Building a successful sales pipeline is hard to get right at any company, let alone a startup where things are just getting off the ground. It’s not just about defining the right stages and processes, it’s also deciding what metrics should be tracked and how they can be used to improve sales processes.
In this post, we'll explore how startups should think about sales metrics.
When you want to improve any process you first have to diagnose what is working and where you need to iron out the kinks. In a sales pipeline that often means asking questions like:
Obviously data isn’t going to give you all the answers. You need to collaborate with your sales team to get more context on the deals and metrics. Also, you should spend time with your customers to enrich these insights and gain a deeper understanding of customer expectations and needs.
But where data really does help is choosing the right part of the process to focus on. Your pipeline is changing all the time as deals are moving through the different stages, so sales metrics enable you to keep your finger on the pulse.
Often for founders, this ends up feeling like a game of wack-a-mole. You fix the top of the pipeline issue with a great campaign that fills your funnel with leads but now you struggle with the volume and everything slows down…
Let’s face it, you’ll never have time to fix everything. This is why sales metric matter, they get your sales team to focus on the areas that will make the biggest impact.
Hubspot's co-founder Dharmesh Shah literally wrote the book on why sales metrics matter. He argues that tracking how potential customers interact with products, as well as how current customers use and renew them, is the key to sustained growth. Growth isn't just about getting a business off the ground; it's about staying in business. By using insights from your sales data you’ll make better sales decisions, and better serve your customers.
When it comes to sales, startups should focus on monitoring three main metrics: lead conversion rate, pipeline value, and win rate. These three metrics provide a great overview of how well your sales team is performing and whether or not your leads are converting into deals. Here’s a quick breakdown of each metric:
1. Win Rate
This metric measures how successful your team is at closing deals overall. It takes into account the full pipeline from opportunities to signed contract. A high win rate often indicates that you are able to successfully identify the right potential customer and demonstrate your value in a compelling enough way to get them to pay.
2. Pipeline Value
This metric measures the expected value of all your deals in your pipeline. Combining the deal value with the probability of closing deals allows the sales team to track overall performance. It can also serve as a key alert metric for when your pipeline is underperforming and you might miss your targets
3. Sales Velocity
This is measured by the amount a time a deal stays in your pipeline before it’s closed. Ideally you want this number to be low so you know you’re not wasting time on prospects that will never buy and you are able to generate revenue sooner.
From our point of view these three metrics are the most important because they give you a simple but powerful overview of your cash cycle. How many leads are we getting and how fast are we converting them into cash.
There’s a tonne of other sales metrics you can track, and Hubspot details a full list of those here.
Sales data is essential for running an effective startup but with so many different metrics to keep track of, it’s easy to feel overwhelmed by all of the information available out there. By integrating with Hubspot to help teams understand their sales metrics, we’ve found a few best practices for startup sales success.
When you're trying to scale your startup, it's essential to track where you are and how things are going. That's why understanding sales metrics – whether they’re team performance indicators or detailed value figures – is absolutely critical. These metrics can give you an instant glimpse into the health and success of your business, so you know what needs to develop further.
The best way to use sales metrics is to establish a clear goal, track progress over time, and make changes based on what you observe. Now that you know which sales metric matter for startups – are you ready to start using insights to improve your sales cycle?
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