6 Crucial Sales Pipeline Metrics You Should Monitor

 

If you want to improve the efficiency of your sales and marketing campaigns, you need access to data. Sales volume is a good starting point to measure the performance of your B2B marketing campaigns, but it isn’t the only one. 

A sales pipeline enables you to track your B2B buyer’s journey from leads and prospects to customers. Each stage of the journey requires different metrics. Here are six crucial sales pipeline metrics that you should track if you want to improve performance.

1. Sales Cycle Length

The sales cycle length measures how long it takes you to convert a B2B prospect or lead to a customer. If your sales pipeline is filled with poor to mediocre leads (customers with a low purchase intent), you may notice that it takes forever to convert a lead. The infographic below shows you the average cycle length across industries.

The cycle is much shorter for existing customers since they have already used your product or service. New customers will need more hand-holding and hence have a longer sales cycle. It is also important to keep in mind the product/service that you offer and the cost. 

B2B sales regularly take anywhere from 1–12 months, depending on your industry and the value of the product/service you sell. Products with higher costs will typically have a longer sales cycle.

For instance, if you provide SEO services to clients, the conversion time in your sales pipeline can be 1–3 months. While if you’re selling million-dollar heavy equipment, the length of your sales cycle could range from 6–12 months. To calculate your average sales cycle length:

• Gather data on each sale closure and calculate the total time spent from first contact to closure of each sale. 
• Next, compare your results to other brands offering the same product or service. 

Maintaining a sales cycle report gives you a better understanding of the quality of your leads and the effectiveness of your sales strategies. If your sales cycle is much longer than your competitors, you can make the required course corrections. For instance, if your content marketing strategies aren’t helping you get more leads, you may need to know how to write better to reach out to your audience.

2. Transaction Profitability

This one is self-explanatory. In simple terms, deal profitability tells you if the cost of converting a lead to a customer is worth the total value of the sale. It is the ratio of income from a closed sale to the cost of acquiring that sale. 

• Add up the total amount of projected expenditures in securing the sale
• Deduct it from the value of the sale

Knowing this basic profitability metric of a deal tells you to spend too much on customers who spend too little. This will enable key decision-makers like account executives and campaign managers to target higher-value clients, promote high-value products, or reevaluate your marketing strategy to promote low-cost product lines.

3. Conversion Rate in the Pipeline Stage

Your leads in the sales pipeline move through different stages: awareness, consideration, action, engagement, and advocacy. To maximize your chances of converting these leads, you should see how they behave as they move through the different stages.

The pipeline stage conversion rate measures the ratio of leads that enter a specific stage and advance to the next one. For instance, if you get 100 people to click on your landing page (awareness) and ten leads sign up to receive your newsletter (conversion), the awareness pipeline stage conversion rate is 10%. 

Measuring the conversion rate at each stage in your pipeline helps evaluate the attrition at each stage and compare it against the average rate for your industry. If your conversion rate for a pipeline stage is lower than that of your competition, you can develop appropriate strategies for moving your leads forward from that stage. Contact marketing, keeping in constant touch with your leads helps raise the conversion rate across your sales pipeline. 

4. Sales-to-Support Ratio

The metric of Sales to support measures the rate of customer support required post-sale for each product/service that you sell. It enables you to pinpoint the products that have design flaws or are difficult to use or even products that don’t come with proper documentation, making it hard for the customer to use the products. 

Generally, a low sales to support ratio is desirable and indicates that your products are user-friendly with a sound functional design. However, a low sales to support ratio could also mean you don’t have enough customer service channels.

Keep in mind that support teams can sometimes chalk up high sales to support figures for a product that is in high demand. While this is occasionally true, it generally means that customers have a tough time using your products. 

5. Revenue Distribution by Product Line

This metric measures the total sales of each product line to evaluate its performance. This is important for B2B businesses that offer multiple products and product lines. This metric is useful for pinpointing the stars (high growth rate and high market share), cash cows (low growth high market share), and the lackluster performers. These insights will help you to drive informed decisions on marketing resource allocation.

As an add-on bonus, you can use this metric when drawing up proposals and pitches for your prospects and leads. 

6. Customer Churn

Customer churn measures the customer attrition rate, the rate at which you lose customers. This metric is of particular use for businesses with a subscription business model, for instance,  SaaS companies, telco products, or paid newsletters. 

 

Source

The formula for calculating customer churn is quite simple. Subtract the number of customers you have retained at the end of every month from the number of customers you had at the start of that month. You then divide the difference by the number of customers at the start of the month. 

The average churn rates vary across both industries and the age of the company. For instance, the average churn rate for young SaaS companies is around 5%, while established companies have an average maximum average churn of 3-4%.

Older companies tend to have lower churn rates because as the brand matures, the companies tend to understand customer needs better. Hence, they know how to market and position their products to meet their customer’s needs better. Companies that don’t manage and control high churn rates will have shorter life spans. 

Bottomline

While there are many more metrics that you can use to measure the efficiency of your B2B sales pipeline, the six metrics mentioned in the article are a good starting point for most businesses. 

These metrics allow you to measure how effectively you convert your leads, how many do you retain, and how much you spend on converting them. They also enable you to measure your customer’s satisfaction level with your products and services.