Managing and analyzing sales metrics

 

Sales metrics are a collection of individual and organizational performance indicators and ratios that help you understand the effectiveness of marketing and sales activities and the efficiency of the sales process.

Developing and tracking sales metrics are necessary for managing the sales team; these metrics are also vital for individuals who manage a sales funnel. Early-stage technology start-ups must use sales metrics to gain a solid understanding of their competitiveness and performance in the market. By analyzing sales metrics you will be able to recognize which activities yield results and which activities need to be changed. This is essential information for entrepreneurs seeking to build scalable sales and marketing operations.

Once you have established the sales metrics, you can assess how they develop over time. Consider the following:

• How has the pipeline value changed in the last week, month, quarter or year?
• Are conversion ratios stable over time, across regions, between salespersons and sales teams, and so forth?
• Do the ratios you capture provide enough explanation of any variability in your revenue? Do you need to improve the quality and amount of sales data you capture?
• Are changes in key ratios caused by specific events or trends? Do certain factors increase the predictability of a deal closing?
• What characterizes the deals that you close? Do you have sales traction within a particular industry or market segment?

In order to answer these critical questions, you must define what metrics you need to measure, and then begin capturing that data immediately. Do this at the level of individual opportunities level as well as for your portfolio as a whole.

This sales data can be captured and analyzed by using a standard spreadsheet that you develop to suit your needs. Many customer relationship management (CRM) systems will allow you to customize these metrics as your organization grows and to set up your own“dashboards,” thus automating some of the necessary calculations. However, bear in mind that those who do not have experience with building their own spreadsheets to capture and analyze sales data will have a hard time designing such a dashboard in a CRM system.

Tags: customers, sales