Sales Metrics

4 Most Important Sales Metrics in SaaS

Sales teams create some of the most valuable data of any department in a business, because theirs is the data that shows exactly when and how revenue is generated. When examined thoroughly and through multiple lenses, this data can often point to ways that an entire company can be improved. There are four key sales metrics to capture, analyze and compare in order to optimize a business:

Win Rates

Tracking the rate at which your salespeople win the deals they’re pursuing is the most obvious metric to measure. Win rates can reveal the top performers in your organization, but they can also show the way forward. Drilling into your team’s win rates when selling to specific verticals, sizes, or types of companies can show you where to focus your efforts and where your messaging needs improvement in order to effectively sell to companies in areas where you’re struggling.

It’s also critical to establish set-in-stone criteria for what types of deals are considered in your win rate. It’s common for win rates to become inflated due to teams retrospectively excluding lost deals from their calculations due to some circumstance that was unseen when it was put in the pipeline. Though this practice may result in a more accurate telling of the percentage of deals that were won that were possible to win in the first place, it frequently leads to problems down the line.

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Pipeline Coverage

Assessing the strength of your pipeline is key to ensuring your sales team stays productive. The widely-accepted rule is that you should have triple your quota in deal value in your pipeline. While triple your quota is a good place to start, a one-size-fits-all rule will not be a perfect fit for every company. When building pipeline, it’s critical to consider your overall win rate. If your team wins 25% of the deals it pursues, it stands to reason that the pipeline needs to be quadruple the size of the quota.

However, to effectively apply the win rate to determine ideal pipeline coverage this way, it’s crucial that the criteria used to determine if a deal is included in the win rate calculation is the same criteria used to determine when the deal is put into the pipeline. If these two criteria are not inextricably linked, the foundation upon which you gauge your metrics will be inherently flawed. You’ll inevitably spend time building unnecessary pipeline, or worse, find yourself with insufficient pipeline.

True Sales Cycle

Having a view of the sales cycle from the first touch with sales to the point that the contract is signed is the most accurate way of seeing what leads to a win. Zooming in on data from specific stages of the sales cycle and how long the whole sale takes to close will give you even more insight into how you can improve your sales process. Typically organizations base their sales cycle metrics on the average time a deal spends in each stage, and when they see a deal languish in a stage longer than normal, they’ll hit the sales rep with an email and see what’s going on. But the true sales cycle cannot be comprehensively identified by stages within CRM, because the sales cycle begins long before the CRM is ever used. Rather, to get an accurate view of how their sales cycle actually works, teams need to track when the first communication with a salesperson occurred.

Activity Sales Metrics

Keeping track of the day to day activity of a team of reps is the core of sales management, and most teams measure basic activity like volume of calls per day. But it’s important to keep in mind that there are many ways to close a deal. Coming down on a rep because their activity level is lower than the average of their team will not necessarily make them more productive. Measuring activity by a variety of factors is key to managing the capacity of a team, knowing when a person is underutilized and deciding when to hire more talent. Create a reliable system that ensures activity is up to date and promote connects over calls, responses over emails sent and conversations over follow-ups. When all these methods come together effectively, you’ll have an accurate view of your sales team’s effectiveness and know exactly where it needs help and where it’s succeeding.

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