The 14 essential sales pipeline metrics
The 14 essential sales pipeline metrics
The best metrics to use when analysing your sales pipeline, including top, middle, and bottom of funnel, and ways to measure retention.
B2B sales kick up a hell of a lot of data.
So, how can you be sure you are keeping an eye on the metrics that really matter rather than those that merely flatter?
Data can be overwhelming, especially when it comes to your sales pipeline. Our solution? You need to separate the noise from the metrics that outline the health of your sales pipeline.
That’s why we’ve outlined the 14 metrics – no more, no less – that cut through all the whistles and bells to deliver a ringing endorsement of your success…
… Or, at least, ring the alarm on those potential problem areas.
Let’s start at the bottom of the funnel and take this from the prospect to the customer (and on to those lovely referrals).
Table of contents
- How to organise your sales pipeline
- Bottom of the funnel metrics
- Middle of the funnel metrics
- Top of the funnel metrics
- Beyond the funnel: Retention and LTV
- Our last tip
How to organise your sales pipeline
Bottom of the funnel metrics
Pipeline metric #1: Number of qualified leads per week
Leads make deals – and if only it was as easy as rearranging those letters. The first step in the journey is ensuring that the lead is qualified (i.e., ready, willing and able to buy in good time).
Pipeline metric #2: MQL to SQL conversion rate
A vital way to measure sales and marketing alignment is the ratio of marketing qualified leads that are accepted as sales qualified leads. Sometimes this is referred to as the opportunity rate, as an opportunity is a qualified lead.
It’s important that marketing strategies align with the sales strategy to ensure you’re bringing in as many leads as possible.
Middle of the funnel metrics
Pipeline metric #3 & 4: New meetings and new demos booked
The booking of a meeting or a demo is a significant move towards the close of a deal.
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 dividing the 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.
It’s not necessarily the case that small deals are bad: it all depends on the sales pipeline velocity…
Pipeline metric #11: Sales velocity
… Pipeline velocity measures the speed at which a lead moves through your sales pipeline aka your sales funnel.
Generally speaking, the faster the better – but we discuss this in more detail in our blog: how to speed up your sales process.
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
Referrals are incredibly valuable.
Here’s the big takeaway:
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.