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Sales Best Practices

The 7 Most Useful Sales Funnel Metrics

Audrey Weber's Avatar

Audrey Weber

Associate Content Editor

Sales metrics are a useful way to quantify the complex buying process that’s filled with human interactions, emotions, and decisions. These numbers allow you to clearly see your customer’s journey through the sales funnel and identify performance gaps in your sales activities that might inhibit lead conversion rates.

Outreach’s own research has found that sales teams miss conversion expectations by more than 37% due to top-of-funnel inefficacy. An optimized sales funnel delivers ROI by focusing on the quality of sales activities that drive funnel performance and velocity. Therefore, you can’t afford to ignore these metrics. Careful analysis and resulting data-driven actions will lead to sustainable, efficient success.

If you’re unsure about where to start with your sales funnel metric analysis, or want to improve your existing process, read on for results-focused advice.

Why Sales Funnel Metrics Matter for Sales and Marketing Alignment

Sales funnel metrics, such as conversion rates, can quickly illuminate where your marketing and sales processes have fallen out of alignment. Studies have shown that bringing these teams into synchronicity can lead to a 32% increase in year-over-year revenue growth.

Once you establish and measure strong sales funnel metrics, you can drive alignment with objective insights. For example, lead data could help you identify optimal personas for better positioning. Other metrics could help you confirm the effectiveness of your inbound marketing efforts’ or hone in on each individual department’s performance.

A data-driven approach not only makes the path to better teamwork and collaboration clearer but also makes success quantifiable. But it’s not just about refining your company’s own internal processes. Better collaboration between sales and marketing means consistent messaging and smoother transitions through each stage of the sales journey. Leveraging sales funnel metrics to improve your sales and marketing alignment ultimately yields a better customer experience that improves retention trends over time.

Seven Useful Sales Funnel Metrics

If you are ready to pull as much insight as you can from the buyer’s journey through your sales funnel, it’s time to pick and track your metrics. Here are seven of the most useful data points to study, from initial top-of-funnel lead generation to bottom-of-funnel customer creation.

Metric One: Leads

This should come as no surprise. Leads are the reason for the existence of your sales funnel, and tracking metrics associated with them is essential. You can use data on sales funnel leads to shape and guide almost every part of every process across both your sales and marketing teams.

While the volume of leads entering the funnel is simple to track, a deeper analysis of leads will provide you with even richer information. Don’t just study the total number of leads. Focus on qualified leads, and study their cycle time, i.e., the time it takes a lead to move from one stage in the customer journey to the next.

It’s also important to look at lead sources: Where are they coming from? How many are coming from marketing activities, and how many are coming from sales activities? This analysis will identify opportunities to improve the efficacy of top-of-funnel activities.

Metric Two: Conversion Rate

At the end of the day (and quarter), the leads that convert to sales are more valuable than those that don’t. You can measure conversions by tracking your conversion rate, which is the number of sales divided by the number of leads. This metric tells you how efficiently your team is converting the leads that enter your sales funnel.

If your conversion rate is not where you want it to be, you may have to examine several parts of your sales funnel in order to locate and eliminate the problem. Try analyzing your Closed Lost Reasons (for customers that can’t be advanced through the funnel). Are the leads entering the top of the funnel truly qualified? Does your sales team need more training, staffing, or improved processes? If you are able to track this metric by employee, it can be used to identify both struggling and superstar members of your sales team.

Metric Three: Acquisition Costs

Nearly all of the sales funnel metrics that you track should be focused on increasing revenue, and this includes analyzing and controlling costs. Do you know your lead acquisition and customer acquisition costs?

To calculate your lead acquisition cost, divide your total acquisition cost by the number of leads generated. To calculate your customer acquisition cost, divide your total acquisition cost by the number of customers generated.

Metric Four: Customer Lifetime Value

Customer lifetime value (LTV) can help you gauge how effectively your business model performs over time. This metric tracks how much a customer invests in your product against your average customer acquisition cost. You must know the lifetime value of a new customer in order to accurately set your acquisition cost goals. Plus, it’s an extremely important number for organizations that derive revenue from up-selling and cross-selling additional products during a customer lifetime.

To calculate your lifetime customer value, you need the value of your average revenue per account. Multiply your average revenue per account by your gross margin, and then divide that number by your churn rate in order to know your lifetime customer value.

Metric Five: Total Sales

Your total sales is the amount of revenue generated from the orders that were placed during a specific time period. This single metric translates your leads, conversions, and all other sales funnel activity into a number. It’s straightforward to calculate: add up the revenue from customer sales during the date range you are analyzing. Are your conversions leading to the type and amount of sales that you want?

Metric Six: Cycle Time

Cycle Time is a set of metrics that tracks how long it takes for a prospect to advance from one milestone to the next within the funnel. You should track this metric from funnel entry to the final sale, as it will give you valuable insight on how efficiently your team is processing sales. Are there any slow spots that could be brought up to speed with new techniques or additional resources?

Metric Seven: Average Deal Size

To calculate your average deal size, divide your total number of deals by the total dollar amount of those deals. If you check this metric regularly, you can easily see whether your deals are getting larger, smaller, or staying the same - are your average deal sizes in line with your goals?

Efficient, Insightful Access to the Sales Funnel Metrics You Need

At Outreach, we’ve found that tracking these powerful sales funnel metrics is an effective way to fine-tune the quality of your sales activities and build out a frictionless buyer’s journey, from discovery to customer success. We start with a unified sales and marketing approach that elegantly pairs our sales engagement platform with your marketing automation tools to refine the top-of-funnel strategies that yield bottom-of-funnel success.

Outreach can streamline your organization’s sales automation, lead analysis, team performance reporting, and much more. Contact us today to learn how a partnership with Outreach can translate sales funnel metrics from basic benchmarks to actionable insights.

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