Four key sales pipeline metrics to track for aggressive growth
Tracking metrics is a vital element to success and reaching our goals -- from watching our weight to quantifying our time -- and sales should be no different. By identifying and tracking key sales metrics, we’re able to gain an understanding of where and what to adjust in our pipeline, and attain valuable feedback to use towards the continuous improvement (kaizen) of our ever expanding sales pipeline.
In a Wall Street Journal essay, Scott Adams, the creator of Dilbert, argues that goals are for losers, simply an endpoint (do we ever reach the end of a goal?). For example, if you want to generate $250,000 this year in sales, you will spend every moment until you reach the goal, if you reach it at all, feeling as if you were short of your goal. In other words, goal-oriented people exist in a state of nearly continuous failure.
Who wants to walk around in a state of failure?
In sales this entails setting individual (sales agent/manager) or unit performance (sales team) metrics that can provide insight into how your sales processes are performing right now. It helps your team focus on what activities really matter (i.e affect your bottom line) rather than simply aiming to make another $137,000 this year to hit their mark.
Here are four key metrics you can track on a daily basis to empower your sales team, and measure and achieve aggressive growth. Let’s abandon the focus on goals, and start focusing on metrics.
Metric 1: Amount of Deals Added to Pipeline
“Less is more” is a popular statement especially in hard economic times. While I believe living a minimalist lifestyle can help benefit all facets of your life. When it comes to sales, more is more!
It’s easy to let your pipeline stay stagnant or even worse drop to zero when you’re maxed out with a ton of hot leads, proposals to write, and meetings to attend. What happens when you’ve processed all of your sales orders where’s the next deal coming from?
Rather than scrambling for new prospects once work is completed, make sure you’re always constantly topping them up. Here are three sales strategies I employ to make sure the amount of pipeline deals is always consistently north of a million dollars.
Create Business Opportunity Lists. I’m a big fan of using lists for everything from creating great ideas to creating new sales opportunities. Kick off your week with a new business opportunities list. Brainstorm with your sales team 10 new business opportunities you’re going to pursue you’re going to pursue, outreach, and connect with during the coming week (I recommend x10 based on a twoperson sales team). Doing this one activity on a consistent basis helped us close more deals two months later already (this depends on a length of a sales cycle, of course).
Maintain this new standard for prospecting “We become what we repeatedly do.” If we’re going to be sales leaders we need to set the standard on executing on our new business opportunities list. I find that as soon as I “lift the foot off the gas pedal” and stop maintaining the habit of weekly brainstorming sessions and following up on sales outreach work daily, our pipeline starts to drain.
As we all know, forming new habits is hard. I employ Jerry Seinfeld's Productivity Secret, A.K.A “Don’t break the chain,” a method that helps you stick to your good habits and break bad ones. Each day you complete your sales prospecting tasks, you mark it on your calendar with a big giant X. (It’s oddly motivating seeing a calendar with crosses marked all over it). Stick the calendar up in the sales office for all to see for extra added pressure.
Get creative with your list building. Rather than just relying on the usual channels inbound leads, purchasing lists, and cold calling, get creative and find new outreach opportunities and angles.
- Track brands and companies that mention keywords related to your product/service offering using apps like mention.net and follow up with a tweet, note to your prospect.
- Keep track of job changes of your existing contacts on Linkedin and reach out with a note of congratulations (follow up to see if your service would be a right fit for their company),
- Contact people who you have unsuccessfully tried to sell to before and/or people that you haven’t talked to in 6 months. Change happens.
Metric 2. Average Size of the Deal
This is a fairly straight forward metric and once the math is done it’s worth its weight in gold since we’re able to determine how much margin we have to invest in a sale.
Our objective as a salesperson is to sell on value rather than cost. In doing so we can attain a higher price as well as sell more to the same customer. Sticking to this rule we’ll always maximize our average sales orders (this gives us more margin to invest in a sale).
Focus on companies with complex problems. Companies with multiple functional areas and global operations are ripe for us to solve problems for (be it streamlining an area of their operations or helping them automate a lot of their processes). The bigger the potential to help the bigger the payoff.
Bundle up your way to higher sales. The next time you step into a coffee shop, try just ordering a coffee you’ll be hard pressed not to be asked if you’d like a muffin with it too (unfortunately the Barista doesn’t care about your “don’t break the chain” positive health habits calendar). A bundle is when several items are sold as one combined product. Coffee shops do it, Mcdonald's does it and make millions in the process, all with one simple question, “Would you like fries with that?”.
Work out what can you bundle with your product/service offering and increase the average size of your deal by asking one simple question during the sales process.
Metric 3. Average percentage of Deals that Successfully make it through the Pipeline
Everyone’s favorite part of the sales pipeline: the conversion. Here we look at the average percentage of deals that successfully makes it through the pipeline or leadtocustomer conversion ratio (%), and work out how exactly we can increase our closing rates.
Always work with the decision makers. Working with the decision makers of businesses to explore opportunities and challenges facing them is the key to speeding up the sales process. They’re light on time and want solutions fast. The time spent here is on actually getting through to the right people, this is a skill in its own right and one you should learn.
If you have the ear of an influencer at your prospect’s company, a simple question could be enough to get you in touch with the key decision maker: “Michael, do you mind if I ask you who, apart from yourself, is involved in making the final decision about this?”
Get the answer and propose a facetoface meeting or host a private webinar based on the proposal sent to the final decision maker.
Know their business inside out. Become a trusted confidant who understands the ins and outs of your prospect’s business. Offer insights and strategic advice through the occasional email, or personalized monthly newsletter. When they’re feeling a pain point that is connected to your expertise, the chances of them coming to you more than another vendor is extremely high.
I’ll never forget working with a guy who could close 50 percent or even more of the deals he worked on. The reason why his customers bought from him was something to the tune of: We felt that even though your price was higher, you understood what we needed much better, and the solution you offered also showed that. Every time I wanted to increase my own win rate, I came back to this simple approach.
Metric 4. Sales Velocity. Sales velocity is the average time deals stay in the pipeline before they are won.
Now this is one sales metric we want to minimize! The shorter the sales cycle the more revenue/profit we’re set to make. This is where we need to get creative to reduce the sales timeline of initial contact to close.
Break down the e-wall. Reduce the human tendency to ‘wait’ and ‘think about it’ by setting clear timelines around communication. Doing business by email is now the norm, with that so are long response times to proposals if you don’t set clear next steps. Let your prospect visualize the process using actionable oriented language.
“After you’ve had a chance to read the proposal, the next step would be for us to skype next week to discuss moving forward. What time will suit you next week?”
Induce certainty with your prospects. Understanding prospect theory is crucial if you want to present your product/service in its best light. People have a strong preference for certainty and are willing to sacrifice income/revenue to achieve more certainty in the future. For example, if proposal A is a guaranteed win of $1,000, and proposal B is an 80 percent chance of winning $1,600 but a 20 percent chance of winning nothing, people tend to prefer option A. Put together proposals that you can guarantee and once you’re in the door then you can offer more aggressive opportunities.
If you take one thing from this blog post, it should be this: Forget goals, track metrics and “quantify yourself” if you want to be a sales leader on top your game.
[image via thinkstock]