Earlier this month at Dreamforce, salesforce.com announced their new Analytics Cloud. With the Salesforce Analytics Cloud, you can pull up information about business performance on your cell phone, transform it, get underneath what is happening in your business and share it with other key stakeholders via Chatter. As a sales leader having this ability to mine into what is going on in your business in a very visual and actionable way is incredibly powerful.
Inspired by salesforce.com's recent announcement, I wanted to dive into a few key performance metrics that sales leaders should be measuring to drive more predictable revenue growth for their business. The fact is that most sales leaders are focused on later stage sales pipeline metrics (opportunity to close) and aren't closely monitoring the early funnel metrics. If you don't believe it, consider the most recent executive meeting you helped prepare for or presented at. Your report was likely prepared to answer questions about near-term quota goals--with a few larger and later stage deals that may contribute to your revenue target called out.
The problem with this approach is the focus is on near-term goals, and while these goals remain very important, they should not take a team's focus away from the key performance indicators at the early stage of the sales cycle. By monitoring early stage sales activity metrics you can help keep the pipeline full of opportunities and drive a healthy long-term pipeline of deals and predictable revenue for months to come.
When thinking about early funnel sales metrics that matter, there are really two categories that you should focus on; lead quality metrics and sales team management metrics. The first category are metrics that you can glean specifically from your sales team performance that help you understand what the relative quality of your leads are; the second are metrics that as a sales manager you can use to get better results out of each of your team members. Let's start with the first category.
Lead Quality Metrics
- Speed-To-Contact: Measuring the time elapsed before the first live conversation between someone from the sales team and the lead provides management with an understanding of the quality of leads being generated, especially when compared with speed-to-contact attempt (see below). For example, if you're getting a lot of leads where the speed-to-contact attempt is fast, but the actual speed-to-contact is slow, then it means there's not a high level of intention. If that's the case, you need to talk to your marketing team and see what they might do differently to get you better quality leads.
- Qualification Rate by Lead Source: Most sales and marketing teams measure conversion rate and ROI by lead source but neglect qualification rate. However, this metric is really a leading indicator of whether what marketing is producing is likely to translate to pipeline. The sources that have a low qualification rate need to be tweaked or eliminated quickly.
Sales Team Performance Metrics
- Speed-To-Contact Attempt: Speed-to-contact attempt is the time it takes from when a lead is received to when you call or email them in response to their inquiry. This metric is a leading indicator of whether your sales people are covering the "basics." Speed to reach out to a hand-raiser is one of the metrics that is also most correlated with the ultimate metric, your conversion rate. If a salesperson is calling quickly, it means they've not only got their head in the game but you will also see results in them hitting higher sales numbers. This metric also provides sales managers with insight into which sales reps are lagging behind or failing to contact leads in a timely matter.
- Key Metric Performance Index: For each of my sales team I create an index of how their contact rate and qualification rate differs from the mean as a percentage. In other words, if the average qualification rate for leads today (number of leads received divided by the number accepted as qualified by my sales team) is 20 percent and someone has a qualification rate of 25 percent then they are 20 percent above the index. I chart my team according to the index and then typically dive into what is going on for low performers. On contact rate, I'll work with them on the process they are following that is generating too little sales activity. For those who are under-indexing on qualification rate, I'll listen into some of their call recordings and determine if they are making the appropriate judgment calls.
The really interesting comparison, however, is where reps are indexing low on one metric and not on another. What you tend to see is that an under-performing rep who is new in the role will under-index on qualification rate, but be doing fine on contact rate--a lot of activity without results. These are great opportunities to work with the rep on their sales conversation and connect into their calls to coach them. Reps who have been around for a while tend to index the other way, low on contact rate and high on qualification. These reps are probably cherry picking, which you don't want either. For these reps, I'll push them to work harder to cover more ground.
By measuring and monitoring early stage metrics within your sales funnel, you'll find you have more control with the ability to create an accurate map that details how you can improve your chances of making or exceeding your revenue goals. You'll also want to make sure you have sales software that captures granular details and bubbles that up into a visual view via a tool like Salesforce Analytics Cloud. With the metrics above in mind, and the right tools and technologies to monitor and take action, you'll be well on your way to generating more predictable revenue than you've ever had.