Manage Your Sales Team Effectively With The Right KPIs

Your funnel maps the progress of leads through the marketing and sales process.  Some companies have separate sales and marketing funnels, and some combine them. For the sake of understanding the progressions, let’s combine them for now. 

It’s important to understand that only a small percentage of leads will make it from the first stage of your funnel to close.  The ratios are important.  You will need to be clear about how many leads are needed at each stage in order to close enough deals to hit your sales goal. 

Let’s say your marketing to sales funnel goes like this:  Engage, Download, Marketing-Qualified, Sales- Qualified, Cultivate and Close. 

Calculate the loss ratio at each stage, and how fast leads typically go through the funnel.  Once you know those ratios, you can calculate how many leads are needed at each stage to hit the sales goal overall, and for each product.  

Let’s run through an example:  For product 1, how many leads need to go in the top of the funnel, for one to come out the bottom?  We can work that backwards.  For one to close, we need at least 4 in Cultivate, 7 in SQL, 10 in MQL, 20 in download and 100 in engage.  Next you can figure out how long leads typically stay in each stage.  The speed from stage to stage is the velocity.  That could speed up or slow down at different stages. 

Some leads don’t come through marketing. Sellers may prospect in existing accounts, get referrals or cold call. These leads will have different close ratios and velocities.  

The first and most important thing to measure is if there are enough leads/opportunities at each stage of the funnel to hit sales goals. If your sales goal is $10,000 per quarter, your average sale value is $2,500, your sales cycle is 12 months, and your sales ratio is 10 prospects to one close, then you can figure out the math from there. 

 At any given time, the funnel needs to look like this:

Second, are things moving through the funnel at the right velocity? The KPI around that might be based on average number of days from sales qualified to closed.  If the average is 12 months, then the average should be around 365 days. 

Those measures may be the most obvious, but there are some other key KPIs that matter.  Many companies measure the number of calls or emails.  While that may matter if you have SDRs or sales reps who are cold calling, that number is less important once a lead is qualified.  

Once a lead is qualified, it is important to track the next actions.  Every lead must have at least one next action planned.  That next action should be very specific.  “Follow up” doesn’t work because if a rep is working on 100 leads, they won’t remember exactly what to follow up about. The next action needs to be a specific action, ask or deliverable. 

Another measure is how many qualified opportunities have the next meeting or phone called scheduled with the client.  If the client hasn’t agreed to a next action, chances are, the next meeting will never get scheduled.