Which sales pipeline metrics should you monitor to grow your sales?

David Lorbiecke_3
David Lorbiecke_3 Posts: 188 PIPEDRIVE TEAM
First Comment Pipedrive Team
edited July 2022 in Business Talk #1

Key sales metrics are fundamental in helping navigate sales through your pipeline in a clear and measurable way. Without these metrics, your sales team is less likely to meet their sales goals. They’re also important for effective sales team meetings and training. 

Fundamental metrics include:

  • Number of deals. Knowing how many qualified opportunities are in your pipeline at any time.
  • Value of deals. Adding up the total value of all the deals in your pipeline gives you insight into your potential revenue.
  • Deal size. Dividing the total value of your deals by the number of deals in your pipeline reveals the average size of your sales contracts. 
  • Deal close rate. Knowing the average percentage of active deals your sales team closes will help you estimate monthly, quarterly and annual income. 
  • Sales velocity. Your sales velocity is how long it takes, on average, to turn a qualified lead into a customer. 

With any revenue growth, a good place to begin is to look at sales velocity. 

The formula for calculating sales velocity in currency is:

Number of Deals x Average Deal Size (Value) x Deal Close Rate

Divided by

Average Length of Sales Cycle in Days.

Here’s an example:

Let’s say you currently have 30 deals in your pipeline with an average deal size of $5000. Your deal close rate is 50% and it usually takes you 75 days to turn a qualified lead into a paying customer. 

30 x $5000 = $150,000

$150,000 x 50% = $75,000

$75,000 ÷ 75 days = $1000

That means that on any given day you have $1000 worth of sales speeding through your pipeline.

Using this formula, you can work out which adjustments need to be made to increase revenue.

For example, you can increase the number, size, or close rate of your deals. Or you can decrease the time it takes to make them paying customers.

How can these sales pipeline management tactics be used to make revenue-boosting adjustments to your business? Which metrics do you use for your sales team?

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