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6 Key Metrics Every Sales Manager Should Be Tracking
A person skill at using data can be very effective. Data can help you make better decisions, change course if necessary and find new opportunities. The following is 6 metrics that you should be tracking to effectively manage your sales data.
However, sales people often times only look at a few metrics like close rates and total pipeline amounts. There is so much more that will allow you to see further inside your business and determine what is going on at a deeper level.
To get started, let's look at six key metrics every sales manager should be tracking to help them better manage their business.
1. Opportunity Waterfall
This is one of the most important metrics that sales managers need to easily see. It simply shows you all the changes in your opportunities between any two periods. Smaller companies may be able to track all the opportunity changes pretty effectively using Excel, however, as a company grows and has more and more opportunities it can be very difficult and time consuming to manage using Excel and you may need to look at different data warehouse and/or business intelligence vendors.
2. Stage Conversion Waterfall
Since the start of the month or quarter, what are your conversion rates from Stage 1 to 2? 2 to 3? And so on. This gives you an idea of pipeline shape so you know if you are building your pipeline at a fast enough rate to meet your revenue targets. Going a step further on this metric would be tracking this month to month to see how your conversion rates are trending.
3. Average Close Rate
Simply the number of opportunities won divided by the total opportunities closed within any given period of time. However the important part is to see how it is trending from month to month on a company-wide level as well as individual rep level. You could even break this number down by your different marketing channels to see if you have more success in one area over another. If your close rate is decreasing, it may be a sign that you need to better qualify leads or find new ways to attract more quality ones. And if your close rate is increasing, you reps may be doing a better job at managing their opportunities.
4. Average Stage Velocity
This metric is very effective at showing you if a deal is stalled in a particular stage. Hypothetically, if on average opportunities stay in your negotiation stage for 10 days, and you have a deal that has been in the negotiation stage for 15 days, you know that deal is at risk of being lost unless you get it back on track. Tracking this number over time can allow you to see what deals are at risk of being lost so you can either do something about it or stop wasting resources.
5. Pushed Deals
This is a more difficult number to get using your standard CRM system or Excel. It is hard to detect because the total pipeline amount does not change, only the close date changes. There are sales analytic applications (http://www.cloud9analytics.com) that automatically capture these changes so you can see if a deal has been pushed 2, 3, 4, or 10 times. Like stalled deals, push risk is an important risk factor. If a deal has been pushed out more than 3 times, is it a legit deal? Let's get it out of the pipeline and stop wasting resources on it.
6. Pipeline Amount vs. Historical Levels
It is great to know what your total pipeline is today, but in the bigger picture that is just a number. How does that number look compared to this day last month/last year or maybe you want to compare it to a company goal? You can get this information from Excel if you have the data from the two periods you want to compare. However, if you have hundreds and thousands of opportunities, it may be worthwhile looking into a solution that can show you this data automatically.
Are there any other sales metrics that you think are important? This list is by no means exhaustive, it is just the most common metrics I see people tracking or wanting to track in order to better understand and manage their business.