You might have a huge dashboard spread across two or three screens. You might also have a cluster of gauges that measure everything your sales force does down the individual phone call. But for all of the metrics and information, we rarely use these KPIs for sale to improve the sales force and their results.
Here are five KPIs that Measure Sales Effectiveness:
- Close Rate
- The Right Opportunities
- Control of the Conversation
- Average Deal Size
- New Meetings
KPIs for Sales Effectiveness 1: Close Rates
The most important KPI for sales is the salesperson's wins ratio. This key sales performance indicator measures the salesperson's effectiveness. Sales leaders and managers who don't focus on sales effectiveness and the need to improve their sales skills ask their sales forces to create more new opportunities. There is no reason to create an abundance of new opportunities only to lose a large majority. The order here is important, especially if you are pursuing net new business.
It is difficult to improve win rates. It's easier to ask your team for more opportunities. Even though it takes time, energy, and money to level up your sales force, increasing effectiveness is the fastest way to reach your goals. You don't improve your results by creating more opportunities; you improve your results by winning more or the opportunities your team creates.
This metric tells us more about the sales leadership and their managers than it does about the individuals and their win rates. Improving this KPI is the most important initiative for sales leaders who want growth.
The higher the close rate, the better your results. This is how you close more deals.
KPIs for Sales Effectiveness 2: The Right Opportunities
You can never close a deal you didn't first open. Hitting your targets means creating and winning new deals. But all opportunities are not equal. Some are more valuable than others. Some belong nowhere near your pipeline. Each individual salesperson's pipeline is a sign of their effectiveness when it comes to creating value for their prospective clients in a first meeting. The frequency of clients refusing a second meeting seems to accelerate, suggesting that buyers are disappointed with the sales conversation.
Sales leaders who look at the opportunities without taking a deeper look to determine the true value of the opportunity will struggle to reach their goals. The first order of business with discerning what is an opportunity can't just be a salesperson having a first meeting with a prospective client. While BANT isn't a useful way of qualifying, it's important to ask the salesperson if the client scheduled a second meeting and why they are interested in change. Also, eliminate opportunities that are not right for your company and your goals.
The number and total revenue of the opportunities are important metrics. They also need to be managed. You can start that process through territory management.
KPIs for Sales Effectiveness 3: Control of the Conversation
This metric should replace velocity or sales cycle. The idea that one can shorten the sales cycle often leads to salespeople trying to accelerate deals at the expense of their contacts. Salespeople, especially those who are One-Up, are already so far ahead of their prospective clients that they can go faster than their contacts. Deals fall apart when salespeople pursue a pace that disconnects them from their contacts and their needs.
The ability to convert each meeting into another meeting is more important than the speed at which they have these meetings. Time does not kill deals. Time with no forward motion kills deals. There are a lot of other things that kill deals, like salespeople rushing their clients. Not creating the right value for the client will also result in contacts going dark or moving on to a salesperson willing to spend time with them, helping them with the decision they are making for their company and their future results.
This metric can be measured in the salesperson's ability to leave a meeting with another meeting on their prospective client's calendar.
KPIs for Sales Effectiveness 4: Average Deal Size
While it is not true that larger clients are better than smaller clients, winning large clients is often more challenging than smaller deals. Larger clients do much more for a sales organization with net new revenue and goal attainment. This KPI for sales provides another view of the salesperson's effectiveness. Larger clients deciding to change is often important and strategic. Because they need more help from the salesperson, these deals can be competitive and often more difficult to win. This is how sales effectiveness impacts large clients.
This KPI for sales provides another way to assess the sales effectiveness of the individual and the sales force. A low average deal size often means the salesperson is not effective enough to win large clients. But it might also mean the salesperson isn't pursuing larger clients. The more you develop your sales force, the greater their confidence in pursuing and winning larger deals.
KPIs for Sales Effectiveness 5: New Meetings
Every good thing that ever happens to a salesperson begins with meeting a stranger. The number of new meetings is still important, even if a salesperson succeeds. The number of meetings isn't nearly as high for salespeople and sales organizations with high sales effectiveness as it is for companies that have low effectiveness. Whenever you see sales leaders suggesting the answer to every sales challenge is "more," you can be certain they have a low effectiveness.
You might notice that salespeople with high sales effectiveness need not make a lot of calls to get a meeting. Nor do they have to create a lot of opportunities because they can win enough without wasting opportunities. Those who count phone calls are better served by counting meetings, the outcome of cold outreach. Here is how you can help your team succeed at B2B sales prospecting.
5 KPIs for Sales
These five KPIs for sales will help you measure and improve your team's sales effectiveness. Where you recognize gaps, you need to develop the sales force by training and coaching them. The better your team, the better your results. By looking at these KPIs, you can help individuals, as well as your team. If you want better sales results, improve your overall sales effectiveness.