A sales pipeline is a visual representation of the different stages a prospect goes through before they become your client. It gives a clear picture of which stage your prospect is standing in the sales process. To evaluate a company’s sales pipeline and record the data metrics, the sales leads need to perform a sales pipeline analysis. It is crucial to record and analyze these metrics which not only provides information on the current sales performance but also gives insights into the areas that need improvement. For this, we should observe the sales pipeline stages closely and track certain critical parameters for proper maintenance of the pipeline.
Here’s a list of 10 critical parameters that you need to take into account for sales pipeline maintenance:
1. Win rate
One of the most important parameters of a sales pipeline that needs to be tracked is the Win rate. It is the ratio of the total number of deals closed or sales that happened to the total number of qualified leads you had initially. This is an important metric to be recorded as it gives a complete picture of your sales process. For example, if the win rate is good and improving with time you know that your sales process is doing well or if it’s reducing with time you need to change your sales strategies. Make sure the win rate of your sales pipeline is consistently increasing with time. You can also compare your win rate to that of competitors to identify the areas you need to improve.
2. Average sales cycle length
An ideal customer in B2B can take anywhere between 1-12 months to decide and purchase a product/service. The average sales cycle length of a company is the time taken between the first communication with the customer and the day you close the deal with them. This is an indicator of how successful your sales strategies are and how soon your salespeople can convince your customers. This differs from company to company based on the marketing and sales strategies they use. Instead of working with assumptions, by knowing this parameter, you would be able to know the timeline and work towards reducing the sales cycle length.
3. Average deal value
Revenue is an integral part of any business. As we all know, apart from all other indicators we give importance to the revenue we earn which decides the success or
failure of a business in the long run. An average deal value is nothing but the average amount of money you earn by closing deals. This can be measured monthly or yearly based on your need to track this parameter. While tracking this parameter, you would also be able to identify the most profitable customers, whether you are meeting your
revenue goals for the year, etc.
4. Pipeline Velocity
Pipeline velocity is not a single parameter, but a combination of the above 3 parameters. To put it in simple terms, pipeline velocity is the speed at which a prospect travels through the sales pipeline stages successfully till the end. This can be calculated by taking into account the win rate, sales cycle length, the average deal value, no. of opportunities you got, etc. Basically, this parameter helps you to know the strengths and weaknesses based on which you know how to increase sales pipeline velocity.
5. Customer Lifetime Value
Customer Lifetime Value (LTV) is the total amount of revenue generated by a particular customer throughout their lifecycle with your company. If your LTV is high, you can understand that your marketing and sales strategies are working well. If it is low, it indicates that your competitors are grabbing the attention of your customers. You should act soon accordingly to stabilize your business in the market. One thing is for sure, customer retention is always more profitable than new customer acquisition.
6. Lead Response Time
This parameter is a measure of the time taken by your sales team to reach out /respond to a lead. Lead response time is a sign of how fast your salespeople act in acquiring and converting leads. This is an important metric because every minute you delay there are N number of competitors in the market ready to acquire them. Also, this metric shows the interest of your sales team over a period of time and you can also make weekly reports, analyze and take steps to reduce the response time.
7. Customer Acquisition Cost
Customer Acquisition Cost (CAC) is the total amount of money you invest in acquiring a new customer, which includes your marketing and sales strategies. No wonder you always want it to be as low as possible. Tracking this parameter and comparing it with Return On Investment (ROI) you receive from a particular customer gives you an idea of whether it is worth the deal or you need to cut costs in any specific area.
8. Conversion Rate
Conversion rate is the percentage of leads entering your sales pipeline that are successfully converted into sales at the end. As a business owner, you want every lead to be converted into a client and maintain the conversion rate as high as possible. Your sales pipeline can be divided into stages and you can calculate the rate at which the leads move forward through each stage of the pipeline. This gives you an idea if your leads lose interest in your product at a particular stage and find out the reason behind it.
9. Ratio of leads to qualified leads
A clear understanding of your product/service and the buyer persona is crucial to targeting the right customer for your product. Only when you target the right customers, your win rate will increase. The ratio of leads to qualified leads determines the quality of the leads your sales team identifies. Also, you know how well your methodologies and strategies work and make changes if necessary.
10.Churn Rate
One bitter truth in business is that customers don’t last forever. The churn rate denotes the rate of customers who leave your business and don’t repeat the purchase. It is an important parameter, particularly for subscription model businesses, in which you can identify the pattern of churn rate and work towards reducing it.
Best tool to measure sales parameters
One of the best tools to measure these critical sales parameters is Lystloc. Lystloc’s features such as task management and field sales report are useful in getting sales insights. Also, the automated reports are of great help to analyze the sales performance and build strategies based on the data easily. Lystloc also facilitates saving the repeated customers for your business i.e potential leads and you can fetch this list anytime from the app. You can also view your sales team’s activities in a day using a timeline feature which improves productivity and hence the win rate. For more information and sign up, click https://wwwk.lystloc.com/ .
The bottom line
There is a saying “If you can’t measure it, you can’t improve it” which is true in the case of the sales pipeline analysis. Measuring the above parameters helps you in understanding the health of your sales pipeline and in following the pipeline
management best practices. Sales pipeline maintenance is complex if you keep moving with assumptions. Use accurate data of the sales pipeline metrics to maintain your sales pipeline properly and devise future plans wisely.
