A question to all sales leaders out there: have you ever had great months or terrible months in sales but not really known why or how? Of course you have. It was a facetious question. But not to worry, you’re in good company. You’re also in luck because Copper Director of Sales Training, Kyle Bastien, and VP of Sales, Jake Young, at Grow.com teamed up to share the tough questions they’ve had to ask themselves throughout their careers and discuss and debate the best way to get the answers.
Watch the webinar and read the recap below to get the real sales metrics and equations they use to find the answers to some key questions around where failure points are in sales and what behaviors are really important to growing your sales team.
Here’s six key sales questions and the equations Jake and Kyle recommend you use to get the answer.
What is the current state of our baseline KPIs?
It’s incredibly important to establish the baseline metrics of your funnel. If you don’t know where you stand you’re not going to be able to chart a credible course for your team or know which levers to pull to improve the business and drive meaningful results. This equation can be looked at like a funnel, and is meant to help you understand the shape of the business and where you are, and maybe where you need to optimize, in terms of number of leads, deal size, conversion rates, and generating more opportunities.
The Revenue Equation:
Leads -> Opportunities -> Wins -> Average Deal Size = Revenue
What rate are my qualified leads growing?
Lead velocity rate allows you to see what rate your qualified leads are growing month over month. It tells you more of what you’re trying to accomplish than just what we did at the present state. If your leads are growing faster than your revenue, that is where you can start to predict future growth. If you want to grow your sales by 100%, you need to grow your leads by 120%. Being able to quantifiably track your lead velocity is the best way to see where you’re going to be at in the future.
Lead Velocity Rate:
LVR = Last Month MQL - This Month MQL / Last Month MQL x 100
When should pipeline materialize?
Revenue forecast is one of those things that’s self reported by the rep. I hate to say it, but sales people are generally poor at predicting the exact timing of when deals are going to close, especially as the number of opportunities they work increase. So what do you do? Chart your pipeline created by week, in cohorts, and then chart future revenue based on win rate and timing. Compare this analysis to the close dates on projections of the rep to see who it taking a realistic look at the future revenue. This equation will help make forecasting revenue based on data rather than rep sentiment.
Revenue Forecast = Weekly Opportunities Created x Win Rate x Average Deal Size x Sales Cycle Distribution
Are my reps on pace for their ramping period?
Every sales leader must know, on a basic level, how long it takes to get your reps to full productivity. This will factor into your forecast and help you understand if you have the ability to hit your targets and when your team is ready for more growth. If you are wondering how effective are your training and hiring programs then this is an equation you should consider using.
There’s an interesting “X” factor here, which is salespersons experience. Not all reps are created equally: a well seasoned rep will ramp much faster than an up-and-comer. The difference in experience plays a huge role in the equation you use to measure ramp period and help you understand how quickly can you get your team ramped and hitting their number.
Ramp time to full productivity:
Ramp-Up = Amount of Time Spent In Training + Average Sales Cycle Length + “X”
(X = sales rep experience)
What channels are ‘closed won’ deals coming from?
The beauty of this metric is that it can measure how your sales and marketing engine are working in tandem. It will help you better understand how productive your reps are, which lead sources are driving the most revenue, where to allocate resources, and the effectiveness of your sales training. This metric will really give you the benchmark inside of a company that you can measure marketing and sales reps alike against. Kyle and Jake recommend adding a retention number to the equation so you can see if you’re getting good, long term customers.
Revenue per Lead by Channel
Revenue Per Lead = Leads From One Channel / Revenue From That Channel x Retention %
What actions are truly predictive of purchase?
If you like Michael Lewis’s book ‘Moneyball,’ then you’ll like this equation. Most companies are aspiring to build a product that is “sticky” and run a sales experience that adds value at every stage. The Golden Motions Analysis will help you figure out how. This is not really a metric, but more of a correlation analysis that can help you predict retention or purchase based on user behavior.
Golden Motions Analysis
Frequency of ‘Motion’ vs. Frequency
Now that you’ve read the overview, click here to watch the full webinar. Kyle and Jake will walk you through the details, with real use cases and examples, leaving you with practical knowledge you can incorporate into your business today!