Sales Managers are often left dancing on their toes trying to figure out the relevant metrics that determine the success of their sales efforts. Although it is extremely tempting to focus on the bigger picture and directly determine the ROI of campaigns or business processes, one is bound to miss out on the real picture in such a case.
There are a many important metrics that you need to focus on in order to measure your sales efficiency and performance. Let’s take a look at them one by one –
1) Volume of Calls and Emails
This is one of the basic sales metrics since the number of people that your sales team reaches out to determines the reach of your products or services. If people are not aware of your offerings, it is bound to have a direct impact on your revenue. Thus, it is imperative for managers to set standards regarding optimum performance levels. The first step here would be to analyze and decide upon the quantity of calls or emails (or the count of prospects) that every sales executive is expected to make over a period (usually a day or week). This should then be identified to the department as goals that they are expected to achieve.
2) Engagement Percentage
It is one thing to reach out to someone and a completely another to get a reply in return. Hence, this makes the amount of engagement that you are generating a much more crucial variable than you may realize. If optimized the right way, it gives you an opportunity to churn more leads out from the same amount of prospects.
Calculating the engagement percentage is one way to go about it. If executives are making X number of calls (or emails) per day and they have been able to connect with the prospect a Y number of times, the engagement percentage can be calculated through the ratio Y/X*100
Now to exemplify the analysis part, a low percentage can indicate problems with your sales workflow like contacting prospects at wrong hours, connecting with someone who does not have the decision making power, manual processes with no use of tech, and what not. The operations can then be optimized accordingly.
3) Number of Meetings Scheduled
Now that you have a bunch of prospects who have replied and are in the cold lead zone, it is time to push them over the edge and into the warm zone. The metric that comes into the picture here is calculating the number of leads that have been successfully scheduled out of all prospects that your sales department collectively reached out. Directly meeting with your prospects is bound to give you an upper hand than virtually conversing with them.
4) Number of Proposals and Closures
Along with the number of meetings, it is also important to analyze about how many of them were fruitful and led to proposals and closures. Keeping a tab on the number of hot leads is the last step in the analysis of the sales funnel and gives an insight into the quality of your sales processes. Only then would one be able to effectively calculate the true ROI of the company’s sales processes.
5) Lead Response Time
Let’s say you are a sales executive and have a prospect that has been on your list that has made a recent inquiry. You want to close the deal as soon as possible to reach your monthly target. Only one problem, you take too much time to respond to his initial query, and now there is no reply from his end. This is the most common mistake in the market, forgetting how important lead response time is.
Statistics suggest that lead is 60 times less likely to respond to your emails/calls if it is contacted after 24 hours of their inquiry as compared to when contacted within 1 hour. Thus, managers need to analyze and optimize this metric accordingly.
6) Average Deal Size
If you are thinking why does this metric matter anyway if any revenue is revenue and all deals are worth something or the other? Well, this is not the case.
It is imperative to determine what all leads are worth pursuing. After all, they will be utilizing the company’s time and resources from the point of inception to closure. Thus, sales managers can analyze the scenario by focusing on the average deal size and making sure that executives are not wasting time on smaller deals that are easier to close. They should instead be focusing on bigger fishes in the sea. If your average deal size is consistently less than the required benchmark, you need to question the lead generation tactics of your company. They might need tweaking to align them with the organization’s goals better.
7) Average Sales Cycle
There are companies that may take weeks to close prospective deals, while others may close in hours. It all depends on the industry and the type of business that they are operating in. But one metric is certain; your average sales cycle should be in sync with the average of your industry. If not, your turnovers might be in serious trouble. A longer sales cycle tends to put pressure on operations and leads to the wastage of useful organizational resources. If your sales cycle is too long, it should be optimized by reducing the time it takes to complete each stage of the sales process. By arming yourself with such powerful insights, you can quickly remove any bottlenecks show your team the direction in which they should instead be investing their time.
8) Performance Against Targets
The last metric on our list, this is another important indication of the efficiency and performance quality of your sales process. Targets are usually recognized by analyzing past performances and industry standards. The sales team is then required to meet them, generally on a monthly basis. Usual targets involve the following heads –
- Average Deal Size
- Number of Deals Closed
- Revenue targets
- Number of daily calls
- Number of deals lost
In conclusion, these eight metrics are bound to provide a helping hand to every sales manager, assisting them to analyze and determine the existing as well as the required performance levels for their team.
Did we miss out on any other important metric? We would be happy to know about the ones you use. Comment them below!