Selling can be complicated in the best of circumstances. But when both reps and managers lack visibility into their sales pipeline or don’t know which metrics to track over the long term, it is often impossible to get to those ever-rising quota numbers.
Sales metrics allow you to clearly see your customer’s journey — as long as you follow the right data. With everyone looking to do more with less these days, no sales team can afford to waste time and energy tracking the wrong data or chasing down leads and opportunities that aren’t leading to conversion rates.
That energy should be spent selling. Especially since:
- The average number of buying interactions rose from 17 in 2019 to 27 in 2021.
- The average company loses 10–30% of its customers each year.
- 9 out of 10 companies use two or more sources of contact data to learn more about prospects.
If you’re looking to increase conversions and start gaining confidence in your pipeline forecasts, it’s time to start with your sales pipeline analysis. Read on for an in-depth look at the sales pipeline and the critical metrics you need to know.
What is the sales pipeline?
The sales pipeline is opportunity data that can be represented visually to allow reps and stakeholders to see where all their deals sit. It’s used for converting leads into sales and organizes how reps track and manage their sales activities. It allows reps to picture potential buyers as they move through different stages in their journey, with details about each prospect and deal.
A sales pipeline focuses on revenue opportunities, giving sellers insights to take meaningful actions to close deals faster. It visually demonstrates the stages (i.e., prospecting, proposal, negotiation, or closing) of the sales process and illustrates what’s needed to meet revenue targets.
Why analyzing your sales pipeline matters
The sales pipeline lets leaders make revenue forecasts, identify problem areas, and plan corrective actions — if you want better sales performance, you need to be tuned into your pipeline.
Here are a few tips for pipeline monitoring:
- Create and follow a schedule for pipeline monitoring
- Track sales funnel metrics that affect pipeline flow and sales performance
- Maintain accurate account details
- Use platforms that provide a full-featured dashboard for complete pipeline visibility
Leaders should set sales KPIs to track the effectiveness of sales activities to optimize the sales process overall.
For sales organizations, the pipeline is your lifeline. With that in mind, we’ve collected some of our favourite metrics to track and analyze to keep your pipeline in tip-top shape.
Metrics to use to analyze your sales pipeline
Since metrics serve as indicators of your sales team’s overall effectiveness, tracking the right ones can help illuminate what parts of your sales process should be adjusted — or repeated.
Below, we’ve compiled a cache of important metric areas to help sales leaders best support their rep productivity, efficiency, and execution.
1. Sales activity metrics
Sales activity metrics are data points that reflect the performance of your sales team. They help leaders understand how individual efforts contribute to the team’s overall success. These metrics can include stats, such as:
- New prospects reached
- New leads created
- Calls dialled
- Emails sent
- Follow-ups sent
- Meetings scheduled
2. Sales pipeline metrics
For managers, keeping your pipeline healthy means keeping tabs on many moving parts. Leaders need a deep understanding of active deals and any issues that might be slowing things down.
A few key sales pipeline metrics include:
- Average deal size: Just like it sounds, average deal size refers to the average size of your deals. It is calculated by adding the total revenue achieved in a set period (e.g., per quarter) and dividing by the number of closed/won opportunities for that timeframe.
- Average sales cycle length: The time it takes for an initial lead to become an actual buying customer helps teams evaluate the efficiency and effectiveness of their strategy. The length of the sales cycle is important because the quicker sales close, the more deals a rep can work on in a given timeframe, which can have a deep impact on revenue and profitability.
- Customer acquisition cost (CAC): Indicates how much it costs to land a new client, calculated by dividing the sum of your marketing and sales costs by the number of closed deals during a particular period. This metric is important for determining the ROI on marketing and sales efforts and overall profitability.
- Pipeline coverage: The ratio between the total dollar value of your sales funnel (all opportunities) and your revenue targets (the percentage you need to close). Sales managers should keep an eye on this metric to determine the likelihood of reaching quota — when you’re able to see the early warning signs, corrective actions can be taken.
- Qualified leads: Prospects that fit the profile of someone likely to buy. Tracking the number of qualified leads can help you better optimize your prospecting process. Companies that maintain a steady flow of qualified leads can usually rely on more predictability of the pipeline.
- Win rate: This helps determine how effective your team is at closing deals and is calculated by dividing the number of closed/won deals by the number of opportunities created during that same period. Sales managers can review win/loss data across all reps to look for repeatable successful tactics and coaching opportunities.
3. Sales productivity metrics
In sales, efficiency and productivity can be the difference between closing or losing deals.
Sales productivity metrics provide insight into where your reps spend their time so you can help them make adjustments as needed.
Start with the sales cycle duration; how long does it take your rep to bring a sale to completion?
Then, assess other factors which might be contributing to the inefficiencies of your sales reps, including:
- How much time are your reps spending on non-selling activities? What about how much time they spend recording their activities?
- How much time are your sales reps spending talking to prospects?
- How many different tools is your sales team using?
4. Sales KPI metrics
Sales KPI metrics are data generated by sales activities that are used to measure performance against strategic goals. This information helps track if a business is meeting its objectives and is the easiest way to measure the health of your pipeline.
A few key sales KPI metrics include:
- The average revenue per user (ARPU): The mean of revenue from each account or customer and is usually calculated depending on your sales model. To calculate ARPU, divide your total revenue over a particular period by your total number of users.
- Churn rate: The percentage rate at which customers stop subscribing to a service. Calculate your churn rate by dividing the number of customers lost over a specific period by the total number of customers at the beginning.
- Net Promoter Score (NPS): Helps businesses to measure customer loyalty. To calculate NPS, ask your customers to rate how likely they are to refer your company to someone else on a scale from one to ten.
- Conversion rate: The number of sales divided by the number of leads that reveals how efficiently your team converts the leads that enter the funnel.
5. Leading and lagging indicators
Sales leaders use leading and lagging indicators to understand trends, make predictions, and evaluate their team’s results — such as whether or not they are on track to meet their objectives.
Leading indicators are forward-thinking measurements that predict the likelihood of achieving a goal and include numbers such as new opportunities created or average opportunity size.
Lagging indicators quantify and reflect your team’s results and can include revenue generated, number of closed won opportunities, and quota attainment. Sales teams use these metrics to adjust their sales plans for the next cycle to achieve better outcomes.
6. Sales lead generation metrics
Understanding lead generation metrics lets you measure the effectiveness of your lead generation strategies and can help improve sales and marketing alignment for your organization.
Sales lead generation metrics can be determined by:
- Lead generation rate: The total number of leads captured divided by the total number of visitors through a particular channel.
- Cost per lead: The average amount of money your team spends to acquire a new lead. You can calculate this metric by dividing the amount you’ve spent by the number of new leads you’ve acquired.
- Conversion rate: The number of qualified leads that result in closed-won deals. Consistently tracking this metric helps you to understand how efficiently your team turns new leads into paying customers. Calculate your conversion rate by dividing the number of leads converted into sales by the total number of qualified leads over a specific period.
Proactively detect pipeline risks with Outreach
In an economic downturn, every opportunity matters. Manually reviewing your pipeline to figure out which deals are at risk is often a requirement that comes at the cost of actually selling.
To give sales teams a more holistic view of pipeline health, Outreach assigns a Deal Health Score to every opportunity in your pipeline. As a result, sellers using Outreach proactively understand deal risk and gain more confidence in deal health accuracy. Deal Health, which is part of our revenue intelligence solution, Outreach Guide, gives sales managers and reps a tool to not only identify which deals may be off track – but specific insights about what is going well, what could be better, and quick actions that enable you to get the deal back on track all in one place.