Tl;dr - Too many companies just track revenue and $ in the pipeline. Instead, they should monitor a wide range of predictive and diagnostic sales pipeline metrics that can be generated through adherence to well-defined sales process and proper adoption of sales technology. Those metrics should then be incorporated into proper sales coaching and used by management for corporate decisions.
How Accurate is Your Sales Pipeline?
Before we dig into important sales pipeline metrics and how you can use them to troubleshoot and improve industrial sales, we first have to investigate your pipeline. If it's full of irrelevant rubbish, then the metrics don't matter.
Creating an accurate sales pipeline is built on important industrial sales best practices. These include:
- Proper sales process that is consistently followed - Methodology and consistent adherence to the defined process are necessary.
- Effective and realistic qualification criteria for each stage in the pipeline - Quantitative and qualitative criteria must be clear to move between stages.
- Accountability of reps to consistently use CRM and update information - If data is incomplete or if CRM is only occasionally updated, then the pipeline is meaningless.
- Adequate coaching - Reps must be coached by sales managers consistently and on important sales competencies (not just pricing and technical features) to reinforce the three points above.
If you don't have those in place, your pipeline will be inherently unreliable and metrics of little use.
Important Sales Pipeline Metrics
Let's assume your pipeline is reliable, and therefore metrics that you can extract are meaningful. What metrics are important to track?
What do we want to use metrics for? Too often, companies start with the goal of being able to understand how they did. Descriptive metrics recap in various degrees of detail what has happened. Revenue is the most common.
Every business needs to know revenue, but they get that through accounting software. They don't need duplicate information from the CRM. Tracking top line growth is unproductive from a sales troubleshooting and improvement perspective. It just creates generalized angst or satisfaction.
If it's low, then "something's got to change." If it's on target, then "we're doing a good job."
Instead, let's focus on predictive and diagnostic sales pipeline metrics. Predictive metrics provide an early warning of deviations from a trend or plan, allowing teams to make proactive adjustments.
Diagnostic metrics are particularly helpful in uncovering the root cause of industrial sales symptoms.
- Prospecting activities
- Meetings created
- Qualified projects created
- Number of buying team members identified
- Tempo of engagement
- Various target account, ICP & customer engagement metrics
- Number of referrals
- Sales qualified leads created by sales
- Lead conversion rate - meetings/leads
- Close/Won vs. Loss rate
- % of deals ending in no decision
- Length of the sales cycle
- % of deals moving through each stage in the sales pipeline
- % of deals that don't close within 30 days of the forecasted date
- % of deals discounted
- Average deal size
- Number of deals removed from the pipeline by rep
- Number of deals removed from the pipeline by manager/pipeline review
You'll have some of your own and may not want to use all of these.
Despite having CRM, most companies don't/can't track many of these. That reinforces the importance of proper CRM configuration, rigorous sales process, solid pipeline qualification criteria, consistent CRM use, and accountability. That means that emphasizing metrics not only has downstream benefits but also imposes discipline that improves performance anyway.
Further, these are powerful tools for adjusting activity and for effective sales coaching.
Using Sales Pipeline Metrics for Coaching
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A huge gap in most sales teams is that sales managers don't manage. Often they don't know how. They were successful reps who received no sales management training. They default to the behaviors of their manager - often filling an administrative and coordination role with a bit of closing assistance thrown in.
Sales coaching is an especially important and consistently overlooked aspect of the sales manager's job. As a rule of thumb, a non-selling sales manager (someone who doesn't carry significant new logo development responsibility, but just focuses on managing a team of 3-5 reps) should spend 50% of their time coaching.
That includes pre and post-call planning and debriefs, joint calls, pipeline reviews, and coaching on specific techniques. Unsure? These metrics clearly indicate the importance of sales coaching.1
- coaching weekly increases relative sales performance 9%
- coaching several times weekly doubles that to 17%
- regular sales coaching improves sales process proficiency by 28% and sales technology proficiency by 50% (have you ever wondered why CRM adoption was low among your folks??!!)
Yet most managers don't coach enough, only coaching "on demand" - when a rep comes to them. Often the requisite mutual trust and respect low, making coaching is less effective. And coaching in the industrial space almost invariably focuses on the wrong topics. Managers and reps predominantly talk about pricing, quotes, and technical features, rather than more impactful strategic and tactical sales techniques, sales process, technology, and even simply encouraging and motivating.
The key is to understand that you need accuracy embedded in your pipeline to get good metrics, and then the value of metrics to inform and guide coaching. Without coaching, you may have troubleshooting insights but no improvement.
So how do metrics-driven insights inform coaching? With some savvy.
For instance, if a rep consistently fails to uncover or establish an appropriate budget, it probably means they're uncomfortable discussing money. That's a crippling sales weakness that often manifests in a need to discount.
The symptom of discounting can also reflect a failure to sell value, failure to sell consultatively and therefore to uncover compelling reasons to buy, failure to reach decision-makers, and inability to ask great questions.
The point is that discounting isn't necessary to succeed in sales - so if it's happening consistently across the company, that indicates one set of issues. If it's prevalent among a couple of reps, another set of issues. An accurate discounting metric points a strong sales management team toward underlying issues for investigation.
If deals consistently get stuck at the written quotation stage, it's likely that quotes are issued prematurely and without an understanding of why and when someone will buy.
If deals end in no decision, coaching will often uncover that reps never discovered compelling reasons to buy and might not be reaching decision-makers.
If one rep's sell cycle is substantially shorter or longer than the team's average, it likely indicates differences in sales process adoption.
Very high and very low close rates typically mean that deal qualification is inconsistent. During pipeline reviews, if sales managers uncover basic questions which reps can't answer, that likely indicates a need for approval - in other words, an abiding belief that a rep must be a supplicant and a resulting hesitance to ask a prospect challenging questions.
While sales pipeline metrics often reveal symptoms of problems that constrain top line growth, sometimes sales managers need more diagnostic breadcrumbs to get to the underlying areas that require coaching and training. A sales team evaluation can provide granular insights to help managers coach reps toward individual and collective improvement.
An Important Management Responsibility
On the one hand, accurate and informative sales pipeline metrics are a byproduct of good sales process and proper CRM adoption.
But that's not enough.
This is a management responsibility. Culture, accountability and coaching conversations have to reinforce the importance and obligations. After all, management has a horse in the race too.
Besides simply hitting top line growth forecasts, management needs:
- accurate and reliable forecasts
- early warning of deviations from plan that require either remedial action (get trend line back up) or organizational response (meet pending demand by increasing capacity, plan for financial implications, etc.)
- tools to fulfill their obligation to every sales rep to support and develop them
- tools to fulfill their obligation to every other employees and owners, removing reps who can't/won't perform
- accurate metrics, including revenue attribution, lead conversion rate and number of sales qualified leads, which will inform decisions into marketing investments
Sales pipeline metrics can be a powerful tool in improving individual and aggregate performance. To have value, they must be harvested from a consistent and proper process. They should help to anticipate and diagnose sales challenges. Coaching must build on insights from the metrics. And management must embrace and emphasize the importance, and use metrics for corporate management as well.