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7 Metrics Every Sales Manager Must Know and Measure

Supplier: Phocas Software
26 November, 2014

We are now in an age where sales managers have a myriad of advanced data measurement and analytics options available to them.

Through sales analytics software, visual data discovery or Business Intelligence software, sales managers can gain insight into their sales team's pipeline and have a team that works more effectively and efficiently. But are they measuring the right things?

The above analytics options have revolutionised sales measurement. They enable sales managers to pinpoint where their teams can generate more leads as well as cross-sell and upsell to existing customers and much more. The potential exists for sales managers to enjoy great benefits. Whether they get to enjoy such benefits depends on how they use the tools.

So, are you measuring the necessary metrics to ensure your sales team are working at optimum level? We outline the 7 Metrics Every Sales Manager Should Measure.

The Sales Pipeline

This is a great way to gauge a company's health. Sometimes presented in a graphical format, it shows the sales opportunities the company currently has and an estimation of the amount of revenue the sales team is going to generate in the coming months. If the opportunities within the pipeline are managed well, the sales team will stay organised and feel more in control of their sales figures, giving the sales manager more confidence in the targets that can be achieved.

What metrics should be measured in a sales team's pipeline?

  • Number of potential deals in your pipeline
  • Average size of a deal (in $) in your pipeline
  • Average percentage of deals that are converted from leads to customers
  • Average time deals are in the pipeline (measured in days)

Sales Revenue

Measuring the revenue a sales team brings in, instead of only their profit margin, gives a sales manager more insight into the business' performance. If a company experiences steady "top-line growth", it could be viewed that the performance in that period was positive even if the earnings growth or "bottom-line growth" didn't change.

Measuring revenue allows you to identify the profitability of the business. By calculating the profit ratio (divide net income by sales revenue) businesses can reveal how much of every dollar brought in by sales actually makes it to the bottom line.

Forecast Accuracy

Forecasts will never be exact, but there are tools available that will assist a business in creating the most accurate forecast as possible. The accuracy of a sales team's forecasts needs to be measured on an ongoing basis to ensure that they are continually reaching their predicted targets or at least getting closer to them as time goes on. Producing accurate forecasts enables a company to reveal issues threatening the business as well as opportunities available.

Sales Funnel Leakage

No sales team wants a leaky funnel but sometimes with limited technology and man-power this can happen. It's imperative to know where the holes in your funnel are, how they occured and how you can essentially ‘plug' them. Things to review include:

  • Lead response time: a business that responds quickly to a sales qualified lead is more likely to win the sale
  • Rate of follow-up contact: persistence is key, a sales teams should be continually following up with a lead via phone calls and emails until they are deemed no longer qualified

By constantly monitoring this data and putting means in place to avoid opportunity leakage, the overall sales numbers will improve.

Win vs Loss Rate

It's important to understand the reasons why leads buy or don't buy a company's product / service. This information is crucial as it can assist in improving a sales team's close rate thus gaining more market share for the business.

Cross-sell and Upsell Opportunities

Cross-selling and upselling can be complex and risky. However, with the challenges around new customer acquisition, businesses must find ways to improve sales from existing customers. With the right analytics tool, businesses can identify cross-selling and upselling opportunities in the organisation and ultimately, generate more sales for the business.

Closure Rate aka "Win Rate"

It's important to be aware of how many leads or opportunities are being converted into customers. This metric focuses on the final stage of a sales team's pipeline. By this point a sales team would have invested a lot of time and resources into the lead so this rate should be as high as possible.

A low or constantly changing closure rate signifies lack of competitiveness in the market, it means the value proposition being offered to the leads is not good enough. It may also mean that the sales team requires additional training.

Measuring a sales team's performance has evolved from the simple spreadsheets used back in the 20th century. There are now advanced business intelligence software options that provide dynamic reporting capabilities with dashboards to help automatically track key metrics. This gives a sales manager the ability to become more proactive as well as make more insightful and strategic decisions that will benefit the company.