Sales metrics are a collection of individual and organizational performance indicators and ratios. They are calculated from collected data that describe the company’s historical and ongoing sales processes, and are used to understand the effectiveness of marketing and sales activities as well as the efficiency of the sales process. 3 Key Metrics for Sales Staff necessary for effectively managing a sales team:
Average Deal Size Determine the average dollar amount brought in by each sales contract and refine the metric by eliminating very high and low values that distort the average. This metric will help you make sales forecasts and look for factors that contribute to increases in deal size.
Cycle time Measure the average number of days that sales opportunities sit in the funnel. Cycle time can be measured as an average or as an interval and then can be categorized by deal size. Good salespeople often spend time early in the sales process establishing the value they offer customers and getting them to move the sales process forward. This allows salespeople to focus their efforts on opportunities that are likely to close, and move on from opportunities where no sale exists.
Closing or “win rate” Calculate the number of proposals per sale. It is a variation of the conversion ratio, but it focuses on the final stage. By that stage, your sales staff will have invested a lot of time and resources in the opportunity, so this rate should be as high as possible. A low or fluctuating rate is a serious sign of your lack of competitiveness in the market and your value proposition or market relevance might need work. A low close rate may suggest that your sales staff require additional training. Given what it takes to reach the final stage, this ratio should be around 1 deal expected from every 3 proposals, or better.
There are many more metrics you can use and over time, and you will find that some metrics prove more critical for your business than others.