When we think of sales process management, it’s easy to focus on developing the process, monitoring its use, and revising it over time.
Don’t forget measurement!
One of the benefits of a clearly defined sales process is that it provides you with a foundation for measuring results.
If everyone is following the process and all opportunities are appropriately categorized, you’ll be able to use your sales process to learn a lot about what’s happening with your sales team.
3 Key Measurements for Sales Process Management
Opportunity Stage Length
One of the most valuable measurements is the amount of time opportunities spend in your sales process. If you can develop realistic averages for each stage, you’ll significantly improve the accuracy of your forecasts.
This can also help as you set targets for new hires. Even before they close deals, you can see if they’re moving opportunities through the pipeline at a reasonable speed. You can focus coaching on opportunities that are stalling more than is typical.
Forecasting is an essential component of sales process management, and one important measurement for accurate forecasting is close rates by stage. For example, if you know that, on average, 10% of your qualified prospects will eventually close, you can measure the potential value of your pipeline at the qualified stage.
You’ll need historical data to develop this measurement, but once you have it, you’ll gain a new level of insight into your sales process. If you have any historical data for key stages in the process, you may be able to measure close rates for those stages even before you start capturing new data. Some stages, because of required paperwork or approvals, tend to have more historical data.
Pipeline Churn Rate
Pipeline churn rate is a valuable measure of how dynamic your pipeline is. Churn is simply how many prospects moved through each stage in any given time period.
If you are working opportunities more slowly than you are generating them, you will end up with a backlog in your pipeline and may end up with stale opportunities. You’ll need to have a plan for nurturing those opportunities on a timely basis.
On the other hand, if you are constantly running out of leads, you have a generation problem. If you can scale up prospecting, you can likely increase sales, as your team should have the capacity to work those opportunities.
Ideally, you’ll have a consistently churning pipeline without significant backlogs in any stage.
Sales Process Management Using Measurements
Using Measurements for Training
As you begin to track the data you’re getting from your sales process, you’ll likely identify areas for improvement. Maybe you are seeing a huge drop-off from qualified opportunities to quotes, or your final close rate on proposals isn’t high enough.
This can inform your sales training process, as you target training on skills needed for specific areas of the process. You can then evaluate the success of your training by measuring performance in those specific areas.
Using Measurements for Forecasting
As you track your sales process, over time your forecasting ability should improve. This data is invaluable to your delivery organization, as they can plan how to scale to meet demand.
Remember, though, that the key to any effective measurement is good data. If your team isn’t getting the right information into the system from the beginning, or if they are using subjective definitions of opportunity stages, it will be impossible to develop an accurate forecast.
What measurements do you use for sales process management? I’d love to see your suggestions in the comments!