Much like children today are a barometer for what society will be like tomorrow, leads in a brand’s sales pipeline are the best hope for sales in the future. And, just as kids require nurturing, businesses must nurture their leads as they grow and develop into qualified prospects who will hopefully convert and ultimately evolve into loyal customers.
But for that to happen, you have to monitor your sales pipeline. There are many metrics to track — and they will vary based on what you’re trying to accomplish — but what follows are the 10 most important metrics to ensure your pipeline is operating at its peak.
10 sales pipeline metrics
- Number of leads
- Ratio of leads to qualified leads
- Win rate
- CAC and LTV
- Conversion rate by stage
- Churn rate
- Average sale size
- Average sales cycle
- Sales per rep
- Sales pipeline maintenance
1. Number of leads
For your business to grow, you have to generate leads, which hopefully will turn into customers and sales. That’s why it’s always smart to track the number of leads you’re bringing in. While too many leads aren’t too much of a problem, too few could indicate issues elsewhere — such as the need to devote more budget to marketing or to retrain sales staff — which you’ll want to diagnose and address before they hurt your bottom line.
2. Ratio of leads to qualified leads
Also consider how many of the leads you generate actually become sales qualified leads (SQLs) who are more likely to take a desired action. If the ratio is too low, it’s a sign the leads you’re bringing in aren’t likely to convert into sales. If that’s the case, you should reassess your targeting efforts.
This metric also measures sales team efficiency and can help managers zero in on staff who may need additional training — as well as those who are ready for promotions.
3. Win rate
This metric displays the number of SQLs that turn into customers. Track the win rate over set periods — such as monthly, quarterly, and annually — to ensure everything is moving in the right direction. If your win rate is increasing, congratulations — your sales team is effectively closing deals. And, of course, if your win rate is dropping, you need to invest more in marketing and sales to reverse the trend.
You can also use this metric to compare yourself to competitors as an added gauge of success (or failure).
4. CAC and LTV
Customer acquisition cost (CAC) is exactly what it sounds like: the cost you pay to acquire each new customer. And, no surprises here, you want it to be as low as possible.
However, lifetime value (LTV) is how much money you generate per customer throughout your relationship. So, if LTV is too low, it’s a sign your competitors are luring customers away, and you should take action to retain them. It could also indicate there’s something amiss with your customer targeting efforts.
5. Conversion rate by stage
As customers and prospects move through the buyer journey, the likelihood they will convert increases, so you want to see as many customers travel all the way to the end of the funnel as possible. By breaking down the journey into stages and assessing drop-off at each point, you can better address any roadblocks along the way to ensure customers and prospects continue to move toward conversion and loyalty.
6. Churn rate
It’s a sad fact that not all customers will stay with you forever. Churn rate measures those who don’t return. This figure should be as low as possible. In addition, if you see it inching upward, that’s a good indication there’s a problem somewhere along the line, which you should address before your customer base takes a big hit.
7. Average sale size
Monitoring the average size of each purchase helps your sales team stay on track to meet their goals and identify what kind of deals convert most frequently so they can adjust their lead-targeting strategy if necessary. It’s also a useful metric for sales managers in determining how to allocate team resources, as smaller deals tend to close faster and larger deals require more time.
8. Average sales cycle
How long does it take customers to convert? That’s what the average sales cycle measures. Look for leads who have been in your pipeline longer than average and see if you can identify what’s holding them back. This will help you better nurture those leads — and perhaps save those sales altogether.
9. Sales per rep
This metric, which shows how many sales each member of your team is closing, drills down into employee effectiveness. In addition to buoying your most effective sales representatives, it can also help identify what separates them from reps who need more support so you can effectively address the gap.
10. Sales pipeline maintenance
Unfortunately, you can’t control sales results outright, but you can control your actions to generate sales. Whether you’re trying to drum up more qualified leads, increase conversions, stem customer loss, or help your sales reps improve, these 10 metrics will guide you along the way. After all, just as physical pipelines need maintenance, so does your digital sales pipeline.
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