3 Important Sales Funnel Metrics

Posted on January 6, 2011. Filed under: Funnel Audits, Pipeline Measurement, Sales, Sales forecasting, Sales Management, Sales pipeline | Tags: , , , |

This week’s blog entries are related to Hitting the Ground Running in 2011.  Click here to go back to and start at the beginning of the week.

There are three key metrics that are key to producing high sales results year after year.  They are win rate, velocity and push rate.

Win rate is the percentage of all sales opportunities you pursue that actually result in a sale.  If you pursue ten opportunities and win three of them your win rate is thirty percent.

Win rate is important to know because it tells you how many opportunities you need on your funnel at any time.  If your funnel has only five opportunities then your 30% win rate could expect to win between one and two of the deals.  If you need to win five more deals then either your win rate will have to increase (and fast!) or you’ll have to fill your funnel with more deals.   As you set your strategy for this year you’ve got to anticipate changes in your win rate, perhaps from new products you’ll be selling or a new territory you’re taking over.  Be prepared to adjust your funnel approach accordingly.

Velocity is the time it takes for a sales opportunity to become a sale.  It’s easy to see why this is so important.  First, any sale that isn’t expected to close in the current year doesn’t belong on this year’s funnel.  That could have a dramatic effect on your funnel value.  Also, you could have a funnel that looks healthy with plenty of opportunities on it, but if too many have been sitting on that funnel for too long you could be misleading yourself.  Deals that are on your funnel for longer than the typical sales cycle are suspect and should be re-evaluated for integrity.

Push rate is related to velocity but it’s worth separating and tracking as a metric.  Push rate is the percentage of deals that are forecasted to close within a time frame that don’t close in that time frame.  This isn’t good for all stakeholders in the sales supply chain.  I’ve seen quite a few salespeople who take this situation lightly thinking they’ll make it up in a later period.  What commonly happens though is the seller relaxes and lets up his selling effort on these deals.  He becomes too confident that they’ll eventually close.  They stop or cut back on prospecting and building a healthy funnel.  If the deals don’t close as expected the seller finds out too late and has run out of time to reverse course.

What you should do is use last year’s results to create a factual baseline for things like win rate and velocity.   Commit to documenting win rate and velocity and push rate for the new year and you’ll have some good data to build your funnel management around.

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