There are so many different sales metrics out there. In fact, there are are probably too many. And working in sales you already have so many other things on your mind. You have to know your product and target market inside and out. You have to qualify and generate leads. You’re setting up sales meetings. And you’re dodging the many obstacles that can come up along the way. All of that’s on a good day.
So to succeed, and also hone your own skills, you need ways to track your sales productivity. Don’t try to understand every sales metric out there. Focus instead on your sales organization’s goals and any metrics that will help you meet those goals. You’ll be able to see quickly where you’re getting results and where there are opportunities to improve. Your performance against key sales productivity metrics often determines your commission, which according to the Bridge Group could represent around 36 percent of your total take home-pay.
Here’s a look at some of the most useful sales productivity metrics that you can use to help you understand your performance so that you not only become better at sales, but also make more money.
Time Spent Selling
Time is money. It may be a cliche, but in sales you know it’s true. The more time you can spend selling, the more sales you’re likely to close. That’s obvious, of course. But each week, you’re probably spending time on other activities, like attending meetings and updating your CRM. The amount of time you spend selling (which is your total work hours minus everything that’s not working toward closing a sale) is an important measure of your success.
You’ll never really be able to dedicate all of your time to sales. But the more time you do, the more likely you are to succeed. The key is first to figure out how much time you’re spending not selling. What pulls you away? How many meetings do you have each week? Do you really need to attend all of them, or can you consolidate some of them? Or, are there better ways to use your travel time between sales calls? Look for ways to become more efficient so you can reduce that time by as much as possible. There are only so many hours in the workday, and you need as many of them as possible devoted to sales.
Number of Open Opportunities
Your number of open sales opportunities is an important metric because it’s an indication of what your personal pipeline looks like. If you have too many open opportunities you may be spread too thin. If you’re unable to qualify leads, then you won’t be able to close them either. Conversely, if you don’t have enough, you won’t be able to meet your sales productivity goals. Finding the right balance is critical to maximizing your chances of hitting your target.
Of course, there are different factors that could determine your open opportunities:
- Your company culture
- The industry
- The size of your deals
- Your experience level
If you’re not sure if you’re working to capacity, InsightSquared offers a pipeline coverage calculator to help you estimate yours. If you find don’t have enough open opportunities, then you probably need to ramp up your lead generation efforts. That could include spending more time searching leads or creating new content to help raise awareness and generate interest. You might also look for opportunities to upsell and cross-sell to existing customers. On the other hand, if you have more open opportunities than you can handle, talk to your manager. This metric can help you make a compelling case as to how you could win more deals if you had fewer opportunities to manage.
Number of Closed Opportunities
Closed opportunities measure both sales you won and those you didn’t. It’s an important metric as it indicates just how many opportunities you brought through the sales cycle in a given period of time. As a result, it can give you insights into your ability to work your pipeline.
Say you have 43 open opportunities in a given month, but only manage to close 10 of them. You have to ask yourself a few questions. Are you letting opportunities slip through the cracks. Could you have found more effective ways to close these deals? Are there other factors getting in the way?
If you find you’re not closing your opportunities efficiently, take a close look at your sales process. Where are things breaking down? Are you losing track of opportunities? Could you be more persistent? As HubSpot notes, the averages salesperson only makes two attempts to reach a prospect. But in fact, 80 percent of sales require five follow-ups.
Win Rate Is The Key Metric
While it matters how many sales opportunities you’re closing, your win rate is probably the best overall metric for your sales productivity. To calculate your win rate, divide the total number of closed opportunities that you’ve won by the total number of opportunities that closed. For example, if 17 opportunities closed this month and you won nine of them, you would have a win rate of around 53 percent (9/17 = 0.529). If you have opportunities in your pipeline that haven’t yet made it to the proposal stage, you can leave them out for now. The win rate should only take into account your closed opportunities.
According to RAIN Group, the average win rate is 47 percent. There are main ways to increase your win rate if you’re not quite reaching that benchmark. One of the best is to get more strategic. For example, take a look at these metrics:
- Sales by Product or Service: If you work for a company that sells multiple products or services, is there one that tends to sell particularly well or that you’ve had particular success selling in the past? If so, focus your efforts there to boost your chances of closing more deals in the future.
- Sales by Lead Source: If you know which sources (LinkedIn, marketing, referrals, etc.) are leading to the greatest number of sales, pay special attention to sources that come from those leads to increase your chances of success.
- Sales Based on Prior Activity: If your customers typically take specific actions prior to making a purchase (like signing up for your newsletter or downloading content), look for prospects who have taken the same activities and target them more aggressively.
Average Sales Cycle
Your sales cycle is how long it takes to win a deal from the moment you first make contact with a prospect. As you can imagine, speed matters. Your sales cycle is usually measured in days, but can vary widely depending on a few factors:
- Your industry
- The complexity of the sale
- B2B vs. B2C
Suppose you first heard about Karen at Acme Corporation on June 1, but didn’t book a sale with her until September 22. That’s roughly 16 weeks or 114 days. Say you also had three other sales cycles that took 100, 122, and 94 days. Your average sales cycle (all added and divided by four) is 107.5 days.
There are a number of ways to shorten your sales cycle. Your product offers a solution to some problem your prospect is facing. Find ways to effectively and efficiently present that. You need to also vigorously disqualify any leads that aren’t promising. Finally, make sure that you deal with any objections early on to make sure your prospects are on board.
Average Deal Size
The size of the deals you win matters. After all, if you’re able to win one really big deal, that might be worth a lot more to your business than a whole bunch of little ones. Plus, bigger deals deserve more of your attention. If you know that your average deal size is $10,000, and you see an opportunity in your pipeline that’s worth $60,000, you’ll probably want to go the extra mile to try to close it. Big deals are not only more valuable, they’re also typically harder to close and take longer.
Calculate your average deal size by taking your total deal revenue and dividing it by the number of closed deals. Whether this number goes up or down isn’t necessarily a good or bad thing. But, it is important because it can give you insights into what’s going on in your pipeline. If your deals are fairly consistent in size, that might be your sweet spot. Focus on those deals. But if you see that your average deal size is increasing over time, investigate why. Are you finding a better way to upsell or cross-sell? Are there are other factors that have come into play. Understanding these things will make you a more effective seller.
Your total bookings is the value of all the deals you’ve won, signed, or received a commitment for during a given period. For example, if you closed 10 deals that were each worth $10,000, your total bookings would be $100,000. The higher this number is, the better. If you’re able to increase your total bookings over time, not only will your company be thrilled, but you’ll also see the increase in your take-home pay. Increasing your total bookings depends on increasing your win rate or the size of your deals. Look for opportunities to upsell and cross-sell to maximize the value of every deal.
Lead Response Time
Your lead response time is a measure of how quickly you follow up after they take an action, like signing up for an email list or downloading a free trial. Leads can go cold fast, so it’s really important to follow up quickly. If you have a clear system in place notifying you when queries come through, you’re more likely to offer a quick response. Of course, you need backstop measures for when you’re out of the office or not able to respond quickly. For example, is there an automated response you can send with a promise to follow up within 24 hours. Regardless, your lead response time is a critical metric to keep an eye on. If the number gets too high it means you’re overextended or that you’re not taking your leads seriously enough. Either way, that’s not a path for success, so be as mindful as you can.
Measure Your Performance, Get Results
There’s no doubt about it. Sales is a tough job. It takes hard work to be successful. But when you are, you’ll see the returns in your paycheck. To improve, track your performance metrics. You’ll find insights into your strengths and weaknesses. Learn from this, hone your skills, and you’ll see improvement over time. When you sell more faster, you’ll feel more accomplished and more valued within your sales organization.