Ahh, the sales pipeline – the land of absolute clarity and data-backed insight that guides your sales team to close at a higher clip.
Oh? This doesn’t sound like your pipeline? That's a bummer.
Let's take a stab at solving that using some insight around your metrics, shall we?
Your pipeline can and should be a living, breathing list of priorities for your sales team, giving them data points and history of previous interactions which allow them to close qualified leads at a higher clip every single quarter.
Sounds like paradise, I know. But it’s possible. Getting to this paradise requires a little TLC around the sales pipeline metrics that are served up to you by every CRM worth a damn
Sales Pipeline Metrics to Track
Fair warning, these aren’t metrics related to the marketing side of the inbound funnel. These are mainly the metrics that your sales director or revenue officer will care about. Once you have these metrics down, head to our post about Sales Pipeline Analysis to learn how to put these into action.
Number of deals in the pipeline
Starting with the basics, this is a metric that is exactly what it sounds like. Use your CRM or spreadsheets to show how many contacts you’re currently engaging and trying to sell. This is a metric that can teach when to hire or fire salespeople based on resources. It’s best to break this down even further to the number of deals in each stage of your sales pipeline. More on that down the page.
Average Deal Size
The sum of all of the previously mentioned deals divided by how many deals there are. For those creating deals of varying dollar amounts, it’s important to keep track of how much money you’ve got coming through the pipeline quarter to quarter. You can begin to make revenue forecasts and plan ahead when you fully understand your average deal size in conjunction with the number of deals in the pipeline and the close ratio.
The formula for win rate is the number of sales qualified leads divided by the number of customers. It shows you the percentage of leads, touched by your sales team, that end up customers. This will give you insight that sounds like “if my sales team works x number of qualified leads, they will close y number of deals”.
Total Pipeline Value
Take all the deals in your pipeline and add them up. Pow! You’ve got the total value of your pipeline if every deal in there were to close today. Spoiler alert, they’re not all going to close in one day. Some won’t close at all. But that’s why we’re here. Your sales pipeline metrics let you look realistically at revenue predictions.
Average Length of Sales Cycle
Take every closed-won customer in your database, and look at their deals. Now, look at how long that deal was in your pipeline - from the moment your sales rep laid eyes on the contact, to said contact putting pen to paper. Find that data for every deal in your pipeline, add them all up, and then divide by the total number of deals. You can consider this stat as your average time to close an opportunity. It’s a valuable statistic as it can allow you to calculate when certain funds will be available (if you’re a bit more bootstrapped) or if you’ll be hitting your sales quotas in a given month.
You’ll see many different definitions of this term – it’s been around for quite a long time, and as you know, the practice of selling has changed over the years. We ascribe to HubSpot’s definition: the sales cycle is the sequence of distinguished actions or stages a potential buyer experiences from their first contact by the sales team, to final purchase.
Across many organizations you’ll see stages along the lines of prospect, connect, research, present, and close, but at Story Block we recommend using stages that are even more accurate and specific to the actions your sales team needs to take.
Probability to Close
This is the percentage of likelihood that an opportunity at a given stage in the sales pipeline will make a purchase. The further down the pipeline they head, the more likely they are to close. For example, someone your sales rep connected with on LinkedIn might have a 5% chance of closing, while an opportunity who just received a proposal after their third meeting will have a 75% chance of closing. Your CRM can do this work for you based on your historical data, but if you’re starting fresh you can generally put your own probabilities at each stage to use as a benchmark.
Lead Response Time
This metric refers to the amount of time it takes for a sales rep to reach out to an inbound lead. This matters because your brand’s promptness influences the buyer’s decisions. The data tells the story here:
- 35% - 50% of sales go to the vendor that calls back first. (source)
- Sales conversions have a 391% higher chance of closing if a lead gets a response within the first meeting. (source)
- In fact, 55% of companies respond after five days. That’s free real estate at this point! (source)
Be prompt and considerate, and your sales efforts will pay dividends.
HubSpot defines sales pipeline velocity as the speed at which leads move through your sales pipeline.
The formula is:
(Number of deals in your pipeline) x (overall successful close rate percentage %) x (average deal size in $) ÷ (length of sales cycle in days)
For example, if you have 12 deals in your pipeline, a .25 win rate, average deal size is $15k, and it takes you 45 days to work a deal, you’re looking at a sales pipeline velocity of $1000/day.
This is a metric that gives you and your CFO some advanced foresight and boundaries for setting budgets. It’s great to keep an eye on because it weighs your deals by their probability to close and keeps you from stretching yourself too thin. Learn more about this sales pipeline formula and you’ll come to love it.
Stacking up to Revenue Growth
These sales pipeline metrics all help to paint the picture of what’s really going on in your sales engine. Drilling in on these KPIs and finding ways to pass your benchmarks from the past quarter allow you to incrementally optimize your processes and grow your revenue in a truly sustainable way. Learn more about achieving and understanding revenue growth in our free, ungated guide.