Sales metrics that matter

Sales are a critical component of what makes a company tick and metrics that measure sales performance are used by many organizations. Some companies track sales by category and examine pipeline metrics, sales metrics and win loss ratios. However, while companies may have metrics in place, this doesn’t mean that they are tracking the right metrics or tracking them properly. For example, a company might track days to close a deal, but not think to classify deals by deal size or by vertical, which may be where the real insight lies. Or, a company might track this metric but can’t track it over time. Some companies don’t necessarily even know the right questions to ask, or how to interpret the results.

I recently spoke to LucidEra, a company that specializes in sales analysis. The company targets mid size organizations and provides business intelligence capabilities and best practices to help organizations improve sales effectiveness. Rob Reid, CEO and Ken Rudin, VP of Marketing at LucidEra, explained that the company has compiled numerous metrics and analytics to help provide insight to sales organizations. The company delivers this functionality via a SaaS model. It works like this: LucidEra brings in your company data from a number of sources including salesforce.com (it can actually be installed as a tab in salesforce), Microsoft CRM, Excel, or a custom data source. It then analyzes the data and provides reports, graphs, and other visuals to the end user. Here’s a screen shot of one kind of analysis that examines new versus repeat business:

new-vs-repeat1

LucidEra offers a number of prebuilt metrics and dashboards and also allows companies to customize their own analysis. In this example, you can see that sales associated with new business is essentially flat and the revenue associated with this kind of sale is lower than that associated with repeat business. Repeat business, on the other hand, is higher and has a repeated pattern that shows an increase in the 4th quarter. This then begs the questions – what is driving the spike? Can it be used in other quarter? Why is first time business low? You get the idea. Other kinds of analysis include reporting on and analyzing what’s changed in your pipeline, leads analysis, and sales representative performance.

To help companies get started, LucidEra provides a Pipeline Healthcheck service which focuses on identifying trends in key sales metrics, interpreting what the trends mean, and quantifying how changes in those metrics can affect your business. LucidEra will take your sales data and give you an assessment within 48 hours. Some of the topics a Healthcheck includes are:

  • What changes have occurred in your pipeline in the last week, month, quarter, etc?
  • What are the trends across your critical pipeline metrics such as win rate, average deal size, and the average length of your sales cycle?
  • What are the key factors that influence these metrics? For example, how does the length of your sales cycle vary by industry, by lead source, by the size of the deal, etc?
  • What is the likelihood of a deal closing based on the characteristics of the deal, such as whether it’s a new customer or a repeat customer?
  • Which forecasted deals are at risk? For example, which deals are stuck in your pipeline?
  • Where are the characteristics of the deals that you’re most likely to win; that is, what’s your sales “sweet spot”?
  • How do sales reps and regions compare on key metrics such as win rate or deal size, and how is that trending over time? How do these metrics differ based on how long a sales rep has been with your company?
  • What is the quality of your sales data, and what key information is missing which would give you valuable insight into your pipeline, sales people, or sale process?

The upshot?

I’m a big believer in asking meaningful questions about data and interpreting it properly. Sometimes, companies have good intentions – like analyzing sales data – but don’t know the right questions to ask. They may have the data at their fingertips, but this doesn’t help if they can’t effectively analyze it. Don’t get me wrong, I’m not saying that making BI more accessible is a bad thing. My point is that it does take some talent, however, to ask the right questions and interpret the results. Companies like LucidEra that provide a best practice approach in a useable way can help organizations that are struggling to figure out what all of their data means.

Metrics that matter actually do matter.

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One Response

  1. [...] There must be a focus on the right metrics (ACV, TCV,  and MRR as well as sales and marketing metrics.). [...]

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