On this episode, we discuss how to approach selecting which sales metrics to track, the importance of using leading vs. lagging indicators, and which key metrics you should focus on to improve the performance of your sales team.
Video Script
That's a great question. One that is near and dear to my daily activities as a manager and one that I've looked at quite a bit because there are a lot of levels to this question.
The first question you need to ask is, why are you tracking these things? What's the outcome? What's the purpose of doing this?
Often, we do it because we must report results up through the organization. We must provide our status and roll these up into sales reports which then go up to the VP level. These reports then become part of the organizational reports.
These are all necessary and very important, but you should also look at these reports as an objective of what you're measuring, and a way to improve sales team performance.
There are many different things that you can and should be tracking to see how your sales team is doing. But avoid looking at lagging indicators. In other words; looking at the end of the month or quarter, seeing that you missed your target, and getting frustrated. That’s like waiting until the end of a game to see that you lost, the score wasn't in your favor, and then getting mad that you didn't do anything during the game to adjust those activities!
So you want to look at those things that you can adjust, and provide some input and coaching as you go along. For example, one of the most important things that you can track at the top of the funnel is the number of quality appointments that each rep is having each week.
Are reps meeting with qualified buyers and having quality conversations? Whether it's in person or web meetings; Are they having an opportunity to discuss the customers' needs, have an initial discovery call to qualify, and identify an opportunity out of that?
The only way to know whether we're able to get to those meetings is if there are some activities that are generating those appointments. So are you looking at call volume and email? Are you looking at the number of outbound attempts that your team is making? These two last questions depend on the type of the sales role. Is it a pure inside versus an outside role? Do they have a mixture of existing accounts and new accounts? And some of that is definitely up to discretion.
But you should be thinking about how many quality appointments each week is each rep responsible for making. Because out of those appointments, your team is going to generate opportunities—and you should have a good idea of your appointment to opportunity ratio.
In other words, how many good qualified appointments result in a new deal going into the pipeline? You should track that. How many opportunities did we generate this week, this month?
The next is proposals. How many of those opportunities moved forward in a way that your team qualified it, had a good solution, and were able to put a proposal in front of the client? Because that's going to tell you what's going to be closing. Maybe it's next month or the month after.
And then from proposals, you want to look at what did you close. You can think about your proposal to close ratio, which is another important one. What's your win rate on those opportunities that are in the pipeline? Those are some meaningful metrics that tell you where you are in the pipeline and how well your team is doing.
What's most important then is your bookings for the month and the quarter, and your percentage of quota or percentage of plan. Those are other indicators that are going to tell you how you're doing, how you're tracking, and if you can make some course correction. But if you don't have enough quality appointments, you can rest assured that you're not going to generate the number of opportunities you need to fill the pipeline up and to move forward to proposal and close. Maybe you need to do some extra activities, or run some campaigns to start generating more appointments and opportunities.
There are two other things that I like to look at the overall level, which is when I look at that pipeline as a frontline sales manager.
When trying to assess how qualified, how good, how valuable is that pipeline, you should look at each stage and see how long is each opportunity been on that stage and how long overall, has that opportunity been in your pipeline (the age of the deal). Then you can compare that to averages, and you should have a good idea of how long a typical opportunity takes to move through each stage so you can see if it's stuck.
When you think about a bloated pipeline, it's because something's been on a stage for much longer than normal and you're not doing the right things. In fact, maybe your rep lost that deal or doesn't know it yet, but you probably need to do some active coaching to move that opportunity along or to disqualify it and focus on some other deals.
There is an interesting statistic that says it takes 50% longer to lose a deal than it takes to win one. So why are you spending that extra time on deals that aren't going to move forward? Let's identify those and get them out of the pipeline.
I've given you some ideas of things that are important to track on a weekly and a monthly basis. You should develop your own scorecard and discuss these metrics both at a high level in your team meeting. Then spend one-on-one time with each individual to be able to give them direct feedback and coaching as you go along.
Remember that what you're looking to do is improve the performance of the sales team, and these are some ideas that will help you do that.
SRG Insights is a Q&A video series where we answer your questions on the topics of sales, sales management, sales coaching, and sales training. Featuring sales experts with over 25 years of sales and sales management experience.
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