The success of sales teams is typically measured by tracking sales metrics as they go through a proverbial sales funnel. These metrics are broadly referred to as “Funnel Metrics.” However, tracking quantitative metrics alone may not be sufficient to provide actionable insights for sales optimization coaching. To gain a more comprehensive view of performance that is tied to specific actionable levers, different data types and analytical methodologies must be included in a holistic sales funnel management process.
What are Funnel Metrics?
There are several different funnel metrics that can be tracked, including new opportunities (leads), opportunity close rate, qualified opportunity close rate, sales cycle, average selling price, deal size, and win rates. Each metric is important in its own right. Since a metric may be sequentially dependent on a different metric — for example, a qualified opportunity necessarily happens after a new opportunity is identified, it is important to analyze or predict the quantitative data sequentially. However, structuring data is only a step in the right direction. Gaining a comprehensive view of performance for sales optimization coaching requires the inclusion of qualitative data as well as quantitative funnel metrics. Moreover, other analytical methodologies that tie and compare the data are equally important.
Drawbacks of the Traditional Approach to Funnel Metrics Management
A drawback of the traditional approach to managing funnel metrics is that it is time-consuming to track and difficult to interpret. Additionally, without the proper integration of the right data and analytic methodologies, funnel metrics only give a snapshot of performance at a specific point in time and may not be representative of the sales team’s overall performance.
A Holistic Approach to Funnel Metrics Management
Quantitative funnel metrics answer “what happened” questions, while qualitative data is better suited to answering “why” questions. For instance, if you wanted to know why a salesperson was not performing well, you would ask their manager for an assessment of their skills. The challenge is figuring out how to seamlessly integrate the two so that you can benchmark a salesperson’s performance in a meaningful way. Predictive modeling can indicate future sales if done correctly, and a benchmarking methodology can explain why one salesperson is a better performer than another within a sales role.
Measures that combine both quantitative and qualitative metrics, such as a manager’s assessments of salespersons skills or customer satisfaction scores, can be used to establish a more scientific framework for sales optimization. By grasping how the metrics move through the funnel, managers can provide productive coaching to their sales people. Managers can also help salespeople improve their conversion rates by identifying areas where they are losing leads and customers. Additionally, funnel metrics can help sales people identify opportunities to upsell and cross-sell to existing customers. For example, a holistic framework demonstrates how to increase the average size of deals closed by salespeople. This is done by ensuring more deals are closed at higher values in less time.
When salespeople have to make tradeoffs between metrics, predictive analytics can help prioritize which metric combination is more important. For example, for some salespeople, it may be more productive to increase the sales cycle duration (usually, a shorter time frame is preferable) to increase the quality of the sales opportunity. For other employees, the reverse may be true. Predictive analytics marketing can assist in determining what would work best based on the business context.
One example of a success story is Salesforce.com. The Salesforce team effectively used funnel metrics to track their customer acquisition funnel and identify areas where they were losing customers. They then used predictive analytics to identify patterns in customer behavior and implement changes that helped improve their conversion rates. As a result, the sales team was able to increase their customer conversion rate by 30%.
By tracking funnel metrics, managers can gain a better understanding of their team’s performance and identify areas for improvement. Additionally, a holistic approach to funnel metrics management can provide actionable insights that can help salespeople improve their conversion rates and average deal size.
In summary, funnel metrics are a key part of measuring success in sales. By tracking various funnel metrics, managers can get a more comprehensive understanding of how their team is performing. Additionally, funnel metrics can provide actionable insights for coaching sales people, especially when combined with predictive analytics.
