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5 sales metrics every startup should adopt

Posted by Jennifer Spencer  September 13, 2012 10:25 AM

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One of the most important decisions to make while growing your company is what to measure to most effectively evaluate success. Too few metrics means you are flying blind, but too many means you are lost in data. The most logical benchmark for measuring the successes of any young company is, naturally, sales. But there are five other sales-related metrics that are worth tracking if you can do it.

The following metrics are indicators of how you and your team are doing. They can be early warning signs that tell you something needs to change. Or they can measure other aspects of your company’s growth and evolution. Introducing one or more of these metrics (and eliminating ones that are driving unproductive behavior) can generate additional benefits for your company.

But tread carefully! Complexity can be the enemy of efficiency. For every new metric you introduce, you and your team will spend significant time tracking, reporting and considering the meaning of what exactly was measured. Before you adopt any of these or other additional measurements, estimate the investment and be willing to spend double the time and effort. Then go forward and reap the benefits.

1. Touches
Whether your team is inside or outside sales, whether they’re a sales hunter or gatherer, how many times did each of them contact each prospect and customer? Calls made, voicemails left, emails sent or meetings scheduled do not count. These activities are measures of speed dialing and spamming, not sales skills. Touches are successful contacts made or meaningful conversations had with a customer or prospect that moves the opportunity along in the sales cycle. You must have effective and cost-efficient systems in place to measure phone, email and in-person touches before putting this metric on your team.

But why count Touches? You can figure out the optimum number of Touches per customer type, so you don’t waste time chasing deals unlikely to close. Hubspot (a Yesware customer) has done great work quantifying this.

Without counting Touches, the “squeaky” customer will absolutely get the grease, no matter how unprofitable they are. And counting Touches is a great way to compare salespeople. Missing a revenue target is more understandable if the number of Touches is high – we all know that cold streaks can happen to even the most experienced, most aggressive sales people. But there’s no excuse for low Touches!

2. Time-To-Close
Otherwise known as Speed or Sales-Cycle-Time, this metric tracks the various days/weeks/months that it takes a salesperson to close each deal. The importance of this metric is easy to see, although the desired result is company-specific. In some companies, a salesperson that closes a $200k deal every month might be more valuable than someone who takes twelve months to close a $2 million contract. But not if each sale requires custom development and significant deployment effort.

No matter which approach your company prefers, Time-To-Close can be a valuable sales measurement to track. As with number of Touches, you can use Time-To-Close as a way to eliminate bad leads from the sales funnel. If the opportunity is over a year old, it’s unlikely to close. For your company, the window for closing deals might be as short as a month. Time-To-Close is also a good measure to compare salespeople.

3. Time-To-Respond
This metric is tougher to reliably measure, because it’s more granular, but it can also be very effective at predicting success. After the salesperson has established interest, rapid response to a prospect’s questions, objections and proposals can mean the difference in closing or losing the deal. It’s easy to see why – in the mind of the buyer, fast response in the sales process signals an eagerness to support the partnership in the long term. In cases where products or services are evenly matched, quicker response time is a strong advantage.

4. Customer Response
Many companies track calls made or emails sent. In most companies, moving prospects up in the pipeline (and therefore assigning them a higher likelihood to buy) is tied to a salesperson’s activity. For example, you’ve sent the prospect a proposal – now you can move them from a 10 percent to a 25 percent likely to close. That approach is senseless in a number of ways, but the most obvious one is this – SENDING THE PROPOSAL DOESN’T MATTER. What does matter is the response – did the customer accept, read markup return the proposal and provide feedback?

There’s not enough space in this article to discuss this idea in depth. Let me simply propose that companies stop measuring pipeline stages as activities of a sales team, and start measuring them as activities of our prospects and customers.

5. Time-to-Cash
All other things being equal, the customer who pays fastest is best. This metric combines a salesperson’s ability to negotiate quick payment terms, and their skill in identifying customers to pursue and close. In some companies, where prices and discount schedules are fixed, speed of payment is second only to volume for influencing the salesperson’s compensation.

While these metrics are usually tied to compensation, they don’t have to be. It’s difficult to definitely know how accurately you’ll be able to measure your sales team against these metrics. It is even tougher to know what the desired numbers should be. Many people pay close attention to what is tracked whether or not it figures into their paycheck. For others, public recognition and shared goals are more powerful motivators.

Regardless, whether hitting goals is tied to compensation or not, introducing one or more of these metrics can help grow and increase the value of your company.

Matthew Bellows is CEO of Yesware, an email service that helps salespeople track conversations, create sales templates, sync emails with CRM and much more. @mbellows

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