Key MSP Growth Metrics Part 2: Sales

OCTOBER 31ST, 2019
In our last piece, we looked at marketing metrics like pipeline and awareness. In this piece, we’ll look at the important metrics for sales when marketing hands over leads. We’ll also look at a few numbers that impact both sides of the house.

Essential Sales Metrics

With leads in hand, sales must move deals forward quickly. Sales teams have the hectic job of qualifying leads, following up on deals in progress, and in many cases, ensuring the success of clients they have already brought on board. As they work to close business, there are some numbers that reveal how well they’re performing.

Sales-Generated Pipeline

Similar to marketing-generated pipeline, sales-generated pipeline relates to the estimated value of opportunities identified by salespeople. Setting goals around sales pipeline is useful because it requires salespeople to identify and track some of their own opportunities, rather than relying solely on marketing leads. To get this number, salespeople must estimate the value of an opportunity through research or direct contact. The potential revenue from all sales-generated opportunities is sales-generated pipeline. Regardless of whether pipeline comes from marketing or sales, it’s wise for salespeople to keep their pipeline dollar total four times as high as their actual revenue goals. Due to churn and lost deals, total revenue will often be right around a quarter of total pipeline.

Time Taken to Contact Leads

People lose interest quickly. Worse yet, they find your competitors if you’re not responsive. The quicker you can get in touch, the more likely you are to close new business. Time-to-contact is how long it takes you to reach out to inbound leads. An effective sales team keeps this number as low as possible so potential customers don’t find someone else.

Time from Contact to Close

From when you contacted a lead to when you closed the deal, how long did it take? This is a good metric for tracking how effective and productive sales teams are. If you’re growing, this number should be shrinking, and your team should be streamlining and sharpening the saw every step of the way.

Lead Conversion Rate (aka Win Rate)

This metric is one of the most important. This shows you how many of your leads became opportunities and then customers. Without this number, it’s hard to say whether your revenue department is really growing. Be sure to keep track of win rates so you can tweak sales efforts in order to see this number climb.

Other Sales Metrics

As with marketing, sales has a long list of metrics to track. These metrics can affect the sales department at-large or individuals (number of calls made, number of conversations, etc.). For a detailed look at other sales metrics you might track, see this piece.

Metrics That Impact Sales and Marketing

If we think of sales and marketing as the revenue department, it becomes clear that there are a few metrics that don’t fit so neatly in either category. Instead, they are the result of efforts from both sides. Here are the ones that matter:

Average Deal Size

What is the average size of each deal you close? If you improve your company’s quality, status, and capabilities, you can take on bigger, more sophisticated customers. So, if you’re really growing, your average deal size should too.

Customer Acquisition Cost

This number is telling because it helps you understand how profitable deals really are. This can be a tough number to determine as it’s actually the sum of several numbers. Taking into account costs from marketing (advertisements, outreach costs, etc.) and sales (expenses, travel, etc.), what is your total investment in turning a prospect into a loyal customer?

Final Thought: It’s All About Revenue

When you boil it down, marketing and sales are responsible for revenue. Revenue is a simple enough metric to track and a great indicator that you’re growing, but the other metrics we’ve explored help you understand how well your teams are performing their tasks. As you continue growing, these figures will help you optimize sales and marketing processes to ensure you’re finding valuable clients and moving deals forward quickly.