Of course, there is no need for either of these to take place face-to-face: increasingly it is more likely that they will a virtual meeting.
But it is important that there is a strong consensus on exactly what a meeting or demo can be defined as if it is to be used as a measurable marker in the sales journey.
Pipeline metric #5 & 6: Pipeline value by stage and salesperson
The total value of your pipeline is the sum of the estimated deals within it.
To gain a more nuanced perspective on it, you can break down the total pipeline value into various stages (such as lead, opportunity, and meetings booked).
Taking this even further, you can track the performance of each salesperson by breaking down each stage, across the team.
Top of the funnel metrics
Pipeline metric #7 & 8: Win rate and the number of new closed deals
A closed deal marks the final stage in the pipeline where leads become customers.
Given that opportunities fluctuate, in addition to monitoring the number of closed deals (close rate) most organisations will also track the ratio of deals won (or the win rate).
Tracking this enables a more granular understanding of where the sales process could benefit from some TLC, especially if you dig deeper and calculate win rate by sectors or channels.
Pipeline metric #9 & 10: Average deal size and sales cycle length
By dividingthe revenue from each deal won by the close rate you can understand whether you are winning bigger deals or netting smaller and smaller fish – and how you need to allocate resources and campaigns to change this.
Typically, larger deals take more time to close and smaller deals take less time.
You can calculate the average length of time deals are taking to close by dividing the total number of days to close a group of deals and the number of deals in the group.
Here’s how you can calculate and compare your velocity each day – which is how much money you have moving through your pipeline every 24 hours.
To improve your velocity, you need to work on all of the four factors above: number of deals, win rate, average deal size and length of sales cycle (or pinpoint which you will focus on).
Pipeline metric #12: Customer acquisition cost
The biggest deal in history is worth very little if you have thrown more money to acquire the customer than they are ever going to throw at you.
Ask yourself: “Is this deal profitable?”
The acquisition cost tots up all you have spent (on new business sales and marketing) and divides it by how many customers resulted.
This needs to be assessed alongside your average deal size.
Beyond the funnel: Retention and LTV
Pipeline metric #13: Customer Life Time Value
Life Time Value (LTV) represents the initial revenue from the deal and any ongoing business, upsells and cross sells that take place over the span of a business relationship.
To calculate it you must ensure that any marketing or sales spend (for both acquisition and retention) is deducted from the customer’s total revenue.
This is sometimes expressed as a ratio of revenue versus cost to enable comparisons across different customer types.
👉 It’s worth also keeping an eye on your churn rate – that’s the number of customers who stop doing business with you. That could be someone cancelling a subscription or anyone who stops buying a product or service from you in some capacity. This can help you to identify areas in which you can improve your customer retention.
Pipeline metric #14: Number of referrals per customer
Not many businesses are using this metric, but we reckon you are missing out if you don’t include it in your armoury of stats.
More referrals mean more qualified leads will be heading your way, and that you have created a bond with the customer who has made the referral.
So, put that in your pipeline metrics and smoke it!
Our last tip
It can help to have a visual representation of your sales pipeline so that everyone in your sales team and marketing team can track the customer journey.
We recommend making a visual sales pipeline using these metrics to measure your data.You have your design team create one or if you’re a smaller business, there are design websites that can help you to make a quick visual pipeline, such as the very basic example below.
But something like this is a good starting point, and then you can add in more detail to each stage.
If you’re looking for help with your lead generation and prospecting, Sopro can support you to create a successful sales pipeline – and retain customers.