A data-driven mindset offers an enormous advantage in the business world, because it gives CEOs and managers an objective perspective on sales and business growth. It also empowers business leaders to always strive to decrease inputs, maximize outputs and be intensely analytical.
Unfortunately, many tend to prioritize subjective opinions over actual data when it comes to running sales teams. Even in highly transactional, inside sales-driven models, most teams are ignoring their existing data. In doing so, they are unable to answer the seemingly simple question of whether or not they’ll hit their number this quarter.
For sales leaders, it’s easy to get caught up in the immediate tasks at hand, like deal execution, pipeline coaching and hiring to support growth. But in order to compete against other organizations, you must be analytically rigorous. Simply creating a goal out of thin air to triple your pipeline next quarter, for example, is too blunt and will only set you and your team up for failure.
Now is the time to become a data-driven sales organization, because this approach currently offers a substantial competitive edge. It’s only a matter of time, however, before analytical sales management becomes the norm. In order to start using your existing data to understand and hit your sales goals, you need to focus on the following three, key areas: How Much, How Good and How Soon.
The “How Much” of sales and marketing is your lead inventory, also known as your sales pipeline. Do you have enough inventory today to support your sales team and your goals going forward? A good way to answer this question is to chart your sales pipeline. Then you can figure out at which stages of the sales process these leads lie.
Now that you know how much inventory is in each of your sales stages, chart a sales funnel. Many make the mistake of mapping pipeline inventory in the shape of a sales funnel, without giving much thought to past performance or future expectations of these stages. Instead, analyze your historical conversion rates through each stage. Don’t limit yourself to just the sales funnel, either. Look at marketing, and at what rate you expect them to hand leads to sales. This will allow you to essentially predict your future.
Knowing how long it will take to move leads through your sales and marketing funnel will give you even further clarity on when deals will close. However, be wary of looking at your entire sales cycle as one Average Sales Cycle number. Just as you can’t close 50% of a deal, Average Sales Cycle can be misleading, and there’s a lot of variability here. Instead, break down “how soon” for each stage individually.
By breaking down inventory, conversion rates, and sales cycles to the individual stages in your sales process, you’ll create a more realistic forecast and gain a deeper understanding of how many deals your team will close within a given period.
Stop guessing about whether or not your sales team will hit their number this quarter. Think analytically, and use data-backed metrics to keep your reps more accountable for their pipeline at the sales stage level. In doing so, you’ll take the guesswork out of sales management and be able to set (and achieve!) more realistic goals for your team.
Steve McKenzie is vice president of sales at InsightSquared, which supplies sales performance analytics for data-driven business executives and their teams.