The Sales Metrics You Must Measure to Achieve Your Sales Goals
For Sales Leaders and CEOs the right sales data means everything when it comes to defining your Sales Plan and measuring progress towards your revenue targets. Sales dashboards can provide that visibility, but they are only as accurate as the underlying metrics, calculations and assumptions that support them. The investment in the time it takes to develop sound sales metrics is one of the best practices shared by Best-in-Class sales teams. Here’s how to put those best practices in place.
Aligning Sales Goals and Metrics – 3 Critical Stages of Sales Dashboard Design
1. Sales Revenue Forecasting
To build a successful sales plan you have to start with a sales revenue forecast that demonstrates how you will achieve the annual booking and revenue goals set for your sales team.
Key inputs for Sales Revenue Forecasting include the following:
- Annual Booking Goal
- Annual Revenue Goal
- Quarterly Booking Requirements
- Targeted Win Rate
With these numbers identified it is possible to know how much qualified sales pipeline your sales team needs to have as you enter each quarter of your sales year.
Conversely, without the Sales Revenue Forecast as the foundation to your Sales Plan you will never know for sure how much pipeline you need. Without quantifying that information you can’t build a targeted pipeline to know if you sales efforts are on track to meet the revenue and booking goals.
2. Sales Pipeline Analysis
With your target Sales Revenue Forecast established you can now build a Sales Pipeline Analysis that makes it very clear how much pipeline your sales team needs – by quarter and by sales stage.
Two things are very important to be successful at sales pipeline planning:
- Formal sales stages and win probabilities, and
- Conversion percentages for how many of your opportunities typically move from stage to stage.
Key inputs for Sales Pipeline Analysis include the following:
- Target average opportunity value
- Current number of opportunities by stage
- Current total value of each stage
- Stage conversion percentages
- Target values by stage
With this information defined it will now be clear how your current sales pipeline compares to the targeted sales pipeline necessary to achieve your annual booking and sales revenue targets. (A valuable advanced step to apply to this model is to compare pipeline values based on current accounts and new logos.)
A graphical depiction of this sales pipeline analysis is a great way to visually assess the gap between your targeted requirements and your actuals. Your sales dashboard is now taking shape once this stage is complete!
3. Lead Flow Analysis
As you can see, we have built your sales metrics model backwards, starting with the booking and revenue targets. Those initial numbers define your sales pipeline requirements – and now with those goals set we can lock down your sales lead needs. We call this area “Above the Funnel” since most of this analysis is directed at leads that have not yet become qualified sales opportunities.
Key inputs for Lead Flow Analysis include the following:
- Average number of targeted contacts (leads) within a prospect account (company)
- Quantity of targeted companies in your sales plan
- Current number of leads in your marketing database (or contacts in your CRM)
- Number of companies in your marketing database
- Stage conversion percentages (how many leads typically convert from your marketing database into qualified sales opportunities)
Completing this analysis is often a challenge for many companies simply because they lack the data to define their current situation. Hopefully you have at least some of the information and can make educated assumptions on the missing data. What is most important here is making the connection between your required sales pipeline and identifying how many leads will be needed to continuously load the top of that pipeline with sales ready leads.
Putting Your Sales Dashboard to Work
Once these three stages are complete you can now see where you stand at any point along your overall sales cycle. You will have better insight into how your current quarters are shaping up and begin to predict the success of future quarters based on the values in your early lead and pipeline stages.
This exercise takes some time to complete and will require you to dig deep into your CRM and marketing databases to create the initial numbers. Once it is place however it will become an indispensable tool for sales leadership and the CEO, CFO and chief marketing officer to know everything is aligned for revenue success.