The 4 Key Sales Funnel Metrics
- Number of opportunities
- Funnel Value
- Sales Cycle
- Conversion Rate
More opportunities + Bigger deals + higher conversion rate + less time = more revenue
How to Track the 4 Sales Funnel Metrics
Measurement leads to improvement.
The first step is knowing exactly where you stand. It sounds simple, but many companies don’t measure their sales funnel well.
Start with the 4 key sales funnel metrics:
Number of Opportunities
- Make sure you have a clear definition of “Opportunity”
- Make sure all opportunities are labeled in your CRM software
- Add number of opportunities to your “sales funnel” report
- Track the expected value of each opportunity in your CRM
- Make sure the probability (in %) of the opportunity being closed is always updated in your CRM
- Calculate funnel value: (expected value of each opportunity) * (probability of closing each opportunity)
- Make sure “created date” is correct for each opportunity in the CRM
- Make sure “closed date” is correct for each opportunity in the CRM
- Calculate sales cycle: Average time (in days) between created date and closed date. Be sure to include both “closed won” and “closed lost”
- Define a conversion timeframe (e.g. expected days to convert an opportunity)
- Calculate conversion rate: (total opportunities during conversion timeframe) * (number of “closed won” opportunities)
Now you understand where you stand with each of the 4 sales funnel metrics. Let’s figure out what to do with the information.
How to Use the 4 Sales Funnel Metrics
Once a month, look at the 4 metrics and identify the top driver of each. Then think about the most effective action you can take to improve that driver.
Here’s an example:
Number of opportunities
Driver: The number of visits marketing brings to our website
Action: Write 2 articles per week to drive more organic traffic
Driver: Selling service contracts in addition to the main product
Action: Train and reward salespeople for service contracts
Driver: Lead follow-up time
Action: Get software to track and measure lead followup
Driver: Number of followups from salespeople
Action: Track number of followups per closed deal and coach underperforming salespeople.
Then spend the month optimizing those drivers.
Repeat this cycle each month, and you will continue to use sales funnel metrics to improve sales pipeline performance.