What you cannot measure, you cannot improve. The most commonly misunderstood aspect of the entire sales management processes is the design and the use of metrics. Sales metrics allow management to understand, measure, control, and improve the performances of the sales teams. But how do metrics fit into the role of an average sales manager?

Chances are that every sales manager already tracks three metrics within his selling process: calls (or meetings) per day, profitability per salesperson, and target achievement per person. While these metrics may be normal for those still living in the Stone Age, they do not focus on improving the sales funnel. The sales funnel provides a window into the effectiveness of your current sales process. If you break down the sales cycle into sequential steps and track the progress of each sales opportunity, your sales forecasts can become more accurate, and you can diagnose which important opportunities require extra support.

Many companies spend a bunch of time and money on CRM systems that ultimately lead to disappointment. This typically results from overestimating what CRM can do for improving the sales process. Companies that purchase these CRM systems expect it to solve all of their problems. However, CRM can help manage the accuracy of sales data and monitor the performance of sales staff, but it does not actively improve sales processes. We can generate extremely detailed reports, but often we do not know what to do with all this information, and we risk developing “analysis paralysis.”

Below you will find the 5 most essential metrics you can easily track with your CRM system and improve your sales funnel.

1. Conversion Rate

“Conversion rate” is a standard method of insight into sales team performance. It provides a great starting point for a general overview of sales process effectiveness. How many leads or opportunities generated one sale? Conversion rate is only one aspect of the productivity scale, but if you measure the number of opportunities each stage of the sales funnel produces, you can more easily see the inroads to improving your sales team’s performance.

2. Win Rate

How many proposals were offered before the deal was closed? “Win rate” is the ratio of closed deals to viable opportunities. The industry average is around 1 win for every 3 opportunities. If your company has a lower win rate than this average, you may have to reanalyze the relevance and strength of your company and product value. Your sales team’s performance can influence your win rate either positively or negatively. Timely contact and personalized communication with a potential client can boost sales closures; untimely contact, a lack of individual approach in the sales process, and so forth will suppress win rates below the average.

3. Sales Length

The average time between opening and closing an opportunity is your average “sales length,” the time required to nurture a lead from seed to harvest. This metric is a necessary gauge of customer behavior; by understanding the amount of time needed to close deals, you can effectively design campaigns and manage expectations in nurturing your leads. A prospective buyer begins his journey through the sales funnel and becomes a lead as soon as your sales team contacts and engages him. When the deal is closed, your product has satisfied all customer needs, and your sales representative successfully placed an end-date on the sales length.

4. Average Deal Size

As a sales manager, you need to ensure your sales team is managing their time effectively. Your team may be too focused on winning small deals because it is easy to close a small opportunity rather than pursuing the most profitable one. If your average deal size is small, focus on your lead generation process, and try to tease out the reasons your sales team is producing such small leads. Coach your team to increase the average deal size rather than just the number of gross sales.

5. Retention Rate and Customer Lifetime Value (LTV)

A healthy business retains a minimum 60% of their customers and actively cultivates a relationship with those who are ready to buy more of your company’s offering. Starbucks, an industry leader, has a retention rate of 75% – three out of four customers who purchase their product will return for more, and returning customers can access benefits that reinforce their loyalty. Increasing customer lifetime value (LTV) significantly improves profit. Measurements of customer LTV tend to focus on the relationship with a client over time by tracking metrics such as customer satisfaction rate, level of customer loyalty, net promoter score, and more.

All successful managers have to establish an optimization rate for the sales process to improve their employees’ performance.

What factors help reveal a low optimization rate?
1. Ineffective time management within the CRM system.
Your team has to track sales leads in Salesforce or another CRM system, but it can be a time-consuming process for salespeople. If you want your sales team to invest more time in generating leads and improving customer LTV, bring Salesforce directly to their workplace through Outlook. Read more about our CRM integration and how to integrate Salesforce with Outlook.

2. Your sales team needs training and continued education.
If you find that your employees have poor knowledge of the product or their sales skills could be improved, you need to create a knowledge and skill assessment and create a personal development plan for each salesperson on your team.

3. Your department’s internal processes are messy.
Tracking employees’ work time, establishing a clear division of responsibilities, and mandating regular reporting may seem to improve record-keeping at the office, but too many steps in the process can diminish the effectiveness of the sales process itself. You must not only clarify responsibilities and deadlines, but also motivate and engage your employees. Departments tend to add steps to their internal processes regularly, but rarely do they revisit these to slim them back down and boost their effectiveness for team engagement.

After reading this article, what are the first steps you’ll take to improve the measurement and implementation of sales metrics with your company?

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