I like to think I'm a pretty hip guy. Sure, I enjoy a little Journey with the windows down, and I do own a minivan (big family), but in general I like to stay on top of the latest tech and trends in business. One of those trends is the evolving way we
I like to think I’m a pretty hip guy. Sure, I enjoy a little Journey with the windows down, and I do own a minivan (big family), but in general I like to stay on top of the latest tech and trends in business.
One of those trends is the evolving way we manage and measure success in sales. It’s not unlike the movie Moneyball (which totally got robbed at the Oscars, by the way). Just like Billy Beane created success by evaluating players from a dramatically different perspective – like on-base percentage instead of shoe size — we’re seeing a similar transformation in sales. Even just in the last year, our company has made some fairly significant changes in the KPIs we watch in order to predict sales success.
Of course, Domo is in the business of KPIs, which gives us a bit of an advantage — not to mention a killer sales dashboard — but some of these “new” metrics would benefit almost any organization that sells. Here are few examples:
#1: Pipeline Velocity
Old metric: How much is in your pipeline? A pipeline total is not an accurate way to forecast success. A rep working 15 different deals worth a total of $1.5 million looks great on paper, but not all those deals are guaranteed to close.
New metric: How fast is your pipeline moving? The better metric is how quickly the deals are progressing through the sales stages. The pace at which deals move through the pipeline is a much better measure of future success than the number of deals in the pipeline.
#2: Winning Percentage
Old metric: How many deals are you working on? Just keeping an eye on the number of deals sales reps are managing is kind of like choosing a starting lineup based on the number of at-bats each player has, instead of how often they reach base.
New metric: What percentage of deals do you win? If, historically, your sales reps close an average of 35 percent of the deals they work on, you can use that average to more accurately predict how many of their current deals will convert to actual sales.
#3: Closing Speed
Old metric: How many deals did you close last month/quarter/year? This is actually a pretty good metric, but it could be even better. The fact that a salesperson closed six deals this quarter lets you know the rep is competent, but that number doesn’t tell you how long those deals were sitting in the pipeline—or how many deals the rep will close in the third quarter.
New metric: How long do your deals take to convert? This metric provides the insight you need to forecast success. When you measure time to conversion, you know whether it’s taking your people a week to close a deal or a year.
#4 Acquisition Costs
Old metric: How much revenue do your deals produce? As every sales manager knows, sometimes it’s possible to lose even when you win. A deal that generates $20,000 in revenue may look good on paper, but if that deal costs $15,000 in travel, lodging, etc. to close, that’s not exactly a home run.
New metric: How profitable are your deals? The emergence of social media and other new technologies provide an opportunity for sales organizations to reduce their acquisition costs. If sales people can use social media to engage with customers and produce better quality leads — without hopping on planes or wining and dining prospects — the deals they close will be that much more profitable.
#5 New Logos
Old metric: How many sales did you close? Not all sales are created equal. It’s great if your top rep brings in $1 million a year from the same five companies, but real growth—the kind that excites shareholders, frightens competitors and attracts top talent—is driven by net new customers.
New metric: How many net new wins did you get? Bringing in $600,000 from seven new deals is less than the $1 million at face value, but those seven wins will likely prove far more valuable down the road in terms of opportunities to expand—not to mention the marketing and public relations value that comes along with a new brand-name client.
If you’re interested in assessing, revising or completely blowing up the sales metrics your company uses, the team at Domo can help. I’d encourage you to visit www.domo.com/sales to learn more. You can also download the Domo executive brief, “5 Moneyball Metrics Sales Executives Can’t Ignore,” for a fuller discussion of the metrics I mentioned.