Wondering why your business isn’t reaching its Rev Gen goals? Here’s the things you should be looking at to diagnose what’s at the heart of the problem…
In the realm of sales KPIs there are leading and lagging indicators. Lagging sales indicators such as revenue sold versus sales plan are the ones most all business owners keep their eye on. However, leading indicators are where the real money is. Measuring the incidence of those things that cause a sale to happen will provide rapid and accurate insight into where your revenue will be in 30-60-90 days. Further, it will give you time to course correct to hit your goals.
The leading indicators you should track for each of your sellers are sales velocity, opportunity size, sales leads researched, sales leads reached out to, planned buyer facing sales meetings and proposals issued.
Sales velocity is a measure of how quickly an opportunity converts from when it is identified as viable to when it is closed won. This number varies significantly depending on your average deal size, the product you’re selling and the market you’re selling it into. Smaller dollar value and less complex sales should close faster. Higher dollar value and more complex sales with multiple decision-makers will close slower. Do a backward analysis on how many days your opportunities remained in the sales funnel to establish your benchmark, and then strategize as to how you can make that number smaller.
Opportunity size refers to the dollar value of your average sale. When calculating your average, take out deals that are unusually small or large as they will skew the numbers. The higher your average deal size [relative to the price point of your products and services] the better. The Land and Expand sales approach is a good one but if your initial Landing sale is very small it means you are having to sell to the same account multiple times in order to Expand and generate the revenue you could have secured in the 1st sale.
Sales leads researched and sales leads reached out to track your sales team’s top of funnel sales activities. This work is the heavy lifting of selling and most sellers don’t enjoy doing it. Once they get viable opportunities they will neglect filling the top of the funnel. This of course is a major strategic and tactical error. Having a lead funnel that is robust greatly increases your Sleep at Night Factor because if an opportunity doesn’t close then no worries, there are other viable ones right behind it.
Planned buyer facing sales meetings is of course a big indicator of sales success. A quick look into the calendars of your sellers will give you instant insight into the potential for their sales productivity. The best sellers will have ample meetings scheduled in their calendar. Poor performing salespeople will often have empty calendars for the upcoming week.
Proposals issued represent the number of sales opportunities your team is bringing to the point of closure. Be aware that a higher number is not always better. A seller who is providing quotes too early is likely skipping several important steps within the sales process and in doing so will decrease their close ratio. This is where knowing your close ratio [number of proposals issued to closed won deals] comes in handy.
CRM of course allows for simple tracking of all these leading indicators. It’s been my experience that within the first 1 or 2 weeks of tracking your leading indicators you will get big insights into the sales effectiveness and efficiency of your team. There’s lots of nuance to setting up these measurement structures and rolling out. If you need any help around how to do that I would be happy to chat with you.