A new year signifies the opportunity to reflect and a chance for new beginnings. Just as you make your resolutions and examine your personal journey over the past 12 months, so should you contemplate the year’s sales performance. What types of prospects generated the most value for your business? Where did lost deals get hung up in the pipeline? Which activities resulted in the highest conversion rates?
Rather than simply thinking back on whether you hit your monthly or quarterly quotas, asking more detailed questions like these not only helps you get to the heart of last year’s performance, but it also gives you actionable insight to step it up in the new year. Let’s dig into 3 important metrics that will help you to effectively maximize your sales growth in 2017 and beyond.
Sales reps field leads from a variety of sources, like advertising, email, content and more. More often than not, they focus on those which they know are easiest to close, ignoring an average of 50% of marketing leads and likely leaving gobs of money on the table. Lead Yield is just one example of a Yield Measure, or measures that can help you understand how much value you get in return for your investments at each stage of the sales pipeline.
Understanding your lead yield enables you to more accurately score and prioritize leads from your various marketing channels and sources based on those that ultimately generate the most value for your business. It also gives you deeper insight into the data points and qualities you should be looking for when it comes to prospecting – i.e. contact title, company size, industry, other technologies in use, etc.
Lead Yield can be calculated using the following simple formula:
If you want to know how much value you get in return for a lead from one source (A) versus another source (B), you can compare their respective lead yields as shown above. In this particular case, Source B has a higher lead yield than Source A. By focusing on generating more leads from Source B (marketing) and converting these leads (sales), revenue will increase.
Your sales reps are responsible for calling prospects, sending cold emails, booking meetings and more. But instead of simply turning the team lose to do their outreach, leading businesses are measuring rep activities and outcomes to:
A) Determine the right mix and number of activities required to hit quota
B) Identify opportunities for sales coaching and peer training
Rather than requiring managers to manually crunch these numbers, next-generation sales platforms do the math and display the results in highly visual sales reports like the one below, which breaks down the number of activities completed by sales team and rep.
Outcome reports take this a step further by helping teams measure and optimize the efficacy of their communication.
Measuring the efficacy of your team’s communication patterns in 2016 can help you refine your outreach mix, define activity metrics and provide reps with the call scripts and coaching they need to be successful in 2017.
Think about your sales funnel, which is essentially a visual representation of your sales cycle. Now imagine a handful of leads being dropped into the top or wide end of the funnel, and closed deals (both wins AND losses) falling out the narrow end or bottom of the funnel. If someone were to ask you why some deals emerged as wins versus losses, how would you explain it?
The answer is, you’d have to guess, because you have no idea what’s actually going on inside the funnel. This is essentially what happens when businesses focus only on revenue metrics. Simply measuring revenue doesn’t offer much insight into sales performance, and certainly doesn’t tell you how to get better. Instead, you have to measure performance across the key conversion points within your sales funnel that lead to revenue.
While these conversion points differ for every company based on their sales process and pipeline stages, the baseline sales formula companies can use is as follows:
Notice a major drop off from Lead to Opportunity? What about a low Worked Opportunity to Close rate? Following this formula enables you to spot and remedy process bottlenecks, training gaps and much more.
Reflecting on the past year using these 3 metrics and taking the time to learn from your discoveries is sure to make 2017 your best sales year yet. For more insight into how you can measure and maximize your sales growth, check out our free eBook: Understanding the New Metrics of Sales. And be sure to subscribe to the Base Blog to stay up to date on the latest sales tips, trends and technologies!