If you’re an SMB sales leader, you have probably experienced a version of this scenario:
You are rushing to get ready to present in your weekly sales meeting about the health of your sales pipeline metrics, but you don’t have a lot of time to prepare. After all, your morning has already been swamped with calls, trainings, and demos. As you open up your CRM to dig into the team’s progress, you realize there is a lot of information, but it’s not clear what numbers are the most relevant for your goals.
Modern sales teams collect a ton of data that can potentially influence how they approach their sales pipeline. That’s great, except for the fact that not all teams have a strategy for parsing and analyzing all that information.
The key to success is not in collecting data, but in separating the signal from the noise.
In this article, we’ll discuss the most important sales pipeline metrics to understand and optimize if you want to gain more leads, keep prospects moving through the sales funnel, and close more deals.
Sales pipeline metrics to track and optimize
If you keep tabs on these metrics, you can know at a glance how your team is performing. Each one provides insights into details about your organization that can be tweaked and optimized so that your sales pipeline is as healthy as possible.
Number of qualified leads
It almost goes without saying, but you can’t close deals without good leads. Track your total inbound and outbound leads to make sure that your sales team has a big enough pool to generate the revenue needed to grow the business.
If you are short on qualified leads for the upcoming quarter, that is a code red. Drop everything and work on a solution. Consider spending more on marketing to bring in more prospects, coaching reps on how to maintain an up-to-date list of contacts, and leveraging prospecting tools to get real-time alerts about role changes amongst your prospects.
Lead scoring tools can also improve lead quality. These are services that can automatically analyze criteria such as location and engagement in order to prune less promising prospects from your list.
MQL to SQL conversion rate
How many of your marketing qualified leads become sales qualified leads? A big drop-off from MQLs to SQLs indicates that the sales and marketing teams are not on the same page.
If that happens, it’s time for sales and marketing to get aligned. This could be as simple as having cross-department meetings featuring both teams. When everyone discusses strategy and goals as one unit, it will be easier to get on the same page.
This is a measure of the number of qualified leads that turn into customers. Track this number over specified periods of time, such as quarter to quarter, so you can measure changes.
If it’s dropping, boost your training, improve your sales processes, and use better sales enablement tools.
If you are closing at a high rate, but your total sales are not where you want them to be, you may have a marketing problem, not a sales problem. It’s time to ratchet up your marketing efforts so you can bring in more leads.
Average deal size
How much revenue does the average deal bring in? Only after you know how big your deals are can you start to plan for the future and strategize ways to increase your deal size.
Use knowledge of your average deal size to determine how you will allocate team resources. If 50% of your account executives are working on closing enterprise accounts, but your average deal size is only $5,000, it would probably be a better use of resources to shift some account executives onto smaller accounts.
Customer acquisition cost
Customer acquisition cost (CAC) is a measure of how much it costs in sales and marketing to get a new customer. You want this number to be as low as possible.
Have a high CAC? Changes could be in order on the expense side of your sales operation. Sometimes a change as small as approving business expenses only when they are related to prospects of a certain deal size can make a big difference.
Customer lifetime value
Lifetime Value (LTV) is a measure of how valuable every customer is over the course of your business relationship. It’s an especially important metric for Ecommerce companies, as they rely heavily on recurring purchases from the same customers.
To boost LTV, analyze low- and high-performing audience segments and tailor your sales and marketing strategies accordingly.
LTV to CAC ratio
The LTV to CAC ratio is a measure of the efficiency with which you acquire customers.
If you have a LTV to CAC of 5:1, it means that for every dollar spent you get five dollars back in customer lifetime value. For SaaS companies that want to stay competitive, the industry standard for LTV to CAC is 3:1.
If you are only at 1:1, you are probably not going to make money. If you have a fantastic ratio of 5:1, it could be time to pour more money on the marketing fire, because you have an efficient business that only needs more leads to keep growing.
Average sales cycle
This is a measure of how long it takes to close a deal.
Once you know your sales cycle length, you can identify deals that are stagnating in your pipeline. These are the deals that have been in your pipeline for longer than your average sales cycle length. Zero in on those deals, try to identify what went wrong, and strategize on how you can get the deal progressing faster.
One way to help a slow sales cycle is to automate the process of following up with the prospect. Maybe they stagnated because a rep forgot to reach out to see if they had any questions. With a CRM like Sell, reps can program follow-up emails to automatically send at a regular cadence.
Sales by customer
This is a measure of your total sales broken down by customer account.
Maybe you are targeting small, medium, and large businesses, but the bigger businesses are driving most of your revenue. That’s a sign you need to move upmarket and target more enterprise accounts. In knowing that, you can start to budget for hiring more enterprise account executives.
Sales by owner
Sales by owner shows how many sales (or which sales) each rep has made.
In looking at your sales by owner, you gain insight into who your top performing reps are. Talk to the top performers to learn what, if anything, they are doing differently. Implement your learnings into your sales training process.
Deal loss reasons
Losing a deal hurts, but that doesn’t mean you should file away lost deals and never look at them again. By understanding why you lost a deal, you can correct for mistakes and close more deals going forward. Treat every lost deal as a learning experience. With Sell, it’s easy to catalog your heartbreaks so that you can never make the same mistake twice.
As good as it is to track these sales pipeline metrics, they don’t mean anything out of context. Use a CRM like Sell in order to customize your pipeline, visualize the results, dig into the analytics, and implement changes to keep your deals progressing through the funnel. With Sell, you can turn a firehose of data into actionable reports that help you analyze, forecast, and win more deals.