Seven Metrics Sales Should Report, from the Field to the Board Room!Posted: August 2, 2012
Do Your Metrics Enable Accurate Revenue Forecasting and Decision-Making?
As we head into the last third of the year and begin to experience another pullback in the economy, many Sales leaders are asking: Are we tracking the right metrics to gain visibility of future revenues and make critical decisions?
Unfortunately, in too many cases Sales Leaders’ metrics are flawed. They either track too many incoherent metrics, they track and report metrics inconsistently, or they do both.
Luckily, it is relatively easy to solve this problem if you adopt the right principles on the way into discussions with your team.
First, it’s important to think about what metrics increase management’s ability to forecast revenue accurately over 30, 60, 90 days, and potentially beyond.
Second, it’s wise to utilize a small number of simple metrics, that everyone understands and the organization can track and report unfailingly.
Lastly, it is important to implement a set of metrics that enable tactical management conversations and decision-making up and down the management hierarchy, and between Sales and other departments upon which is dependent(such as Marketing and Customer Service).
The Critical Few
Our favorite metrics, which meet the above principles consistently across different types of business models, include:
- # of New Leads
- Conversion Rate of Leads into Proposals
- # and $ Value of: New, Renewal, and Penetration Opportunities by Stage in the Pipeline
- Sales Cycle Time by Stage in the Pipeline
- Conversion Rate of Opportunities by Stage in the Pipeline
- $ Revenue for New, Penetration, and Renewal Sales
- Total Cost of Sales/Total Gross Margin
Typically, these metrics would be tracked at various levels from corporate down to the sales territory. Similarly, they should be reported monthly and rolled up quarterly, semi-annually, and annually for trend assessments.
We find these metrics ideal because they provide the Sales Rep and the Board room with a complete and actionable picture of the Sales Model’s performance, including: the ability to forecast revenue accurately, early warning of changes in demand and rep performance issues, a sense of the company’s competitiveness in the market and the quality of customer relationships, and the overall efficiency of the sales force.
If you are working to refine, or have recently refined, your Sales metrics, we would like to hear from you. Please comment on this post, or send a Tweet.