Measure the Sales Metrics that Matter

Can you imagine trying to graduate from school without ever getting any progress reports? It would be a lot of fumbling around, not knowing what worked and what didn’t. Was it the color-coded notes? Or staying up all night for last-minute cramming? 

Sales can be pretty similar. We’ll throw a lot of techniques at the wall and hope that they stick. But without the right metrics, it’s hard to know what’s worth doing again and what was a waste of time. The best sales leaders will guide their teams with metrics that evaluate not just activity, but effectiveness too. 

There are about as many ways to measure sales performance as there are people on your team. But not all metrics are created equal – some will give you useful insights, and some won’t. Add to that the fact that many sales teams are working with incomplete data or purely subjective pipeline insights. 

And sure, closed/won is one of the most important metrics as far as the business is concerned, but there’s a lot more you can track (especially if you want to pinpoint where you can improve your performance). But there’s so much you can measure, a lot of companies end up measuring pretty much everything and struggle to figure out what’s actually making a difference.

It’s a lot to consider. So what metrics are actually worth your time, and where do you even start?

Why you want to look beyond just closed/won

Wins are the most common metric used to measure success in sales teams across all industries, and it’s for good reason – every sales org ultimately needs to meet numbers to bring in revenue and keep the company going. So the fact that most sales teams measure based on meeting quota and number of deals closed isn’t exactly surprising. 

But there’s something you need to remember: the number of closed deals is a lagging indicator. It measures the outcome of something that’s already happened, but it can’t help you predict and improve future outcomes. What you sold last quarter is important, but it won’t tell you how to make gains this quarter. 

Activity metrics aren’t enough

It’s easy to get lost in the activity metrics like how many calls a rep made or how many meetings got set up. They’re common enough metrics to measure. But then you run into the issue of focusing on outcomes without necessarily looking at how successful those activities were. 

When it comes to using sales metrics to boost your team’s performance, you need to look at more than just the activities they’re doing. Your metrics need to be able to show you what needs improvement, according to Clinton Patterson, VP of Global Sales Development at Lusha:

“If someone’s not on a trajectory to be successful, what are we trying to fix? Do we say just keep trying harder? Do we say make more phone calls? That means we have no idea what you’re doing wrong. Not very specific advice. It’s our obligation as leaders to understand what the intervention should be.”

That’s where effectiveness comes in. Clinton has it down to a basic formula: “Activity multiplied by effectiveness equals success.”

Activity vs. effectiveness

Activity and effectiveness are the two main ways that Clinton measures the key components of pipeline generation:

“I divide it into two categories. One is activity, and activity is simple. It’s how many calls and attempts you’re making, emails, and social selling– how many times you try to communicate via LinkedIn. And there’s also a fundamental principle that if you’re not basically on the telephone, that’s the most critical, most effective sales technique that all of us have got. You need to be in a conversation. If you’re in a conversation, the propensity for you to win business and set up demos and get approved ops is optimized. So if you are not on the telephone or sending an email, everything else you’re doing is called stuff. Now I’m not saying is that important, but it’s not sales activity. So it’s very easy as a salesperson to get very busy doing all kinds of stuff that not actually selling.

Then there’s the other half of the way I look at the world, which is the effectiveness of what we do. So there’s how much do you do and then how well do you do it, right? That’s our craft.”

Effectiveness can be a whole number of things from a call script to tone of voice (or even talking speed) or whether the rep closed the call asking for a meeting. The problem with that, is it can be pretty subjective to try and figure out what’s working and what isn’t. How can you pinpoint and measure a sales reps’ effectiveness? The answer is ratios. 

Using ratios to measure your sales team’s effectiveness

Ratios are Clinton’s golden ticket for measuring effectiveness. We’ll dive into how it works for an outbound example, but you can apply the same principle to inbound sales efforts as well. 

“I’m not a numbers guy, I’m a ratios guy. What’s the difference? A numbers guy will say, ‘I expect 100 dials a day.’ In my experience, that only solves problems that are related to a lack of activity. It’s assuming that we can’t improve what you’re doing, which is the effectiveness piece. All we can do is more of it.” 

That’s not an effective way to scale. So how do you use ratios to tell a better, more complete story? 

How to create an effectiveness ratio

“Think of what it takes you to book one demo – how many conversations does it take? Here’s a quick breakdown of how you could build that ratio.

• Let’s say your close rate is 50%, meaning it takes two conversations to book a demo.
• How many dials did it take to have a conversation?
• If it takes 10 dials to get a conversation, that means it takes 20 dials to get two conversations to get one demo.  
• The ratio is 20:2:1

Now we know what you need to get a demo a day.

Those are simple numbers to demonstrate, but normally the numbers are a bit more lopsided. With a more realistic ratio of 86:11:1, we’ve got two things to fix. 

1. How do we make it so you have fewer dials to get conversations?
2. How is it that it takes 11 conversations to get one demo?

That tells me that your activity might be good. It also tells me that the first 10 seconds is pretty effective since you’re having those conversations, but you struggle with converting into the next step. It shows me what we need to do to help you.”

Metrics to measure that will help your sales team improve

Now we’ve gone over how you can get more effective metrics using ratios, what should you measure? Think of things like: 

• Number of dial attempts
• Number of unique dials per account
• Number of dials it takes to get a conversation
• Number of unique dials vs. dial volume
• Productivity per lead generated
• Productivity per rep

Then from approved opportunities, you can look at the productivity per rep compared to any metric like average deal size, contribution to revenue, etc. 

That’s the kind of number that will really get you somewhere, according to Clinton. “That tells you whether you’re actually raising the bar in terms of performance per person versus just this big quota number in the sky – which is what drives the company, don’t get me wrong. But you need to be more specific, or you don’t know what you’re fixing.”

Make sure you measure lead quality too

On top of measuring your reps’ performance, you’ll also want to take in information about the kind of leads that are generated. 

• Are they high-quality leads, or is a lot of noise crowding out the pipeline?
• How many sales-qualified leads turn into customers? Where do they drop out of the pipeline? That might show where you need to improve your sales funnel. 
• What do those SQLs that turn into customers have in common? If there’s a certain revenue number, company size, industry, or location that resonates most with your product or service, it’s important to pay attention to it.

One thing to keep in mind, though: figuring out which leads tend to become customers isn’t going to work if you don’t have good data. Maybe you didn’t get to capture deep firmographic details, or you’re looking at data from a year ago that might have changed by now. 

But the more (and more accurate) data you have, the easier it is to make solid predictions and decisions on which leads to go after. Make sure you enrich your data so you fill in any gaps and get the most sound insights possible. 

Key Takeaways

• Sales leaders shouldn’t just measure activity, but effectiveness.
• Using ratios to compare activity to effectiveness helps pinpoint areas for improvement.
• Good metrics rely on having good data.