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Are you using these classic sales metrics as insightfully as possible? Because if you are, they explain everything. 

Data overwhelm can be paralyzing. Instead of tracking everything possible, we suggest zeroing in on these five metrics for the best results.

1) Number of Open Opportunities in Total and Per Rep

Measure the total number of open opportunities each rep is working at any given time, and set a benchmark of how many new opportunities they should be getting per month -- not too few, not too many.

What to do with it: Your reps should get a sufficient inflow of new opportunities to have a steady number to work in their pipeline. The right number of leads gives them enough opportunities to hit their quota without overwhelming them.

Look to your own history. How many leads do your best reps usually have on their plates? Does it vary much by segment, type of customer, or average deal size? When was it too many? A common number of leads for a SaaS rep doing low-five-figure deals is 25 to 30 opportunities. Your benchmark may or may not be different.

This metric also gives you a way to check if your team is overwhelmed and determine if you need to hire more salespeople.

2) Number of Closed Opportunities in Total and Per Rep

Add up the total opportunities closed, including both closed-won and closed-lost opportunities. 

What to do with it: Your reps should be closing a certain number of sales deals each month (whether won or lost). If they’re not closing enough total opportunities, drill down. Are they light on deals? Not closing effectively? Is their pipeline full of “hope” that never goes anywhere? Are they not updating the sales tracking system?

It’s common for scaling sales teams to see win rates drop. Is it because of the new people? Has lead quality or management quality changed? Or is the downturn due to packaging, pricing, or website changes? You need to drill down and discover exactly where opportunities are falling off in order to get to the root cause.

3) Deal Size

Measure the average dollar value of your closed-won deals.

What to do with it: This metric will make it easy for you to spot opportunities that fall outside the normal deal size (say three times greater than average) and flag them for special attention.

If you spot a new trend in average deal size, dig into pipeline mix or discounting practices to understand its cause. For instance, an increase in smaller won deals could denote that reps are focusing on small fish, or increasing discounts.

4) Win Rate

Calculate win rate with the following formula:

Closed-Won Opportunities / (Closed-Won + Closed-Lost)

What to do with it: High win rates aren’t necessarily good and low ones aren’t necessarily bad. For example, if your win rate is high, maybe your pricing is too low!

The simplest way to increase your team’s win rate is to find the one or two most problematic steps in your process, and then examine potential fixes internally (ex: a better demo process) and externally (ex: an easier free trial, or simpler pricing).

Look at your sales funnel and calculate conversions through every stage to closed-won. If most reps are struggling in the same area, don’t blame them -- the issue could be something outside their control. Nominate an investigator to get to the root cause of the problem.

In addition, look at win rates in light of other data from Marketing to get the whole story. For example, it makes sense that win rates for word-of-mouth leads (seeds), would be much higher than marketing- (nets) or outbound-generated (spears) leads.

If specific individuals consistently have much higher or lower win rates, don’t jump to conclusions. A sales rep with the highest win rate may be talented at sales -- or talented at sandbagging and cherry picking. Don’t assume -- investigate the data to find out what's truly going on.

5) Sales Cycle

Measure the average time (typically in days) it takes your team to win a deal, and how long opportunities spend in each sales stage.

What to do with it: The best use of this metric isn’t to gauge how fast you are -- it’s to discover whether your current deals are on track or in trouble. An opportunity has lingered in one stage three times longer than average? Uh oh, flag it!

Keep in mind that faster isn’t always better. For example, customers sometimes move too fast for their own good, and rush into a deal that later blows up. Focus on learning the “right” timeframes that create successful deals and customers for your sales organization. Having a benchmark in place of how long successful customers spend in each sales stage can help a rep put the brakes on such a deal. 

These sales metrics can enable sales leaders to keep their fingers on the pulse of their teams. But remember that rather than judging these metrics as high/low or good/bad, their ultimate purpose is to inform. Use them as jumping off points to drill into your sales systems and get smart about what affects them the most.

Editor's note: This is an excerpt from the upcoming book The Predictable Revenue Guide to Tripling Your Sales, and is published here with permission. 

Originally published Jan 26, 2015 7:30:00 AM, updated April 07 2017

Topics:

Sales Metrics