Pipeline management, the process of turning enough leads into customers so you make your quota, is a numbers game. While every B2B organisation’s sales pipeline is different, the fundamentals are the same. Those fundamentals are the metrics, the indicators of whether or not you’re on the right track. When you know your numbers and how they relate to each other, you can pull the correct levers to make your pipeline run more smoothly.
Here are 4 metrics to your pipeline that your salespeople need to know, so they can improve their performance and hit target, every time.
1 – Number of potential deals in your pipeline
This is a simple figure, the number of qualified opportunities that your team are servicing at any one time. A full pipeline is a healthy pipeline, as long as it’s running smoothly and the opportunities in it are likely to buy.
If this number starts to drop, it’s time to increase emphasis on lead generation. It’s important to have fresh leads at the start of the pipeline, to replace the ones that leave and become customers at the end. Use high-quality data to build a narrowly-targeted list of leads that exactly match your ideal buyer persona.
2 – Average deal size
Not all prospects are created equal. Some opportunities in your B2B pipeline will be worth more than others. Closing these larger opportunities should be the priority for your sales team. However, if you are going to hit your quota, you need to know how much potential revenue is in your pipeline. Calculate a mean deal size. Is it where it needs to be?
If your average deal size isn’t enough, or is dropping, you need to take action. Look at how your team can upsell or cross-sell to more opportunities in your pipeline. You should also work on targeting customers with more spending power.
3 – Win rate
Your win rate is the percentage of prospects in your pipeline that become customers. Your team need to know this figure because it determines the number of prospects you need in your pipeline. It’s essential to think about the number of deals you’re not winning. Why are they dropping out of the pipeline? Is there a stage of the pipeline where prospects are more likely to fall off? When you know where your pipeline’s weak points are, you can take steps to strengthen them.
You can improve your win rate at every stage of your pipeline. At the start, think about the opportunities going into your pipeline. Have they been qualified hard enough? Is the data you’re using accurate enough to build up a picture of whether they’re likely to buy? Is now a good time to be selling to these prospects?
Further down your pipeline, do your team have the right sales skills? Could coaching help them close more deals?
4 – Length of your sales cycle
This metric is the average time (in days) it takes for a prospect to move through your B2B pipeline before they become a customer. It’s the indicator as to whether your pipeline flows smoothly or not. Ideally, you want your pipeline to be flowing as quickly as possible. That’s why it’s essential for your team to know how long they are taking to close deals.
To speed up your pipeline, identify the stages of the sales process that need improving. For example, are you contacting your prospects at a time when they’re ready to buy? How many times are your reps following up with a prospect?
How these metrics relate to each other
By combining these metrics, you can calculate the entire value of your pipeline.
To calculate how much revenue you are bringing in every day:
Number of potential deals in your pipeline x average deal size x win rate / length of sales cycle
If you have:
- Number of potential deals: 100
- Average deal size: $50,000
- Win rate: 50%
- Length of sales cycle: 80 days
100 x 50,000 x .5 / 80 = £31,250
Your team are bringing in £31,250 every day. Apply this figure to the number of days in your organisation’s selling period (month, quarter, year). You now know whether you are on track to make your quota.
How are you doing?
Now you know these numbers. How are they looking? Are they enough?
To improve your team’s pipeline management, it’s crucial that you monitor and analyse constantly. A drop in any of these metrics could spell trouble for your quota, while small increases can make a big impact. Perform regular pipeline reviews with your team. Encourage them to be honest about the state of their potential deals. Looking on the bright side is not a sales strategy! The numbers are there to show you where you can improve.
If you want your data to tell you when a client is ready to buy, or when a prospect is ready to move to the next stage of your pipeline, it’s time to talk to Cognism. Click here or call us on +44 203 858 0822.