Managing a sales team means staying ahead of the numbers by analyzing key sales metrics. Those numbers will typically ebb and flow but are all usually measurable. Figuring out what you should be measuring can be more difficult than tracking the metric. Thanks to technology and software such as CRM platforms (SalesForce, HubSpot, Zoho, etc.) you have more data at the tips of your fingers than ever before.
Sales analytics are the practice of gathering insights from data such as trends, reports and metrics to help you determine how your sales efforts are going, whether changes need to be implemented and even to forecast future sales performance. One of the biggest practices utilizing analytics is that companies tend to use sales analytics for is to set sales objectives for your sales teams.
Once you’ve determined what your goals are, don’t just set it and forget it. You’ll want to conduct periodic reviews to make sure that your goals are still aligned with the current objectives. Things such as a global pandemic or stock market crash can have major impact on your sales, and you’ll need to take the time to reevaluate during tumultuous times.
Some key sales metrics you’ll want to keep your eye on include:
· Time spent selling
· Lead response time
· Conversion rate
· Value of a lead
· Customer lifetime value
· Sales cost ratio
· New leads per month
· Monthly sales
If you need help determining the value of a lead, check out our article on the Value of a Lead: What Should You Be Paying and The Value of a Lead: How to Calculate What You Should Pay.
Time is money and if your sales team is spending an enormous amount of time per lead, then there may be some problems in the workflow. Spend some time finding out what may be the biggest time sucks for your sales team to help mitigate the amount of time they’re spending on those tasks. For instance, if they are wasting valuable time on contacting leads who aren’t ready to take the next step, perhaps you could take the burden off of their plate and conduct further marketing to qualify them for your sales team. A CRM or other sales automation software can help you track how much time your sales team is spending at each stage of the process.
A survey was conducted by InsideSales with Omniture to track the lead response time of approximately 700 companies and what they found was positively alarming. Less than 5 percent of companies were following up with a lead within 24 hours. Why is that so alarming? Results from the survey showed that a lead was 21 times more likely to qualify and convert to a customer if the lead was contacted within five minutes.
How quickly are your reps replying to inbound sales leads?
The conversion rate is the percentage of leads that converted to paying customers. This can also be called the “opportunity win rate”. As we discussed in our articles on determining lead value, tracking the conversion rate can give you a better understanding of how much you should be paying per lead (i.e. value of a lead).
How much did you spend on acquiring new customers? For instance, if you’re spending $10,000 a month on marketing, paying your sales team, software, etc. and for that $10,000 you gained 10 new clients, your customer acquisition cost is $1,000 per customer. Knowing this can help it easier to analyze your marketing and sales Return on Investment (ROI) in order to optimize your budget and allocate funds accordingly.
Your customer’s value extends well beyond their initial purchase. Here’s how you can determine your customer’s lifetime value:
Annual revenue per customer X number of years as a customer - customer acquisition cost = customer lifetime value
This metric is worth tracking at regular intervals to see how it changes over time - because it most definitely will change.
If you’re looking to understand whether or not a sale is profitable, this is one metric you’ll want to track. Here’s where we look at some hard truths… Does the revenue earned from the sale outweigh the resources used to close the sale (i.e. employee’s salary, travel expenses, marketing, etc.). To calculate the sales cost ratio, you’re simply dividing the amount you’re spending on sales by the profit those sales are bringing in.
The number of new leads your company receives each month determines how many prospective customers you have in your pipeline. By comparing your new leads per month against new customers, you’re able to determine your average conversion rate for the month.
Beyond the obvious reasons for tracking this metric, measuring your monthly sales can provide you with a clear indication of whether your business is growing or stagnating. It can also help you monitor the effect of any changes to your sales process that you may knowingly or unknowingly implemented. This metric can also help you spot annual trends. For instance, you may find that sales take a dive around Christmas and New Years as many take that time off of work. This allows you to plan for that dip in revenue when setting your annual budget.
Let SalesGig Pro get you to the table with your next potential client with out cold calling and appointment setting expertise. Let us be your sales team! Get in touch today to discuss your lead generation needs.
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