July 30, 2022, Comment off
Sales Pipeline Analysis and Key Metrics to Track
The modern B2B sales process is complex, multi-layered, and predominantly buyer-driven. Sales teams must make the most of their limited opportunities to influence buyers’ decisions.
In this context, sales teams must track every qualified lead and know at which stage they are in the sales process at any given moment. That is where sales pipeline analysis helps.
What is Sales Pipeline Reporting?
The sales pipeline is an intuitive visualization built from the sales team’s perspective.
Consider that your sales team has specific tasks to be completed as part of the sales process. These assignments could include:
- Vetting a marketing lead on the call
- Scheduling a meeting to gather requirements
- Taking management approval
- Providing a live demo
- Providing a proposal
- Negotiation and follow-up Signing the contract
Sales pipeline analysis will show the number and value of deals at each of the above stages at any given moment.
Moreover, it enables the sales team to visualize the distribution of the opportunities they are pursuing to meet their sales targets. It is also possible to assign a specific probability of conversion to deals at each stage and forecast future sales accordingly. How can you make your sales pipeline analysis more focussed?
Key Performance indicators for your sales pipeline
Sales pipeline analysis using KPIs help you to assess the health of your sales pipeline. You can easily measure these indicators and provide a clear picture of the sales team’s productivity with a proper sales pipeline analysis.
MQL to SQL conversion rate
Marketing qualified leads (MQL) are leads generated by your marketing efforts. These leads may include prospects who have expressed interest in your product or service through your website, social media, or a marketing event.
MQLs get converted to sales-qualified leads (SQLs) when your sales team first interacts with them and assesses them as warranting a follow-up. SQLs demonstrate requirements that can be catered to and have a higher likelihood of conversion.
The win rate is the conversion rate, which signifies how many leads ultimately buy your product or service. You can also track the win rate for each stage of the pipeline. It helps you understand which sales activities are most effective and which need enhancement.
Average deal size
As the name suggests, this KPI tracks the average size of the deals closed by your sales teams. While large value deals contribute more to the pipeline, they make it vulnerable.
A sales representative may not be able to achieve targets if just a couple of large deals get stuck. For instance, opportunities that are lower in value but close faster are necessary to smooth out sales fluctuations over time.
Average sales cycle length
This KPI tracks the average number of days it takes for leads to move through all the stages in the pipeline and convert into a sale. It is an indicator of the efficiency of your sales activities.
Sales pipeline velocity
It is the chief monthly KPI to track sales pipeline health. It shows the money value of the sales passing through the pipeline every month.
It is the total number of deals times the average deal size, divided by the average sales cycle in days.
Sales Pipeline analysis using KPIs
Each KPI provides distinct insights into your sales process. Also, you can calculate these KPIs separately for each sales rep, sales team, location, or other relevant parameters for deeper insights.
- Tracking MQL to SQL conversion rates helps determine the most effective marketing channels and formulate a pipeline generation strategy. Allocating more resources to the marketing touchpoints generating the most qualified leads offers a steady flow of SQLs necessary to sustain the pipeline.
- Tracking win rates by sales reps or sales team enables enterprises to understand top performers and laggards. It helps to understand the training support your sales reps need to improve their win rate.
- Tracking average sales deal size by sales rep helps you understand if particular sales executives struggle to close deals of larger sizes and support them accordingly. The average deal size is also a lever for increasing the sales velocity. Bundling, cross-selling, and upselling relevant products or services can increase the average deal size.
- An increasing sales cycle length calls for a deeper analysis of the average time taken at each pipeline stage. If the average advancement time for a particular pipeline phase is high, you can reduce it by understanding the root cause. For example, it may be due to delays in getting management approvals for quotes or contract finalization.
Each of the above sales pipeline analyses ultimately contributes to increasing the sales pipeline velocity. Choosing artificial intelligence (AI) based B2B sales and marketing tools can provide ready-made interfaces for this kind of sales pipeline analysis.