In our white paper, “The Sales and Marketing Daily Checklist: What You Can Should Do Every Day to Close More Deals,” we discussed how important it is to review numbers and strategies every day. Doing this is nearly impossible if you don’t have effective sales metrics in place. We have discussed lead generation sales metrics that you can implement for yourself and your team, this time around, we’re coming closer to actually making a sale.
Here are some sales metrics we recommend for you and your team’s improved performance during the sales pipeline stage or come “closing” time.
CLOSING
- Stage Conversion
It’s important to “diagnose” each stage in your sales pipeline to address the weak spots. These are the usual stages that you have to measure the rates of:
- Cold Lead to QSL (Qualified Sales Lead) – This is normally done at the prospecting stage. Leads are usually qualified by determining the size of the prospect’s company, the point of contact’s decision-making power, their level of interest/engagement, or the project size, scope, and budget. Of course, higher SQLs help speed up the selling process and have more potential for revenue, so qualifying leads is paramount.
- QSL to Presentation or Demonstration – This is the actual contact with client. Depending on your business, this could be a face-to-face meeting, a sales presentation, a Skype chat, etc. At this point, your formal proposal is also given to the prospect/client.
- Presentation or Demonstration to Negotiation – Has the contact translated into active negotiation? It’s always a good thing to hear back from a client after you have presented to them—even if it involves them negotiating your pricing or package.
- Negotiation to Win or Loss – Did you close the deal? This metric is your Quote-to-Close Ratio (see below).
Aside from measuring the rate or percentage at each of these stages, you can also measure the days spent in each stage (or Days in Stage). Does it take a week for stage 2 (converting SQL to a presentation or demo)? Having the Days in Stage metric in place is great so you can manage expectations and plan more strategically.
- Quote-to-Close
How effective is your team at closing a deal? Quote-to-close measures the number of prospects engaged versus the number of deals won/closed within a specified period of time. So, if you contacted 100 prospects last month and 10 of those converted to sales, then your quote-to-close ratio is 1 is to 10 (1:10) or 10% ("Number of deals won" divided by "Number of prospects engaged" then multiplied by 100). This is a great metric for seeing how effective (or ineffective) your sales funnel is (or how you and the team are at closing a sale). It can also give you a clearer picture on how efficient you are at qualifying leads.
There is definitely cause for panic if you see your quote-to-close ratio dipping very month, especially if you’ve established that you have a high percentage of sales qualified leads (SQLs). That means the team is wasting all these good leads—and that you’ll have to look into their closing tactics.
This metric also helps you determine how many leads you need to make to meet your targets or sales quotas. It can also help you predict your revenue (i.e. if you have a consistent 50% quote-to-close rate, you can already forecast your takings).
- Conversion Value
Every prospect / lead has an estimated value attached to them (or what they call sales opportunity metric)—this is something you may have established during the prospecting stage, when you qualify all sales leads. It’s one thing to establish your quote-to-close ratio, it’s another to know the conversion value. Your quote-to-close ratio may be high but are you losing prospects with higher estimated values? So while it’s good to know your quote-to-close rate, you also have to establish the actual monetary value of your conversion rate.
- Days to Close
How many days or weeks did it take to move from prospecting to closing? Just like in Days in Stage, knowing your Days to Close percentage helps you manage expectations and plan more strategically.
- Sales Per Rep / Individual Sales Rep Performance
How is each member of the team performing? This metric measures the success (or failure) of each sales representative on your team. Of course, not all sales reps are at the same level, there are several factors to consider: some are more senior or experienced than others; not everyone is selling the same product or service, or the same volume; and so on. For this you have to establish your baseline.
Once that baseline has been established and you notice a consistent dip in performance throughout the team, you may need to review the strategies in place: is it the sales materials and marketing? The pricing? The actual product?
If one or two sales reps are doing better, then that’s your cue to mentor or coach those that are lagging behind. This is why it’s important to consistently measure this at this stage—so you can address the weak points immediately.
- Sales Reps Hitting Quotas
Measuring the rate or percentage of sales representatives hitting (or not hitting) quotas is a good way to determine if your sales targets are too high/unrealistic or too low/easy. If 50% or less of your team members are meeting their quotas, your targets may be too high. (However, you also need to review these failing reps’ stage conversion rates—they might also just be lousy at their jobs.)
But if 90% to 100% are hitting quotas or exceeding them, you might be too easy on your reps. Time to review your sales targets.
- Monthly Sales
How did you perform this month versus last month? Or this same month last year? Consistently monitoring monthly sales establishes your team’s selling patterns and, more importantly, whether you and your team are improving, plateauing, or worse, declining.
Aside from being able to monitor your progress as a team, the figures you establish from these monthly sales reports can help you with quota-setting and forecasting. For example, if you see that sales performance is great during the summer months, you can take advantage of this period every year.
In the last part of this series, we will be discussing the sales metrics to track after sales.
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