to set targets and forecast future sales performance is knowing precisely how many sales you’ve made this quarter and your goal for the next quarter.” - Jonathan Aufray, Growth Hackers.
Quarterly sales or revenue growth is essentially used to measure how this quarter has performed compared to the previous one. It is calculated by deducting the total sales of the previous quarter from the current quarter.
Again, it’s a useful metric to look at the overall trajectory of the company, but leaders should keep in mind that for a comprehensive picture, it’s always better to look at several quarters and note the consistency of the upward or downward trend.
It should also be noted that negative growth over one or two quarters might not necessarily be a reason for alarm: for seasonal businesses, for example, this could be completely normal.
3. Average Deal Size: It’s time to ‘sales-trospect’!
Average deal size is the average dollar amount generated per closed deal. As a sales rep, leader, or manager, if you track this sales metric proactively, you will develop a projection of your future sales revenue. You will be able to estimate how many deals you need to close before reaching your monthly/quarterly/annual quota.
Avg. deal size = total sales revenue / number of deals closed
If a sales rep has closed ten sales deals for a total of $100,000, then the average deal size is $10,000.
Here are some ways in which this metric can be useful:
- Reviewing this metric over the last month, or quarter, or year, you can see whether your deals are getting bigger, smaller, or staying more or less the same.
- This metric tends to depend on the target market as well. If you are in the business of selling to enterprises, it should be quite large. On the other hand, if you’re trying to target the SMB sector, this number would naturally be lower.
- You can also use this metric to see if there are any salespeople who are consistently closing lower-sized deals than their peers, but making up by closing more deals on average. If you can coach them to close larger deals without compromising on their ability to close more deals, there is tremendous opportunity for growth here.
4. Lead-to-close ratio: Turbocharge your win rate
The leads-to-close ratio measures how many deals you closed from the total number of leads you started with at the top of the sales funnel.
Let’s say you started with 200 leads and closed 20 deals. Now, to get the leads-to-close ratio, use this formula:
Leads-to-close ratio = number of sales/ number of leads
So, your leads-to-close ratio is 10 percent. Now, if your quota is to close 10 contracts in the following month, you need to contact at least 100 leads to achieve that conversion rate. Also, if other reps are closing those leads at a 15 per cent rate, it might be time for a pep talk.
As with all metrics, try to compare it with your industry average. Are the numbers telling you that more training is needed, or can you raise a glass in celebration?
71% marketers strive to boost their leads-to-close conversions and consider it one of the most important metrics. And why wouldn’t they! Here are some major ways you can improve your leads-to-sales ratio:
- Understand your prospects’ buying behavior and augment your way down the sales funnel with a persona-based, customized approach.
- Leverage referral selling the smart way by asking your qualified sales leads to refer you to other companies.
- Know your product to sell it right to your customers; be ready for any “I’ll-get-back-to-you-with-that” questions when your leads throw them at you.
5. MQL-to-SQL ratio: A much-needed quality check
MQL to SQL ratio is the percentage of marketing qualified leads (MQL) that get converted to sales qualified leads(SQL).
MQLs: Leads that are interested in your products but not ready to fully commit
SQLs: Leads that are pushed down the sales funnel to soon follow up with
With this sales performance metric, you get to know:
- lead quality and how it translates to your win rate
- the efficiency of your sales teams
- the capability of your marketing team to deliver high-quality leads
6. Number of meetings booked: Keep 'em coming!
This metric often directly correlates with how many deals you close, and how much revenue you add to the top-line. It helps sales leaders understand exactly how much legwork a rep is putting in, and whether a lower performance is due to a lack of training or simply lack of effort. And of course, the more meetings, the merrier!
You can also compare the performance of different reps to see how many meetings / calls it took them on average to close a similar-sized deal.
7. Number of calls made: Pay attention to the details
Even though cold calling is not as effective as it once was, it’s still an essential part of any sales team’s strategy. For outbound teams, this number will give you an insight into how many prospects you have potentially reached.
You can drill down further here to analyze:
- Number of calls made to number of calls answered
- Total completed calls
- Total calls that lead to a prospect hanging up on the rep
Analyzing patterns by tracking sales calls that were successfully completed and comparing them with calls where prospects hang up can provide very useful insights. As a sales manager, you can leverage this sales performance metric to explore coaching opportunities for your team members.
8. Revenue from new vs existing customers: Is old the only gold?
Why track this sales analytics metric? Why is it important to understand what percentage of revenue comes from existing and new customers when money is after all, just money?
- Getting new customers costs anything from five to twenty-five times what retaining existing customers cost. You do the math.
- Recurring revenue means the customer is happy, leading to more word-of-mouth referrals. This is overall a good indicator of the quality of your products and services.
- More opportunities for upselling and cross-selling that allow you to increase total revenue per customer.
Building on existing customer relationships and turning them into advocates for your brand can help you build a future-proof business.
Of course, you don’t want new customers to form an insignificant portion of your revenue either, because that could mean that your sales team is struggling to gain new leads and/or conversions.
9. Customer churn rate: Goodbye vs see you later
Churn rate tells you the percentage of your customers who don’t renew their recurring subscriptions. This sales metric helps you define whether you are losing more customers or gaining them - for every month, quarter, or year.
Customer churn rate = customers lost in a given time period / total customers at beginning of given time period
Let’s say you have 500 customers in January and 20 of them didn’t renew their subscriptions at the end of the month.
Your churn rate in this case would be 20/500 = 0.04, or 4% monthly.
However, you can try to retain those customers by pulse surveys and check-ins, publishing engaging content, providing resources and coaching to make sure they are getting the most of your product, or building recall through social media.
Okay, all of these metrics are great - but how do you find and track them?
Wingman empowers you with ‘the metrics that matter’
You can identify where you lack through these metrics, but then what’s the way forward to drive some action? This is where Wingman can help.
- With our AI-powered solution, you can make accurate sense of critical sales data - by leveraging complete and granular analysis of sales calls.
- We enable you to track relevant data points like talk to listen ratio, competitor mentions, longest monologues, the number of pertinent questions asked, etc.
- We enable you to extract valuable prospect information, such as the likelihood of conversion, persona-based driving factors, moments of hesitation in the sales process, and other critical metrics.
- With this, you get insights into the performance of your sales reps too - which can act as a base for you to analyze their performance and coach them for better customer engagement.
Now that you know what to measure, don’t wait! Go ahead. Analyze. Predict. Convert.