5 Sales Pipeline Metrics You Should Be Checking for Growth

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    Understanding your sales pipeline is a fundamental sales process for business growth. Besides tracking average revenue and other apparent success indicators, managing your pipeline accounts for less visible sales metrics like qualified leads who are stuck in your sales cycle or have fallen off the wagon. 

    Without a firm understanding of what exactly constitutes growth in your sales funnel, you can’t accurately forecast sales and the best course of action moving forward.

    That’s where tracking your sales pipeline metrics comes in.

    Sales pipeline metrics let you review your key performance indicators (KPIs), including revenue and sales activities, in terms of pre-defined, long-term objectives. These KPIs, when clearly defined, evaluate your competitive positioning and identify areas for growth. 

    This article will discuss three main ways to set up KPIs and manage them effectively for growth. Let’s dive in. 

    Understanding The Sales Process

    Before we dive into pipeline metrics, it’s important to have a thorough understanding of the typical sales process. Understanding and optimizing your sales process is crucial for driving growth and maximizing revenue.

    A well-defined sales process provides clarity and direction to your sales team, ensuring that every interaction with a prospect is purposeful and aligned with your business objectives. Here’s how you can outline and refine your sales process:

    1. Prospecting: The first stage of the sales process involves identifying and qualifying potential leads. This may include researching target market and industries, leveraging networking events, and utilizing marketing campaigns to attract prospects to your sales funnel.
    2. Qualification: Once you’ve identified potential leads, it’s essential to qualify them to determine their fit for your products or services. Qualification criteria may include factors such as budget, authority, need, and timeline. By qualifying leads early in the process, you can focus your sales efforts on those most likely to convert into customers.
    3. Discovery: During the discovery phase, sales representatives engage with a number of qualified leads to understand their specific needs, challenges, and goals. This involves asking probing questions, actively listening to responses, and uncovering opportunities to position your offerings as solutions to the prospect’s pain points.
    4. Presentation: With a clear understanding of the prospect’s needs, sales representatives can tailor their presentations to highlight the features, benefits, and value propositions of their products or services. Presentations may include product demonstrations, case studies, and testimonials to illustrate the potential impact on the prospect’s business.
    5. Objection Handling: It’s common for prospects to raise objections or concerns during the sales process. Effective sales representatives are prepared to address these objections head-on, providing relevant information and reassurance to alleviate any hesitations the prospect may have.
    6. Closing: The closing stage involves securing commitment from the prospect to move forward with the purchase decision. This may include negotiating terms, overcoming final objections, and obtaining signed contracts or purchase orders.
    7. Follow-up: Even after the sale is closed, the sales process continues with follow-up activities to ensure customer satisfaction and foster long-term relationships. This may involve providing ongoing support, addressing any post sale concerns, and seeking opportunities for upselling or cross-selling additional products or services.

    By defining and optimizing each stage of your sales process, you can streamline your sales efforts, improve conversion rates, and ultimately drive growth and profitability for your business.

    3 Steps To Building Your Sales Pipeline KPIs

    Developing your KPIs is a critical strategic planning process for company growth. But you must first define your goals and lay down a strategy to achieve them before doing so. That allows you to see all the data points from an informed angle and measure the few crucial ones that help you understand performance. 

    Now, let’s discuss how to build KPIs for your sales pipeline metrics below.

    1. Identify Your Data Sources

    Some common sales pipeline metrics are nothing more than supporting characters in a larger objective. Not every metric will qualify as a key performance indicator. You can streamline the data you collect to make informed decisions for a concrete set of objectives with that in mind. 

    For instance, if your objective is to retain customers, you’ll need data from your CRM software. Standard CRM metrics like upsell rate, sales cycle length (fast vs slow sales cycle), net promoter score, and customer acquisition cost do little for that pre-defined objective. 

    Instead, you should focus on customer retention cost, churn, and renewal rate to build the KPIs that matter the most. 

    The same thing applies if you’re measuring sales for a particular quarter. To understand performance, you’ll need the revenue data from your company’s invoicing and accounting software. 

    Once you understand your sources, you must collect and manage them. That means setting up tools to collect all the data you need from multiple sources and then creating a dashboard that gives you access to your data. 

    ClicData connects to and extracts data from your CRM, accounts, and invoicing systems, plus over 250 sources into a single data warehouse. That way, you’re able to align all your data sources for everyone on your marketing and sales teams. 

    2. Treat The Data to Make it Usable for Analytics 

    Now that you’ve identified your data sources, you should treat and transform them into visually digestible insights. 

    This treatment involves data cleansing to detect and remove (or correct) corrupt, duplicate, or inaccurate records from your database. Ideally, the remaining data should support your defined KPIs to a large extent. After which, you merge and unify useful performance indicators to create a cohesive data outlook on your dashboard. 

    ClicData’s user-interactive dashboard gives you the freedom to combine multiple data sources to build custom KPIs and tailor your reporting to make data-informed decisions. 

     3. Visualize and Share Your Sales Pipeline KPIs 

    It’s imperative that everyone in your company understands your goals and how you’re tracking your progress toward them. That is especially crucial for leaders and stakeholders and as important for everybody at all levels in the company. 

    Why? KPIs should be a part of everyone’s decision-making process. Visualizing and sharing your KPIs ensures every employee sees how different department objectives impact the company’s overall KPIs. 

    KPI visualizations are only effective when you show patterns and variations in a way that engages the viewer. You must ensure the data is unambiguous, accessible, and actionable by using interactive visualization widgets such as maps, tables, and charts.

    sales pipeline metrics: pre built sales dashboards templates v2 banner

    That way, you’re able to keep leaders and sales teams invested in succeeding and improving existing KPIs for long-term goals. 

    5 Sales Pipeline KPIs To Manage Your Pipeline Better

    An accurate and effective sales pipeline cuts across various departments and covers every stage of the marketing funnel – from customer acquisition to lead conversion and after-sales. 

    That’s why managing your sales pipeline is crucial. You may get fresh insights into your sales process, improve your sales funnel, and maximize resources by analyzing what happens at each stage of your pipeline.

    Here are five Key Performance Indicators (KPIs) to monitor as your business expands. 

    1. Sales Pipeline Metrics: Conversion Rate

    The conversion rate is a vital sales pipeline metric that analyzes the effectiveness of your pipeline. It essentially tells you how (and where) you’re converting qualified leads into sales opportunities and where you’re losing them. 

    Let’s put this into context. 

    Your customer passes through different stages of the pipeline before becoming a customer. While these stages vary from business to business, it has four distinct stages regardless of the product offering. 

    The different stages include:

    • Lead Generation: This stage drives people to your site and consistently builds their interest in your offering.
    • Lead Qualification: This stage checks whether your sales qualified leads (SQLs) have a buying intent and fit the buyer’s persona.
    • Proposal or Quote: This involves delivering a custom quote or pricing to the qualified lead. 
    • Sale: Here, the lead turns into a customer.

    The sales pipeline conversion rate calculates the number of sales qualified leads that move from one stage to the next with this formula:

    sales pipeline metrics: Pipeline conversion rate formula

    Your chances of landing a transaction or closing deals increase as your sales leads progress through the sales pipeline. You can use the sales pipeline conversion rate to measure the efficacy of various sales and marketing strategies and campaigns. 

    But keep in mind that conversion rate as a KPI relies on the context in which you’re tracking. For instance, a 2.5% conversion rate might be excellent for email marketing campaigns but might be too low for social media marketing campaigns. 

    Nevertheless, managing this sales pipeline metric will enable you to identify stages with slow sales processes that might result in leaked sales leads from the pipeline. 

    Delving Deeper Into Sales Qualified Leads

    Sales qualified leads (SQLs) are prospects that have been identified as having a higher likelihood of converting into customers based on their engagement with your marketing and sales efforts. These leads have demonstrated a genuine interest in your products or services and have met specific criteria that qualify them for further sales engagement.

    Here’s how you can identify and leverage sales qualified leads to drive growth:

    1. Lead Scoring: Implementing a lead scoring system allows you to assign numeric values to various actions and behaviors exhibited by prospects, such as website visits, email opens, and content downloads. Leads that reach a predetermined threshold are considered sales qualified and are passed on to the sales team for further follow-up.
    2. Behavioral Analysis: Analyzing the behavior of prospects throughout the sales funnel provides valuable insights into their level of engagement and readiness to purchase. For example, prospects who consistently engage with high-intent content or demonstrate specific buying signals are more likely to be considered sales qualified.
    3. CRM Integration: Integrating your customer relationship management (CRM) system with your marketing automation platform allows you to track and manage sales qualified leads effectively. This ensures seamless communication and collaboration between marketing and sales teams, enabling timely and personalized engagement with prospects.
    4. Lead Nurturing: Not all leads will be immediately ready to make a purchase decision. Implementing a lead nurturing strategy allows you to continue engaging with prospects over time, providing valuable information and resources to guide them through the sales process. By nurturing sales qualified leads, you can increase conversion rates and maximize the ROI of your marketing efforts.
    5. Alignment with Sales Process: Aligning your sales qualified lead criteria with your sales process ensures that your sales team is focused on engaging with prospects who are most likely to convert into customers. By prioritizing sales qualified leads, you can optimize your sales efforts and drive more meaningful conversations that lead to closed deals.

    Incorporating sales qualified leads into your sales process allows you to prioritize your resources and focus your efforts on prospects with the highest potential for conversion. By leveraging data-driven insights and strategic targeting, you can accelerate your sales cycle and drive sustainable growth for your business.

    2. Sales Pipeline Metrics: Length of Your Sales Cycle

    If pipeline conversion rates show how prospective leads flow through the pipeline to become potential customers and later on actual customers, then your sales cycle length estimates how long it takes.

    This KPI helps you make accurate revenue forecasts, allowing you to gauge your company’s financial health and make informed decisions. Many factors can affect the length of your sales cycle. Apart from industry benchmarks, the products or services you offer will more or less determine the actual length of your sales cycle.

    According to Marketing Charts, the sales cycle of B2B businesses can take anything from one month to a year. 

    sales pipeline metrics: typical b2b sales cycle length

    Source: Marketing Charts

    Your average sales cycle length can help you determine why certain products have a higher conversion rate and what individual salespeople can do to make various pipeline points more effective. 

    Here’s how to measure your average sales cycle: 

    sales pipeline metrics:  Average Sales Cycle Length formula

    For practicality, below is how you can apply this in the real world:

    sales pipeline metrics

    Following this application, your average sales cycle length is 19.33 days. You may use this metric to forecast your next sale or compare it against industry standards to evaluate and maximize your sales cycle efficiency.

    3. Sales Pipeline Metrics: Customer Turnover

    When you’re not retaining customers, you’re losing them. That’s a customer turnover or customer churn rate. 

    Customer turnover rate or churn rate is a valuable sales pipeline metric to manage when customers pay you at regular intervals, such as in a subscription model. For mobile apps or SaaS businesses, this would mean customers who cancel subscriptions. But for eCommerce businesses, it could mean customers who fail to make another purchase within an established time frame. 

    Since the customer turnover rate only considers paying customers, it excludes customers at the trial stage to get an overview of customers lost at a specific period, thus making the churn rate the inverse of customer retention.

    So, how do you calculate customer turnover in your pipeline?

    Start by dividing the total number of customers lost over a specific period by the total customers gotten at the beginning of the same period, then multiply by 100. 

    For example, if you lost 100 customers in January, but had 3,000 (paying) customers at the start of January, then you should calculate customer turnover as follows:

    sales pipeline metrics

    Alternatively, you can also track customer turnover by cohort. A cohort is a group of people who signed up for your services at the same time.  It uses a similar formula — total customers lost from cohort divided by total customers in cohort, multiplied by 100. 

    The cohort churn rate allows you to observe how long customers use your product before abandoning it. 

    Therefore, if your customer turnover is high or customers are dumping your products after a short time, then your customer service or products may be unsatisfactory. According to Zendesk, poor customer experience could cause 80% of customers to abandon a brand. 

    But by measuring this sales pipeline metric, you’re able to predict future earnings and identify customer churn patterns that are detrimental to your business.

    4. Sales Pipeline Metrics: Ratio of Sales to Support

    A robust sales process requires not only sales team effort, but marketing efforts as well. Not just with sales and marketing professionals, but management and support staff, too. Though some reports might argue that the ideal ratio for maximum efficiency is 5:1, the truth is, there is no hard and fast rule to it. 

    You might have to consider other factors like time, industry, and customer service. But more than anything, your product type will determine the kind of support and ratio of sales to support your company must implement. 

    Managing this metric will identify the products that customers need more support to handle or which takes up more time and attention from support staff.  

    If your products are too difficult to use or have poor documentation, you might need more support staff. On the flip side, if it is user-friendly, you should have more sales reps than sales support staff. You need to get all customer-facing departments on the same page to hit the sweet spot of this composition and maximize your company’s efficiency. 

    You need to integrate different strategies to capture a share of the market. Sales automation software will automate your sales outreach and improve overall sales efficiency. On the other hand, an effective email outreach campaign will make subsequent product sales easier. If the product becomes too technical for users, your customer service becomes a good support system for your sales support staff. 

    5. Sales Pipeline Metrics: Profitability

    What’s a business without profit? It’s easy to compare current profit with the one from previous accounting periods to gauge your business growth. 

    However, if you want to monitor your company’s financial health, you’ll need to keep a pulse on your net profit and net profit margin. Net profit is the amount of money left after deducting interest, operating, and tax expenses, and net profit margin is the percentage of your revenue, that is, profit. 

    This metric is quite different from the gross profit that helps you identify ways to minimize the cost of goods sold or raise product prices. The net profit as a KPI shows you profit, and the net profit margin shows you profitability. 

    The formula for calculating net profit is simple. First, add your total expenses (i.e., operating expenses, including taxes and interest). Then, minus that figure from total revenue. 

    That is your net profit. 

    Although there isn’t an exact number for a healthy net profit, you’ll want to avoid a net loss, as this will mean your costs are too high. To mitigate this, track every expense to identify areas where you can save more money without jeopardizing the company’s operations or efficiency. 

    Moving forward, if you want to measure your business’ profitability, then track the net profit margin using this simple formula:

    sales pipeline metrics

    The net profit and net profit margin metric make it easier to know which deals or sales opportunities are profitable and lead to the most revenue growth. That, in turn, allows you to make intelligent choices when assessing what deals to assign to a pipeline or what product or services to upsell. 

    Design Your Key Sales Pipeline Metrics According to Your Business Needs

    There isn’t a one-size-fits-all process for all industries when it comes to measuring your company’s sales success and growth. You’ll have to build your own sales pipeline metrics depending on your company’s goal and objectives and transform this raw data into visually appealing information for everyone in your organization. 

    Nevertheless, the sales pipeline metrics discussed above are dynamic measurements to monitor your sales pipeline. You’ll need to keep refining key metrics as you optimize your pipeline or replace them with other indicators of success that align with your objectives at certain times.

    While managing these KPIs can impact your business positively, it takes a bit of time and effort. With consistent practice, you’ll gain better visibility into performance and make better decisions that will tow your business on the right path.