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 learn a lot about what’s happening with your sales team.
According to Wrike, 96 percent of world-class sales organizations know why their top performers are successful. But only 46 percent of average sales teams can say the same.
3 Ways to Measure the Effectiveness of Your Sales Process
We recommend using the following 3 key measurements to determine the effectiveness of your organization's sales process.
1. Lead & Opportunity Stage Length
One of the most valuable measurements is the amount of time opportunities take to move through your sales process. If you 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. Then, you can apply coaching on opportunities that are stalling more than is typical.
Tracking timing can start at the very beginning of your process – an analysis of more than 2,200 American companies found those who attempted to reach leads within an hour were nearly seven times likelier to have meaningful conversations with decision makers than those who waited even 60 minutes.
Wouldn’t it be helpful if you could measure the time it takes your team to engage leads?
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2. Close Rates
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 provide more historical data.
3. 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.
HubSpot Research found 72 percent of companies with less than 50 new opportunities per month didn’t achieve their revenue goals, compared to 15 percent with 51 to 100 new opportunities and just 4 percent for companies with 101 to 200 new opportunities.
Ideally, you’ll have a consistently churning pipeline that never runs dry without significant backlogs in any stage.
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Using the Measurements
Let's get into how your organization can use these measurements for training and forecasting.
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’re 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 how performance improves 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 implementation team, 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.
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Review & Revise
Over time, you’ll need to review and revise your sales process. If you don’t, you’ll eventually need to start back at the beginning. We recommend reviewing the process quarterly. Here are some things to look for:
- Is the team skipping steps in the process? For example, if they’re commonly jumping from step 2 to step 4, you may need to look at step 3 and see why they’re not using it. They might typically do the activities of steps 2 and 3 together, in which case it may make sense to merge them. On the other hand, if they are truly skipping step 3, consider whether it’s actually necessary and either train the team to use it or remove it from the process.
- Are you planning any sales training? If so, consider how to integrate it into your sales process. A good sales training partner will take the time to learn your process, but they may also introduce a new methodology or recommend changes to your process. If you don’t change the process, you’ll be sending your team a mixed message.
- Are there disconnects between sales and other departments, or disconnects between various groups within sales? If so, your process might be the problem. If you can figure out the root cause of the disconnects, work to revise the process to resolve them. This will help you avoid repeating the same problems.
- Where are you losing opportunities? Losses are inevitable, but if you notice a significant trend in any stage of the process, it’s worth a deep dive. The fix might be a process issue, a training issue, or both.
- Has your CRM system changed? If you’ve made any changes to your CRM system, or you are planning to, look at how those changes might impact the sales process. Will people need to capture more information earlier in the process? Will they need to process paperwork or approvals differently? This all needs to be reflected in the sales process.