The Reason Your Sales Pipeline Sucks – Do the Math!!

The estimated reading time for this post is 6 minutes

If you’re suffering from Pipeline Deficiency Syndrome (or PDS as I like to call it) then you most likely haven’t been calculating your Math of Sales correctly . If you don’t know what this is, read on.

For sales experts, analyzing metrics is the key to improving sales performance. By understanding the data behind the numbers, you can identify areas of improvement, increase efficiency, and ultimately boost revenue. 

If you’re like most small business owners or pre-A founders we work with, you likely do not have the luxury of a large sales team to generate new business opportunities and sales revenues. Accordingly, it’s even more crucial that these business owners and founders understand the factors that drive these revenues despite their limited resources.

Sales metrics are essential for any organization to track the performance of their sales team and to identify areas that need improvement. However, as described by John Doerr in his book “Measure What Matters”, analyzing sales metrics is not just about collecting data; it requires a thorough understanding of the numbers and their relationship to each other.

So, let’s  explore how analyzing sales metrics can help you achieve better results.

Let’s begin: What are sales metrics?

Sales metrics are measurements of key performance that help sales teams track progress, identify trends, and make data-driven decisions. They comprise  both leading and lagging indicators of performance and describe the specifics on each part of the sales journey.  In addition, these metrics can comprise combinations of data from various business functions like finance, customer success and marketing.

Examples of these metrics include:

  • Number of booked or held meetings
  • Number of unique transactions
  • Activity and pipeline conversion rates
  • Customer acquisition cost
  • Average deal size
  • Dollars per Dial

Sales metrics can be found at the top, middle and bottom of your sales journey (usually called a funnel, but I use both) and are the responsibility for every individual in your marketing, sales, onboarding and account management teams.

Why analyzing sales metrics is important

As we’ve already described, sales metrics are key performance indicators (KPIs) that provide valuable insights into the performance of a sales team. These metrics allow you to measure the effectiveness of your sales process, track the progress of individual sales reps, and identify areas for improvement. 

By tracking sales metrics, you can measure progress and make data-driven decisions.

When you perform initial and in depth analysis of your sales motions, you can gain a deeper understanding of your team’s strengths and weaknesses. 

When using combined function metrics like customer acquisition cost (sales and finance), campaign conversion rates (sales and marketing), average deal size (sales and finance), sales cycle length (sales and marketing), and sales pipeline velocity via time series or comparative analysis, you can identify trends and make informed decisions to optimize your sales process, improve your team’s effectiveness in that process, and ultimately drive revenue growth.

How to build your sales metrics matrix

When starting out on your data-focused management journey you should start to build and track those metrics that seem to make the most sense for your actual prospect’s journey and interactions with your sales team.

There are five stages to the typical prospect journey:

  1. Prospecting – usually lead by marketing or sales/business development teams

  2. Top of Funnel – activities which attempt to directly engage with prospects and move them into further conversations with the sales teams are usually driven by the sales/business development or sales teams

  3. Mid Funnel – activities which outline the outcomes and results of conversations with new individuals and accounts managed by the sales team

  4. Bottom of Funnel – activities which outline the outcomes of conversations with personified and potential purchases of your offerings managed by the sales, legal and executive teams

  5. Post-agreement cylinder – activities which outline the outcomes with new and existing clients managed by the customer service, finance and executive teams

Developing Metrics

Now that you know when to measure in the new client acquisition process, you should develop metrics that help you understand what’s going on in each of these stages.  What to measure can be comprised of data from a variety of business functions, here’s a few to consider:

  1. Prospecting – total addressable market, unqualified prospects, Ideal client profile

  2. Top of Funnel – Interested prospects curated by marketing or direct outreach, connected conversation rates with markets, Dollar Value Per Dial or Outreach, typical deflections

  3. Middle of Funnel – Connected conversations to discovery meeting bookings, sales meeting that are held, sales funnel (or cylinder) stage journey for each prospect, estimated revenues per transaction, size of buying committee
  1. Bottom of Funnel – Deal Win rates, deal size changes, reasons for win/loss, deal duration completion rates, sales pipeline velocity

  2. Post-agreement cylinder -duration of onboarding process, size of customer implementation team, cost of new business acquisition, churn rates.

When we combine these metrics into a series of dashboards we build what I call the sales metric matrix.  Once your matrix is started, you’ll start being able to connect the relationships between various locations in your sales process as well as financial and customer impacts.

When we layer additional data from other parts of your business, you can then start to determine correlations between website and logistics performance data as they relate to your new customers’ firmographics and the individual personas that are the most effective.

When using graphics, charts and images, you can then build visual dashboards that literally “connect the dots” between different business units, functions and outcomes in your sales, marketing and customer success functions.

With both the matrix and imaging from your key metrics, you’ve now got the insight (vs data) that will assist in decision making for each of these core business processes.

And that is how you become a data-driven revenue and sales leader.

Don’t be intimidated by the math behind sales metrics. With the right tools and guidance, even non-technical Founders and CEOs can learn to analyze sales data and make data-driven decisions (we have a great free tool that we’d be happy to share) So, if you’re not already tracking sales metrics, it’s time to start.

Identify the key performance indicators that matter most to your organization and start collecting data. Analyze the data regularly to identify areas of improvement and make data-driven decisions about your sales strategy. With the right approach to sales metrics, you can improve sales performance and achieve better results.

Unlocking Growth Potential through Sales Metrics Analysis

In conclusion, sales metrics are a crucial component of any organization’s sales strategy. By analyzing these metrics, you can gain valuable insights into your sales team’s performance, identify areas for improvement, and capitalize on growth opportunities. 

Understanding the math behind the numbers is essential, but with the right tools and guidance, anyone can learn to analyze sales data and make data-driven decisions. 

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